2021 (11) TMI 589 - HC - GST

Seeking grant of pre-arrest bail - input tax credit - application moved on the ground that the Applicant had not claimed Input Tax Credit and a letter dated 1st September, 2020 issued by the office of Commissioner (GST) was issued mistakenly - HELD THAT - In the course of investigation, Sarfaraz had produced two delivery challans, admitting delivery of clove bags by the Complainant. These two challans bears signature of Sarfaraz. There are no reason to disbelieve these two challans. It shows that Complainant had delivered cloves to the Sarfaraz and, thereafter, raised invoices bearing Nos.106 and 107 and filed GSTR-1. Whether goods delivered to Sarfaraz, were at the instance of Applicant? - HELD THAT - It is surprising that in the subsequent communication dated 13th August, 2021, the GST Authority opined that M/s. Bansal Traders has not availed ITC against these Invoices during the period March 2020 to October 2020 as was evident from GSTR 3B return filed by M/s. Bansal Traders and GSTR-9 Annual Return filed on 5th February, 2021. If at all, GSTR 3B and GSTR 9 was filed on 5th February, 2021 how and under which circumstances the CGST Authority had certified in their first letter addressed to Investigating Officer that M/s. Bansal Traders has availed Input Tax Credit of CGST and SGST against Invoice Nos. 106 and 107. Although the concerned Officer (GST) was requested to explain the anomaly, he could not explained it and satisfy the Court s query. Thus, subsequent communication dated 13th August, 2021 addressed directly to Applicant is ignored. The evidence collected in the course of investigation, prima facie, shows Complainant delivered the goods to Sarfaraz at the instance of the Applicant and after delivery, he denied Complainant s claim and refused to pay him. Facts of the case constitute offence of cheating and, therefore, application deserves no consideration - Application dismissed.

Summary

Issues:
Apprehension of arrest for offenses under Section 420, 406, and 34 of the IPC, denial of pre-arrest bail, reliance on letters from GST authorities, allegation of cheating in a trading case involving delivery of cloves, discrepancy in claiming Input Tax Credit, denial of second bail application based on evidence of delivery and non-payment.

Analysis:
The applicant sought pre-arrest bail after being implicated in a case involving offenses under Section 420, 406, and 34 of the IPC. Initially, the pre-arrest bail was declined by the court based on evidence suggesting the delivery of 300 clove bags to a co-accused at the applicant's instance, establishing a prima facie case of cheating. The prosecution relied on statements from the warehouse keeper, truck drivers, and a letter from the CGST Authority to support the cheating allegation.

In the second bail application, the applicant argued that he had not claimed Input Tax Credit and presented a letter from the GST office dated 13th August, 2021, which contradicted an earlier communication. The applicant contended that there was no evidence to suggest the delivery of clove bags to the co-accused at his instance, emphasizing the absence of truck entry records in the market yard on the alleged delivery date.

The prosecution, supported by the CGST Authority's letters and delivery challans produced by the co-accused, maintained that the clove bags were delivered to the co-accused at the applicant's instance. The court noted discrepancies in the GST Authority's communications regarding the availing of Input Tax Credit against the invoices, raising doubts about the applicant's involvement in the case of cheating.

Ultimately, the court rejected the second bail application, concluding that the evidence collected during the investigation established a prima facie case of cheating, where the applicant received goods but denied payment to the complainant. The court found the facts of the case indicative of cheating and denied the application for pre-arrest bail based on the evidence presented.