2021 (2) TMI 874 - DSC - GST

Grant of Bail - fake GST challan and GSTR-3B return - It is submitted that as per the Act the liability of payment of GST amount is of the company who collects GST from its customers and not of statutory auditors - HELD THAT - In the given facts, accused is a CA and his firm M/s Rampal Company was rendering professional services to M/s Starcrest Services Pvt. Ltd. as statutory auditors and consultants. The facts show that accused used to collect GST amount from M/s Starcrest Services Pvt. Ltd. and instead of depositing it to the full misappropriated a substantial part through creation of forged GST challans and GSTR-3B returns. It appears that M/s Starcrest Services Pvt. Ltd was misled by the said GST challans and GSTR-3B returns as they seem to have believed that the money belonging to government is being deposited by the accused until the department unearthed it. The plea of rendering co-operation to the department by the accused appears to be baseless as it is apparent that he tried to avoid investigation under the garb of medical treatment in hospitals. The conduct of the accused is writ large that despite being statutory auditor he misappropriated the GST amount and simultaneously misled M/s Starcrest Services Pvt. Ltd through generation of forged documents. Bail is accordingly denied to the accused. Application disposed off.

Summary

Issues involved:
Bail application of accused, misappropriation of GST amount, cooperation with department, involvement in fake GST challans, severity of offense, likelihood of accused fleeing from justice, tampering with prosecution witnesses.

Analysis:
The accused, a CA by profession, applied for bail, claiming innocence in the misappropriation of GST amount. He alleged coercion by the company's directors to pay the GST demand. The accused's firm, engaged by the company, was involved in creating forged documents to show GST payments. The accused's attempt to avoid investigation by feigning illness raised doubts about his cooperation with the department. The severity of the offense, including the creation of fake GST challans, indicated a serious breach of trust. The court considered the likelihood of the accused fleeing from justice and tampering with witnesses.

In bail applications for non-bailable offenses, courts must consider the seriousness of the offense, the risk of the accused fleeing, and the potential for tampering with witnesses. The accused's role as a statutory auditor misappropriating GST funds and misleading the company through forged documents was a crucial factor in denying bail. The court emphasized the need for a judicious exercise of discretion in granting bail, especially in cases involving serious offenses.

The court referred to legal precedents highlighting the importance of considering various circumstances in bail decisions. The accused's actions, including misappropriating GST funds and misleading the company, demonstrated a lack of cooperation with the investigation. The court found the accused's plea for bail baseless, given the gravity of the offense and the risk of tampering with evidence or witnesses. Consequently, the court denied bail to the accused, emphasizing the seriousness of the charges and the need to prevent potential flight from justice or interference with the legal process.