2021 (11) TMI 384 - DSC - GST

Grant of Bail - Fraudulent ITC transactions and by misuse of same - Section 132 (1) (b) (c) (f) (I) of the CGST Act - HELD THAT - Taking note of the custody period of the applicant as also the fact that the applicant is a student pursuing his higher professional degree/diploma, and also note of the fact that there are no allegations of tampering of evidence or influencing the witnesses, the applicant has made out a fit case to grant regular bail. Taking note of the custody period of the applicant as also the fact that the applicant is a student pursuing his higher professional degree/diploma, and also note of the fact that there are no allegations of tampering of evidence or influencing the witnesses, the applicant has made out a fit case to grant regular bail - application allowed.

Summary

Issues involved:
Bail application in a case involving fraudulent ITC transactions under CGST Act.

Detailed Analysis:

1. Allegations and Arguments:
The applicant, a Chartered Accountant, was accused of involvement in fraudulent ITC transactions through misuse of PAN numbers and creation of fake firms. The prosecution alleged that the applicant, along with other accused, was engaged in generating fraudulent ITC invoices amounting to ?117 crores. The applicant was charged under Section 132 (1) (b) & (l) of the CGST Act for his alleged role in the offenses. The defense argued that the applicant was coerced into signing blank papers and his disclosure statement was obtained under pressure, which he later retracted.

2. Legal Standpoints:
The defense contended that the applicant's role was limited to abetment, which is a bailable offense under the CGST Act. It was argued that the applicant was not directly involved in the operations of the fake firms and no incriminating material was recovered from him. Moreover, it was emphasized that the applicant was not assessed under any tax regime, making him not liable to pay any duty or penalty for the alleged fraudulent transactions.

3. Opposition and Counter-Arguments:
The Special Public Prosecutor opposed the bail application, alleging that the applicant played a significant role in routing cash received from other accused through fictitious accounts, earning commissions in a fake billing scam. The prosecution claimed that the applicant's involvement led to the generation of ineligible ITC worth ?117 crores, causing a loss to the government exchequer. It was also highlighted that the applicant was actively involved in converting money into cash through dubious transactions.

4. Court's Decision and Conditions:
After considering the arguments and circumstances, the court granted bail to the applicant, noting that he was a student pursuing a professional degree and had no prior allegations of tampering with evidence or influencing witnesses. The court imposed several conditions for bail, including a personal bond and sureties, restrictions on hampering the investigation or influencing witnesses, and requirements to join investigations when required and keep communication lines open with the authorities.

5. Conclusion:
The court, based on the presented facts and the applicant's background, found it appropriate to grant bail while imposing necessary conditions to ensure cooperation with the investigation and legal proceedings. The judgment highlighted the importance of balancing the interests of justice with the rights of the accused during bail proceedings in cases involving complex financial frauds under the CGST Act.