2019 (8) TMI 1276 - HC - GST

Release of applicant on Bail - issuing bogus, false fabricated bills - showing false supply of goods - granting illegal financial profit to the recipients as input tax credit (ITC) - offences punishable under Section Madhya Pradesh Goods and Service Tax Act, 2017 and Section 132 (1)(b) (C) of Central Goods and Service Tax Act, 2017 - HELD THAT - Under Section 69 of the Central Goods and Service Tax Act, 2017, the Commissioner is having power to arrest if he has reasons to believe that a person has committed an offence specified in Clause (a) or (b) or (c) of subsection (1) of Section 132 of the GST Act - Section 132(1) (a), (b) and (c) of GST Act define types of offences and according to which, whoever commits offence of supply of any goods or services without issue of any invoice or issues any invoice or bill without supply of goods or services of both or avails input tax credit using such invoice, shall be punished with imprisonment for a term which may extend to 5 years and with fine, if the amount involved is more than ₹ 500 Lakhs. It is alleged that the Applicant who was the accountant of M/s Commercial Corporation Seoni issued bogus false and fabricated bills and have shown false supply of goods through the same and also helped Deepesh Tiwari and Amit Awadhiya and thereby embezzled huge amount - Applicant in his statement recorded by Assistant Commissioner under Section 70 of Central Goods and Service Tax Act, 2017, admitted that he was the accountant of the said firm M/s Commercial Corporation Seoni and used to issue bills of bogus firms without supplying the goods. Investigation is going on, so at this stage this court is not inclined to grant bail to the applicant - bail application rejected.

Issues:
1. Arrest under Sections of Madhya Pradesh Goods and Service Tax Act, 2017 and Central Goods and Service Tax Act, 2017.
2. Allegation of involvement in tax evasion scheme.
3. Applicant's defense of being falsely implicated.
4. Dispute over the applicant's role as an accountant and his alleged admission of preparing forged documents.
5. Legal provisions regarding arrest and punishment for offenses under GST Act.
6. Decision on bail application based on the ongoing investigation and seriousness of the alleged offenses.

Analysis:
1. The applicant was arrested under Sections of the Madhya Pradesh Goods and Service Tax Act, 2017 and the Central Goods and Service Tax Act, 2017 for his alleged involvement in a tax evasion scheme amounting to a significant sum of money. The arrest was made based on findings of the investigation conducted by the State Tax Anti Evasion Bureau, which revealed a complex network of fraudulent activities aimed at misappropriating tax revenue.

2. The prosecution's case detailed how the applicant, along with other accused individuals, was allegedly part of a scheme to issue bogus invoices and bills, showing false supplies of goods to claim illegal financial profits through input tax credit. The investigation uncovered a substantial amount of tax evasion, causing significant revenue loss to the State. The applicant was arrested along with a co-accused after the findings were established by the Assistant Commissioner of the Tax Evasion Bureau.

3. The applicant's defense centered on his denial of any involvement in the financial offenses attributed to him. He claimed to be a mere household servant of the main accused, performing menial tasks such as grocery shopping and driving for the wealthy individual. The applicant asserted that he was unaware of the fraudulent activities and was falsely implicated in the case, emphasizing his lack of benefit from the tax evasion scheme.

4. The dispute arose over the applicant's role as an accountant for the firm involved in the tax evasion scheme. While the applicant denied any involvement in preparing forged documents, the State Tax Anti Evasion Bureau argued that the applicant admitted to being the accountant of the firm and participating in the fraudulent activities during the investigation. This conflicting narrative added complexity to the case and raised questions about the applicant's actual role in the alleged offenses.

5. The legal framework under the Central Goods and Service Tax Act, 2017 provided for the arrest of individuals suspected of committing specified offenses related to tax evasion. The Act outlined severe penalties, including imprisonment for up to five years and fines for amounts exceeding a specified threshold. The Commissioner had the authority to arrest individuals based on reasonable grounds to believe that an offense had been committed.

6. Considering the seriousness of the allegations, the court rejected the applicant's bail application due to the ongoing investigation and the substantial amount involved in the tax evasion scheme. The court emphasized that the applicant's admission of being the accountant for the firm issuing bogus invoices and bills without actual supply of goods warranted further scrutiny before granting bail. The decision was based on the complexity and gravity of the case, highlighting the need for thorough investigation before considering release on bail.

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