2020 (1) TMI 788 - HC - GST

Fraudulent input tax credit (ITC) - issuing goods-less invoices - Vacation of interim protection granted to the petitioner - main thrust for vacation of the interim protection is mainly on the ground that the petitioner and his son who is petitioner are threatening the witnesses - HELD THAT - The statements of the witnesses is produced in the Court and the same shows about the threats being extended to the witnesses. Therefore, the petitioner is not joining the investigation, rather misusing the interim protection granted to him and threatening the witnesses and also keeping in view the fact that as per the respondent No. 2 and 3 many other witnesses are yet to be examined, the interim protection granted to the petitioner is hereby withdrawn. Application disposed off - List on the date already fixed i.e. 27.03.2020.

Summary

Issues:
1. Vacation of interim protection granted to the petitioner.
2. Allegations of tax evasion and misuse of input tax credit.
3. Threats to crucial witnesses during the investigation.

Analysis:
1. The judgment pertains to an application for the vacation of interim protection granted to the petitioner. The respondents alleged that the petitioner and his associates were involved in a scheme where input tax credit was availed and passed on without actual receipt or supply of goods, leading to a significant amount of tax evasion. Various premises were searched, and evidence of sham transactions and misuse of tax credit was found. The petitioner failed to cooperate with the investigation, and it was claimed that he was attempting to obstruct the process by threatening crucial witnesses. The respondents argued that the interim protection should be withdrawn due to these reasons.

2. The investigation revealed that multiple firms controlled or handled by the petitioner were engaged in issuing goods-less invoices and manipulating transactions to avail input tax credit improperly. The petitioner was accused of being involved in a complex scheme where cash transactions were disguised as legitimate business transactions to evade taxes and misuse tax credits. Despite repeated summons, the petitioner allegedly evaded joining the investigation, indicating a deliberate attempt to impede the inquiry. The court considered the seriousness of the allegations of tax evasion and misuse of tax credit under GST laws in deciding to withdraw the interim protection.

3. The key contention in the case revolved around the threats allegedly made by the petitioner and his son to the witnesses involved in the investigation. Witness statements indicated instances where the petitioner was accused of pressuring them to favor his son and manipulate their statements to the authorities. The court examined these statements and concluded that the threats extended to the witnesses, combined with the petitioner's non-cooperation and misuse of interim protection, warranted the withdrawal of the protection granted. The judgment emphasized the importance of ensuring a fair and unhindered investigation by addressing any attempts to intimidate or influence witnesses.

This detailed analysis highlights the complex financial irregularities, non-cooperation in the investigation, and witness intimidation that formed the basis for the High Court's decision to withdraw the interim protection granted to the petitioner.