2021 (12) TMI 1263 - DSC - GST

Seeking grant of anticipatory bail - allegation is that the applicant availed as well as passed on ineligible input tax credit from and to non existing firms - HELD THAT - In the case in hand, on perusal of material on record and the investigation papers it appears that the applicant s Swara Jewels had dealt with Arihant Traders and M/s. Sandeep Trading. The ITC availed in connection with these two firms is difinitely below ₹ 5 crores. However, the matter does not end here. Dealing with golden Bullion and Gajmukhi Bullion and Mumbadevi also, the applicant availed ITC. The total amount of availment of ineligible ITC is more than ₹ 6 Crores. It may be noted here that respondent No.2 had inputs that Gautam Joshi has created fake entities, and the applicant Swara Jewels has paper transaction with the same entities. Respondent No. 2 has recorded the statement of Gautam Joshi where he admitted that he has created fake entities as Mumbadevi Jwellers and Arihant Traders. The statement of the applicant as recorded by respondent No.2 also reveals that the applicant has dealt with these entities i.e. Arihant Trading, M/s. Sandeep Traders, Gajmukhi and Mumbadevi Bullion in connection with Guatam Joshi. At this infant stage of investigaion, this much material is sufficient to make out prima facie case against the applicant. Since apparantly, these entities do not exist, if anticipatory bail is granted, the applicant is likely to destroy the evidence regarding the matter. This Court is not inclined to grant anticipatory bail to the applicant as the investigation is at initial stage and apparently at this stage as per the contention of respondent No. 2 the amount of availament of input tax credit is more than ₹ 6 Crores which may rise up in further inquiry - anticipatory bail cannot be accepted. Application rejected.

Summary

Issues Involved:
Anticipatory bail application under section 438 of the Code of Criminal Procedure in a case involving alleged offenses under Section 132 of The G.S.T. Act, 2017.

Analysis:
1. Prima Facie Case and Offense Severity:
The applicant, a proprietor of Swara Jewels, sought anticipatory bail regarding an inquiry by the Central Goods and Service Tax Authority under the CGST Act. The applicant contended that the offense alleged is bailable as it involves an amount less than ?5 Crores. However, the respondent argued that the applicant availed ineligible input tax credit from non-existing firms, amounting to over ?20 Crores. The court noted that prima facie, a case was made out against the applicant for availing ineligible ITC exceeding ?6 Crores. The severity of the offense and potential destruction of evidence during the ongoing investigation were crucial factors in denying anticipatory bail.

2. Legal Precedents and Principles:
The court considered various legal precedents cited by both parties, emphasizing that bail is the rule and jail the exception. Factors such as the nature of the accusation, antecedents of the applicant, possibility of absconding, and potential evidence destruction during the investigation were crucial in determining the grant of anticipatory bail. The court highlighted the need to balance the rights of the accused with the seriousness of the offense and the integrity of the investigation process.

3. Material Considerations and Investigation Stage:
The court examined the material on record, including the applicant's dealings with non-existing entities and the magnitude of ineligible ITC availed. It was observed that the investigation was in its initial stages, with substantial evidence suggesting the applicant's involvement in fraudulent transactions. The court noted that granting anticipatory bail could lead to the destruction of crucial evidence, considering the involvement of fake entities and the significant amount of ineligible ITC availed by the applicant.

4. Decision and Conclusion:
Based on the analysis of the facts, legal principles, and the stage of investigation, the court rejected the anticipatory bail application. The court emphasized the seriousness of economic offenses, the need for a cautious approach in granting bail, and the potential impact on the economy due to such offenses. The denial of anticipatory bail was primarily due to the gravity of the allegations, the substantial amount involved, and the risk of evidence tampering during the ongoing investigation.

This detailed analysis of the judgment highlights the key legal aspects, factual considerations, and precedents that influenced the court's decision to reject the anticipatory bail application in the case involving alleged offenses under the CGST Act.