2021 (10) TMI 801 - HC - GST

Grant of regular bail - Fraudulent availment of ITC - fake transactions - no show cause notice was issued to the petitioner before arresting him - HELD THAT - Notice of motion. List again on 28.10.2021 - In the meantime, considering the fact that the petitioner is in custody since 03.08.2021; offences are triable by the Court of Magistrate and he is no more required for custodial investigation, he is directed to be released on interim bail subject to furnishing his bail/surety bonds to the satisfaction of the trial Court/Illaqa Magistrate.

Summary

Issues:
1. Bail application under Section 132(1)(c) of CGST Act, 2017 read with Section 20(xv) of IGST Act, 2017.

Analysis:
The petitioner filed a bail application seeking relief for the offence committed under specific sections of the CGST Act, 2017 and IGST Act, 2017. The respondent had sought judicial remand of the petitioner based on allegations of fraudulent Input Tax Credit (ITC) availed by certain entities in connivance with Haryana-based dealers. The respondent alleged that a significant portion of ITC was passed on to a single firm, leading to the petitioner's arrest. The petitioner's senior counsel argued that transactions during the check period were conducted through legitimate means, with all payments made via cheque/RTGS and taxes duly paid as per returns. The counsel also highlighted discrepancies in the respondent's case, pointing out that the offence was being made non-bailable by adding figures based on the petitioner's disclosure, which should not be admissible against him. Additionally, the counsel raised concerns about procedural violations, such as the lack of a show cause notice prior to the petitioner's arrest, leading to a violation of his constitutional rights under Article 20 of the Indian Constitution.

The Court noted the petitioner's custody since a specific date and the nature of the offences being triable by a Magistrate. Considering these factors and that custodial investigation was no longer necessary, the Court granted interim bail to the petitioner upon furnishing bail/surety bonds to the satisfaction of the trial Court/Illaqa Magistrate. The respondent accepted the notice and requested time to file a reply, with the next hearing scheduled for a specific date.