2021 (9) TMI 574 - DSC - GST

Seeking grant of Bail - fraudulent availment of input tax credit - respondent has never served notice upon the applicant - offence punishable u/s 132 (1) (I) of the Central Goods and Service Tax Act, 2017 - HELD THAT - On perusal of the reply filed by the prosecution, it would reveal that the prosecution has come with the contention that the applicant was the partner of firm namely M/s. Agrim Impex. It is claimed that said firm had availed inadmissible Input Tax Credit on the basis of invoices issued by M/s. Advanced computers and Mobiles India Pvt. Ltd. and in turn have issued fake GST invoices without accompanying goods so as to enable the recipients to avail inadmissible Input Tax Credit to the tune of ₹ 33.92 Crores. Admittedly in this case, the prosecution has alleged that the has fraudulently availed Input Tax Credit amounting to ₹ 33.92 Crores. Therefore, it can be said that there are allegations against the applicant about commission of economic offence - bail cannot be allowed - Application dismissed.

Summary

Issues:
Grant of bail under Section 439 of Cr.P.Code for the offence punishable under Section 132 (1) (I) of the Central Goods and Service Tax Act, 2017.

Analysis:
1. The applicant sought bail, arguing that without assessment under Section 73 and 74 of the Act, the offence under Section 132 cannot be established. Citing precedents like M/s. Jaychandran Alloys (P.) Ltd., it was emphasized that recovery must follow assessment, not precede it.

2. The defense highlighted the preamble of the Central Goods and Service Tax Act, stating that only the levy of tax should be considered under the Act, not as an offense. However, the court noted that arrest power should be exercised cautiously, as per judgments like Makemytrip (India) Pvt. Ltd. vs. Union of India, which emphasized following due procedures before arrest.

3. The prosecution alleged that the applicant fraudulently availed Input Tax Credit amounting to ?33.92 Crores. Witness statements and documentary evidence supported these claims, indicating prima facie substance in the allegations.

4. Despite the defense's argument that investigation was almost complete, the court referred to the seriousness of economic offenses, as highlighted in Nimma Gaudda Prasad vs. CBI. Given the gravity of the allegations and the need for thorough investigation, bail was denied at the initial stage.

5. The court rejected the bail application, considering the significant amount involved in the alleged fraud and the need for a comprehensive investigation before considering bail. The decision aligned with the principles outlined in relevant precedents and legal guidelines, leading to the rejection of the bail application (Bail Application No. 2546 of 2020).