2021 (10) TMI 133 - HC - GST

Seeking grant of Regular Bail - illegal availment of input tax credit - invoices issued by suppliers, without any actual movement of goods - non-existent transporters - Section 132(1) (b) and (c) of the Central Goods and Service Tax Act, 2017 - HELD THAT - The petitioner has complied with the conditions as imposed in the detailed order dated 16.03.2021 vide which interim bail was granted to the petitioner and also the fact that the petitioner had been in custody from 07.12.2020 till 16.03.2021 and that the challan has already been filed before the Judicial Magistrate Ist Class and the proceedings under Section 74 of the CGST Act have also been initiated and the case is primarily based on documentary evidence, thus, no purpose would be served in sending the petitioner back into custody. The present petition is allowed and the order dated 16.03.2021 is made absolute - the petitioner would continue to be bound by the conditions which have been imposed.

Summary

Issues: Grant of regular bail under Section 439 of the Code of Criminal Procedure in a case involving alleged offenses under Section 132(1)(b) and (c) of the Central Goods and Service Tax Act, 2017.

In the present case, the petitioner, a Director of a manufacturing company, was alleged to have availed a significant amount of Input Tax Credit without actual movement of goods, based on invoices from non-existent suppliers and transporters. The petitioner was accused of offenses under Section 132(1)(b) and (c) of the CGST Act. The Co-ordinate Bench of the High Court had earlier granted interim bail to the petitioner, considering arguments regarding the absence of a notice under Section 73 or 74 of the CGST Act, the necessity of determining tax liability before prosecution, and the petitioner's cooperation during the investigation. The court also noted the lack of criminal antecedents and clear credentials of the petitioner. The respondent-Department argued that the petitioner had created fake invoices and wrongfully availed input tax credit. The court, after considering the facts, granted interim bail to the petitioner subject to certain conditions, including furnishing a bank guarantee for tax liability, not leaving the country without permission, and not alienating properties until final disposal of the complaint.

In compliance with the interim bail conditions, the petitioner furnished a bank guarantee and fulfilled other requirements. The respondent-Department filed an additional affidavit detailing actions taken regarding FIR registration, assessment of tax liability, recovery of tax, prevention of tax evasion, and registration of non-existent firms. The court noted that the detailed affidavit satisfied the previous directions given by the Co-ordinate Bench. The respondent-Department confirmed that the conditions imposed on the petitioner had been complied with. Considering the petitioner's compliance with bail conditions, custody duration, ongoing legal proceedings, and documentary evidence in the case, the court found no reason to revoke bail. Consequently, the court allowed the petition, making the earlier interim bail order absolute, while reiterating that the decision did not reflect a final opinion on the case's merits.

In conclusion, the High Court granted regular bail to the petitioner in a case involving alleged CGST Act violations, emphasizing compliance with bail conditions, ongoing legal processes, and documentary evidence. The detailed affidavit filed by the respondent-Department regarding actions taken was deemed satisfactory, leading to the continuation of the petitioner's bail status. The court clarified that the decision on bail did not prejudge the case's final outcome, which would be determined independently during trial proceedings.