2022 (3) TMI 1046 - HC - GST

Seeking grant of anticipatory bail - availment of fake Input Tax Credit on the basis of fake invoices without accompanying goods - HELD THAT - In the instant case, it is a glaring act, where the petitioners themselves being accused, by concealing their status are levelling allegations against the co-accused and officials by posing themselves as whistle blowers, in fact, which is contrary to the record. Application filed for grant of anticipatory bail to the petitioners, is dismissed.

Issues Involved:
1. Anticipatory bail for petitioners.
2. Non-coercive action against petitioners.
3. Transfer of investigation to another agency.
4. Petitioners' status as whistleblowers.
5. Allegations of fraud and misdeeds by Baljinder Singh.
6. Petitioners' involvement in the fraudulent activities.
7. Concealment of facts by petitioners.
8. Misuse of Whistle Blowers Protection Act, 2014.

Issue-wise Detailed Analysis:

1. Anticipatory Bail for Petitioners:
The petitioners sought anticipatory bail, fearing arrest due to their involvement in a case under Section 70 of the Central Goods and Services Tax Act, 2017. The court found no merit in the petitions for anticipatory bail as the petitioners were actively involved in fraudulent activities with the main accused, Baljinder Singh. The petitioners had created firms to avail and pass on fake Input Tax Credit (ITC) without actual movement of goods, amounting to crores of rupees. The court dismissed the anticipatory bail petitions due to deliberate concealment of facts by the petitioners.

2. Non-Coercive Action Against Petitioners:
The petitioners also sought protection from any coercive action if they complied with the summons/notice issued under Section 70 of the CGST Act, 2017. The court noted that the petitioners had misled the court by concealing their active partnership with the main accused and their involvement in fraudulent activities. Therefore, the court did not grant any protection from coercive action.

3. Transfer of Investigation to Another Agency:
The petitioners requested the transfer of the investigation to the Central Bureau of Investigation (CBI) or Central Vigilance Commission (CVC), alleging bias and threats from the CGST officials. The court found that the petitioners had concealed their status as partners in the fraudulent firms and had misled various authorities by posing as whistleblowers. Consequently, the court dismissed the petition for transferring the investigation with a cost of Rs. One Lac to be deposited with the Punjab and Haryana High Court Bar Association Advocates’ Welfare fund.

4. Petitioners' Status as Whistleblowers:
The petitioners claimed to be whistleblowers who had exposed the misdeeds of Baljinder Singh. However, the court found that the petitioners had themselves created bogus firms and were actively involved in the fraudulent activities. The court observed that the petitioners had misled the authorities by posing as whistleblowers while being partners in the fraudulent firms.

5. Allegations of Fraud and Misdeeds by Baljinder Singh:
Baljinder Singh was accused of committing fraud worth hundreds of crores in collusion with CGST officials. The petitioners had filed complaints against him, but the court found that they were also involved in the same fraudulent activities. The court noted that the petitioners had created firms to transact invoices without actual movement of goods, thereby availing and passing on fake ITC.

6. Petitioners' Involvement in the Fraudulent Activities:
The court found that the petitioners, Manjit Kumar and Hardeep Singh, had created fake firms and were involved in fraudulent transactions with Baljinder Singh. They had availed and passed on fake ITC worth crores of rupees. The petitioners had also admitted their involvement in the fraudulent activities in their statements recorded under Section 70 of the CGST Act, 2017.

7. Concealment of Facts by Petitioners:
The court observed that the petitioners had deliberately concealed their status as partners in the fraudulent firms and had misled the authorities by posing as whistleblowers. The petitioners had not disclosed their involvement in the fraudulent activities in their complaints to the CVC and CBI. The court found this to be a deliberate and intentional concealment of facts.

8. Misuse of Whistle Blowers Protection Act, 2014:
The court noted that under the Whistle Blowers Protection Act, 2014, a complaint can be dismissed if the complainant has concealed facts or misled the competent authority. In this case, the petitioners had misused the Act by posing as whistleblowers while being actively involved in the fraudulent activities. The court dismissed their petitions and imposed a cost for misleading the authorities.

Conclusion:
The court dismissed the petitions for anticipatory bail and the petition for transferring the investigation to another agency. The court found that the petitioners had concealed their involvement in the fraudulent activities and had misled the authorities by posing as whistleblowers. The petitioners were ordered to pay a cost of Rs. One Lac for their deliberate concealment of facts and misuse of the Whistle Blowers Protection Act, 2014.

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