2021 (3) TMI 145 - DSC - GST

Grant of Regular Bail - input tax credit - issuance of invoices without the actual movement of the goods - HELD THAT - The perusal of the record clearly points out that the allegations against the present applicant/accused relate to his being involved in issuance of invoices without the actual movement of the goods as well as in wrongful availing of the Input Tax Credit (ITC) by receiving only invoices without actual receipt of goods. In this manner, there remains no doubt that the allegations constitute an offence under Section 132 of the CGST Act and not under Section 122 of the CGST Act, as being claimed on behalf of the applicant. Contention that there is no document on record connecting the accused with the alleged fake firms - HELD THAT - The enquiry officer during the course of enquiry has collected bulky record which prima-facie supports the contentions of the complainant department regarding the role played by the accused in the commission of offence under consideration. Hence the contention in this regard raised by the accused/applicant is not sustainable at this stage. In the case of Y.S. JAGAN MOHAN REDDY VERSUS CENTRAL BUREAU OF INVESTIGATION 2013 (5) TMI 896 - SUPREME COURT it was held by the Hon ble Supreme Court of India that the economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offences having deprecated conspiracies involving huge loss of public funds need to be view seriously and considered as grave offence effecting the economic of the country as a whole and therefore, by causing a serious threat to the financial health of the country . As well as observations made by the Hon ble Supreme Court of India, it becomes clear that gravity of the matter of quantum of taxation involved in it not only has adverse effect upon the Government exchequer, but same plays a crucial role in weakening the economy of the country. The case in hand is still under investigation. The possibility of tampering with witnesses can not be ruled out. There appears no reason to grant concession of bail to the accused as investigation is still pending - Application dismissed.

Summary

Issues:
Application for regular bail under CGST Act - Allegations of fake invoices and wrong Input Tax Credit (ITC) - Contention of offence under Section 122 vs. Section 132 of CGST Act - Lack of complaint or FIR against the accused - No notice under Section 74 of CGST Act - Alleged involvement in fake firms - Accused's involvement in availing wrong ITC causing loss to Government Exchequer - Bail application dismissal due to pending investigation.

Analysis:
The applicant sought bail, claiming false implication in the case involving allegations of issuing invoices without actual goods movement and wrong ITC availing. The defense argued the offence falls under Section 122, not Section 132 of the CGST Act, as no complaint, FIR, or notice under Section 74 was issued against the accused. However, the prosecution contended the accused admitted involvement and caused a loss of ?44.19 Crores to the Government Exchequer, making the offence cognizable and non-bailable.

The court noted the allegations against the accused relate to fake invoices and wrongful ITC availing, constituting an offence under Section 132 of the CGST Act. The defense's claim of no document connecting the accused to fake firms was refuted, citing collected evidence supporting the department's contentions. The defense's objection to involving actual offenders as witnesses was deemed irrelevant at the bail stage, emphasizing the need for evidence to establish their role in the offences.

Regarding the accused's arrest without an FIR, the court upheld the legality under Section 69 of the CGST Act. Emphasizing the seriousness of economic offences, the court cited precedents highlighting the need for stringent measures in such cases. Referring to recent judgments, the court emphasized the threat economic offences pose to the country's financial health, warranting strict action.

Considering the gravity of the case, potential witness tampering, and the substantial taxation amount involved, the court dismissed the bail application due to the ongoing investigation. The decision aimed to prevent any interference with the investigation process and safeguard the integrity of the case without prejudging its merits.