2021 (12) TMI 1297 - DSC - GST

Seeking grant of bail - fake issuance of GST invoices without actual supply and receipt of goods - Section 132 of the CGST Act, 2017 - HELD THAT - It is to be noted that both additional places of business of two recipients of M/s. SRK Ventures i.e., M/s. Wonderkids Metrics Pvt. Ltd., and M/s. Suumaya Retail Ltd., are same therefore, it appears that M/s. Suumaya Retail Ltd and M/s. Wonderkids Metrics Pvt Ltd., are mutually interlinked and it further appears that all the three entities 1) M/s. Rangoli Tradecomm Ltd. (now known as M/s. Suumaya Corporation Ltd.), M/s Suumaya Retail Ltd., and M/s. Wonderkids Metrics Pvt. Ltd., are mutually interlinked and the same has been admitted by the applicant Sushil Dilipkumar Mehta in his voluntary statement and therefore, applicant no.1 with the help of other applicants has created M/s. SRK Ventures and its suppliers as well as the recipients companies are created for name sake for bogus supply without actual movement of goods and all the companies are being operated by the same person and therefore, this is nothing but contravention of section 132(1)(b) of CGST Act, 2017, which is mandatory to show the turnover and same has been initiated by the applicant in the category of (taxable service) in CGST on return for the month of April, 2021. The goods are not entitled for exempted services. This is nothing but huge loss to the Government. This is nothing but while collar crime which needs to be investigated in detail. The investigation is at crucial stage. More than 5000 invoices are included which are used as bogus invoices and needs to be recovered at the instance of applicants. Applicant nos.2 and 3 have supported the applicant no.1 in this conspiracy of evasion of taxes. Considering the seriousness and gravity of the economic offence in which ₹ 48 crores evasion of taxes at the instance of applicants, investigation is at crucial stage, chance to tamper prosecution evidence and flee over justice, it is held that all the applicants does not deserve sympathy for enlargement on bail - Bail application dismissed.

Summary

Issues Involved:
1. Prima facie case and justifiable grounds for the offence.
2. Nature and gravity of the offence.
3. Possibility of the accused absconding or fleeing from justice.
4. Likelihood of the repetition of the offence.
5. Apprehension of threatening or influencing prosecution witnesses.
6. Apprehension of the accused causing destruction of evidence during the investigation.

Issue-wise Detailed Analysis:

1. Prima Facie Case and Justifiable Grounds for the Offence:
The court examined whether there were sufficient grounds to believe that the accused had committed the offence under Section 132 of the CGST Act, 2017. The Special Public Prosecutor (SPP) presented evidence that M/s. SRK Ventures had declared a high value of supplies amounting to ?963 Crores immediately after registration in April 2021, with no turnover in subsequent months. The accused admitted in their voluntary statements to issuing fake invoices without actual movement of goods, leading to an evasion of GST amounting to ?48.17 Crores. The court found that there was a prima facie case against the accused based on these admissions and the evidence presented.

2. Nature and Gravity of the Offence:
The court emphasized that economic offences involving deep-rooted conspiracies and significant loss of public funds need to be viewed seriously. The accused were involved in a scheme to issue fake invoices and evade taxes, which posed a serious threat to the financial health of the country. The court cited the Supreme Court's decision in Nimmagadda Prasad Vs. CBI, which highlighted the grave nature of economic offences.

3. Possibility of the Accused Absconding or Fleeing from Justice:
The court considered the possibility of the accused absconding or fleeing from justice. The accused argued that they were permanent residents of Mumbai and had roots in the society, thus the question of absconding did not arise. However, given the seriousness of the offence and the substantial amount of tax evasion involved, the court found that there was a risk of the accused absconding.

4. Likelihood of the Repetition of the Offence:
The court assessed the likelihood of the accused repeating the offence. The evidence indicated that the accused had engaged in a systematic scheme to evade taxes through the issuance of fake invoices. Given the nature of the offence and the accused's involvement in the scheme, the court found a likelihood of repetition.

5. Apprehension of Threatening or Influencing Prosecution Witnesses:
The SPP argued that there was a possibility of the accused interfering with the investigation by tampering with witnesses. The court found this argument persuasive, given the accused's involvement in a complex scheme of tax evasion and the ongoing investigation.

6. Apprehension of the Accused Causing Destruction of Evidence During Investigation:
The court considered the possibility of the accused causing destruction of evidence while the investigation was in progress. The evidence presented by the prosecution, including the voluntary statements of the accused admitting to the issuance of fake invoices, indicated that the accused had the capability and intent to tamper with evidence. The court found that this was a significant risk.

Conclusion:
The court concluded that the seriousness and gravity of the economic offence, the substantial amount of tax evasion involved, the risk of the accused absconding, the likelihood of repetition of the offence, and the possibility of tampering with evidence and influencing witnesses justified the rejection of the bail applications. The court emphasized that economic offences need to be treated with a different approach in bail matters, given their impact on the financial health of the country.

Order:
1. Bail Application Nos.2697 of 2021, 2698 of 2021, and 2699 of 2021 are hereby rejected being devoid of merits.
2. Bail Application Nos.2697 of 2021, 2698 of 2021, and 2699 of 2021 stand disposed of accordingly.