2022 (5) TMI 1185 - HC - GST

Seeking grant of Bail - availment of input tax credit - floatation of bogus firms and by issuing bogus bills - HELD THAT - The evidence collected during the course of investigation clearly points towards complicity of the petitioners, who have committed a colossal fraud of about Rs.1.80 crores. Such like huge loss is virtually an attempt to shatter the economy of the country. While noticing that the petitioners are habitual offenders, this Court does not find any ground for grant of bail to the petitioners at this stage. Both the petitions, as such, are dismissed.

Summary

Issues:
Grant of regular bail in a case involving Sections 420, 467, 468, 471, and 120B of the Indian Penal Code based on a complaint regarding a non-existent firm causing loss to the State Exchequer through bogus bills and input tax credit.

Analysis:
1. Background: Two petitions were filed seeking regular bail for the petitioners involved in a case registered under various sections of the Indian Penal Code based on a complaint by a State GST Officer regarding a non-existent firm, M/s Paradise International, involved in fraudulent activities causing substantial loss to the State Exchequer.

2. Investigation Findings: The investigation revealed that the firm in question was bogus, not located at the registered address, and involved in raising bogus bills to claim input tax credit, causing a significant loss to the State Exchequer. Co-accused disclosed details of how the petitioners were involved in the scheme, including promising loans, obtaining personal documents, and setting up fake transactions.

3. Petitioners' Defense: The petitioners claimed false implication and lack of evidence against them, seeking bail on grounds of parity as one co-accused had already been granted bail. However, the State counsel argued that substantial evidence linked the petitioners to the fraudulent activities causing the loss.

4. Court's Decision: After considering the submissions, the court found the allegations substantial, indicating the petitioners' involvement in floating bogus firms and fraudulent transactions leading to a loss of about Rs. 1.80 crores to the State Exchequer. The court noted the petitioners' history of similar offenses and denied bail, emphasizing the gravity of the fraud committed.

5. Future Steps: While dismissing the bail petitions, the court directed the Trial Court to expedite the trial by examining a significant number of witnesses within the next three months. The petitioners were allowed to reapply for bail if there was a delay in the trial's conclusion, provided they cooperated with the proceedings.

In conclusion, the High Court denied bail to the petitioners due to the gravity of the fraud committed, their history of similar offenses, and the substantial evidence linking them to the fraudulent activities causing a significant loss to the State Exchequer. The court emphasized the need for expeditious trial proceedings and allowed the petitioners to reapply for bail if the trial faced undue delays.