2021 (12) TMI 1002 - HC - GST

Seeking grant of regular bail - fake input tax credit invoices, without actual supply of goods - fraudulent and irregular input tax credit affecting collection of Goods and Services Tax - without assessment of amount involved, search and seizure conducted - Sections 16 132 (1) (b) (c) of the Central Goods and Services Tax Act, 2017 - HELD THAT - Section 67 of the GST Act provides for power of inspection, search and seizure. For search and seizure, if Proper Officer only after recording reason to believe that a taxable person has suppressed any transaction relating to supply of goods or services or both or stock of goods or claimed input tax credit in excess of his entitlement to evade tax under the GST Act; or goods of a person engaged in business of transporting or operator of a warehouse have escaped payment of tax may authorize any other officer to inspect any place of business of taxable person. Except recording reason to believe, there is no other bar for the Proper Officer for inspection, search and seizure. It is not the case of applicant nor any argument to the effect has been advanced that no reason has been recorded. Hence, submission that prior assessment has not been made before invoking powers under Section 67 of the GST Act, does not stand and it is hereby repelled. Applicants are arrested for commission of offences punishable under Sections 16 132 (1) (b) (c) of the GST Act. Section 138 of the GST Act deals with compounding of offences. Offence registered against applicants under Section 132 (1) of the GST Act is made compoundable by the Commissioner on making payment to the Central Government or State Government either before or after institution of prosecution. In case at hand, case is instituted against applicants and they were arrested. The applicant are allowed to be enlarged on bail - application allowed.

Summary

Issues:
Grant of regular bail in connection with Crime No.133/2020-21 under Sections 16 & 132 (1) (b) & (c) of the Central Goods and Services Tax Act, 2017.

Detailed Analysis:

1. Arrest and Allegations:
- The applicants were arrested in connection with a case involving fraudulent input tax credit under the GST Act. The prosecution alleged that the applicants facilitated recipients with fake invoices, affecting the collection of GST. They were accused of creating false invoices without actual supply of goods, leading to wrongful availment of input tax credit.

2. Defense Arguments - Rohan Tanna:
- Counsel for Rohan Tanna argued that he was falsely implicated, as he was not involved in the business activities of the firms mentioned. It was claimed that necessary bills were produced to support purchases made. The defense highlighted the delay in the proceedings and contended that the alleged offense was compoundable under Section 138 of the GST Act.

3. Defense Arguments - Abhishek Pandey:
- The defense for Abhishek Pandey emphasized that he had no significant role in the business dealings of the firm in question. It was argued that even if an offense was committed, the maximum punishment would be three years due to the amount involved. The defense sought regular bail for the applicant.

4. Opposing Arguments by Non-applicant Department:
- The non-applicant Department opposed the bail applications, citing evidence collected during the search and investigation. They argued that the applicants were involved in generating fake invoices and e-way bills for illegal tax credit availment. The Department contended that the offense was severe and not compoundable, hence regular bail was not justified.

5. Judicial Analysis and Decision:
- The court examined the arguments presented by both sides. It was noted that the search and seizure were conducted based on reasons recorded as per Section 67 of the GST Act. The court considered the provisions of Section 138 regarding compounding of offenses and the duration of the applicants' detention. Without commenting on the merits of the case, the court granted regular bail to the applicants on certain conditions, including a personal bond and surety.

6. Legal Precedents and Conclusion:
- The court referred to various legal precedents and highlighted the importance of bail conditions to ensure the applicants' appearance and compliance. The decision to grant bail was based on the specific circumstances of the case, the provisions of the GST Act, and relevant judicial pronouncements.

This detailed analysis provides a comprehensive overview of the legal judgment regarding the grant of regular bail in a GST-related case, covering the arrest, defense arguments, opposing views, judicial analysis, and the final decision by the court.