2021 (11) TMI 642 - HC - GST

Seeking grant of anticipatory bail - irregular availment of input tax credit - fictitious/dummy/non genuine firms - revocation of cancellation of GST registration - HELD THAT - There is sufficient evidence showing involvement of applicants. Their custodial interrogation is necessary. The decisions relied upon by the advocate for applicants are not applicable to the applicants. The statement of Alpa Mehta indicate that accounts were opened in her name and in the name of her son by the applicants. They have obtained their personal documents. Three firms were registered using the name of Smt.Mehta. 15 firms suspected to be non genuine were traced. All the 15 firms were registered by using mobile number or e-mail IDs of applicant or his father Paresh Mawani. The statement of C.A Chetan Tak states that applicants have instructed him and his staff over phone for GST related work of 8 out of 15 firms. There were transactions of crores of rupees in the bank account of Unique Pharma Chem and other firms. The amount has been withdrawn. The applicants from their personal e-mail ID have made correspondence with CGST officers and other tax payers in relation to GST query of one of dummy firms. Both the applicants have floated 17 dummy on-genuine firms wherein fake invoices valued more than ₹ 300 crores approximately involving more than ₹ 1,500 crores of GST were involved. The applicants Paresh Mawani has accepted that he is managing the business activies and maintaining four firms wherein two are dummy proprietorship firms. No case for grant of anticipatory bail is made out - bail application dismissed.

Summary

Issues:
Apprehension of arrest in connection with Summons No. GEXCOM/AE/FU/672/2021-AE; Rejection of anticipatory bail applications.

Analysis:
1. The applicants, father and son, are facing arrest in connection with an investigation initiated by the office of Central Goods and Service Tax (CGST) and Central Excise regarding trading of pharmaceutical products by a firm. The investigation revealed fictitious firms and the active role of one of the applicants in business transactions. Statements and evidence collected point towards their involvement.
2. Despite summons and evidence indicating their involvement, the applicants did not respond and are now seeking anticipatory bail, claiming false implication. They argue that the CGST Act provides mechanisms for tax demands, emphasizing the need for proper procedures, natural justice, and quasi-judicial proceedings before any action.
3. The respondents oppose the bail applications, citing substantial evidence of the applicants' involvement in creating fake invoices and evading taxes worth crores. They highlight the applicants' influence on dummy persons, chartered accountants, and involvement in multiple firms with suspicious transactions.
4. The court examined the evidence, including statements from dummy proprietors, chartered accountants, and banking transactions, which point towards the applicants' direct involvement in managing several firms and engaging in questionable financial activities. The court found sufficient grounds for custodial interrogation, denying the anticipatory bail applications.
5. The court emphasized the duty of the applicants to honor summons under Section 70 of the Act, considering the evidence linking them to non-genuine firms, fake invoices, and significant financial transactions. The involvement of family members, correspondence with tax authorities, and admission of managing multiple firms further strengthen the case against the applicants.
6. Based on the detailed analysis of the evidence and the applicants' actions, the court concluded that no grounds for granting anticipatory bail exist, leading to the rejection of both applications.

Order:
Anticipatory Bail Application No.2267 of 2021 and Anticipatory Bail Application No.2269 of 2021 are rejected.