2021 (4) TMI 1059 - DSC - GST

Bail application - claiming false input tax credit on the basis of false sales invoices - HELD THAT - The statement of accused was recorded and the accused in his statement has admitted that no goods were received by his firm dt his registered address from his suppliers and he claimed fake ITC on behalf of these fake firms. During investigation, the fifteen companies are found to be fake and the record of these firms and the E-way bill are filed with photographs of the persons which are found to be non-existent and even the premises of M/S Lotus Enterprises are not to be found on the address and on verification it was found that the address shown in the firm detail has never been running on the address and Mr. Omveer Singh was stated to be died on 31-07-2017, the death certificate and the panchnama of the company is also filed by the department and another panchnama of fake companies are found to be non-existent at the time of verification which clearly established that the accused has availed fake ITC credit on the basis of fake companies without doing any transactions with the firms. The investigation in the matter is still under progress and the department has tried to interrogate the accused during investigation after taking permission from the Court but the accused on his health ground refused for being interrogated. As far as the argument of jurisdiction of the case and the nature of punishment of the offence is concerned, it is transpired that the department after getting the information that the accused firm is involved in supply of goods in UP and on the basis of the notification of the department as produced before this Court also seems to have power to investigate the present case and since the offence relates to tax evasion and fall under the economic offence which does not fall in ordinary offence punishable upto 5 years imprisonment and such type of offences should not be considered liberally particularly in the manner in which the offence is alleged to have been committed by the accused and if in such type of offences accused is granted bail, there is every livelihood that the investigation of the case will be hampered and as such I do not find it to be a fit case for bail. This is not a fit case for bail and hence the bail application is liable to be rejected - bail application dismissed.

Summary

Issues:
Bail application under Section 132(1) (c) and 132 (1) (i) of Central Goods and Service Tax Act in Case No. 88/2020 for release of accused.

Detailed Analysis:

1. Allegations and Prosecution's Case:
The accused was arrested for falsely claiming input tax credit amounting to ?26,45,20,975 based on fake sales invoices from various companies. The prosecution argued that the accused admitted to the offense in his statement, which is admissible under the CGST Act. The prosecution contended that the accused availed fake ITC credit without supplying goods and that the documents collected corroborate the offense, making it an economic offense not eligible for bail.

2. Defense's Argument:
The defense asserted the accused's innocence, claiming he was falsely implicated, and highlighted procedural irregularities in the search and arrest process. The defense argued that the accused's firm was legitimate, dealing in garments, and the alleged fake companies were verified to be registered. Citing legal precedents, the defense emphasized a lenient view for such offenses and sought bail for the accused.

3. Court's Analysis and Decision:
The court reviewed the evidence, noting the accused's admission of availing fake ITC credit from non-existent firms. The court found discrepancies in the fake companies' details, such as non-existent addresses and deceased individuals, supporting the prosecution's case. Considering the economic impact of the offense and the ongoing investigation, the court deemed it inappropriate to grant bail. The court rejected the bail application, emphasizing the seriousness of the offense and the potential impact on the investigation.

In conclusion, the court rejected the bail application of the accused, Manoj Kumar Garg, based on the substantial evidence presented by the prosecution, the seriousness of the economic offense committed, and the potential hindrance to the ongoing investigation if bail were granted.