2022 (5) TMI 1290 - DSC - GST

Seeking grant of bail - misuse of ID password of UDIN and OTP - Allegation against the Chartered Accountant - preparation of forged certificates for bogus/nonexistent companies to claim a GST refund - offence under Section 132 (1)(i) read with 132(1)(b)(c)(e)(f) CGST Act 2017 - HELD THAT - This Court is of the considered view that the allegations levelled against the applicant/accused Sunil Mehlawat are that he shared his ID password of UDIN and OTP with his friend i.e. the co-accused namely Gaurav Dhir and on 16.05.2022, co-accused Garuav Dhir informed him that he had generated some UDIN (as mentioned in the instant application) for CA certificate for filing certain refund claims pertaining to firms which were later on found to be fraud/fake. Hence, applicant/accused Sunil Mehlawat is involved in causing a loss to Government Exchequer to the tune of Rs.7,60,89,626/- and thus has committed offence under Section 132 (1)(i) read with 132(1)(b)(c)(e)(f) CGST Act 2017 and he has actively participated in the preparation of forged certificates for bogus/non-existent companies to claim a GST refund and thereby causing loss to the public exchequer. Considering the gravity and the nature of the allegations levelled against the applicant/accused and the fact that the investigation of the case is at nascent stage and further considering the fact that now a days economic offences are rampant and should be dealt with due firmness - in light of the above discussion and considering the seriousness and nature of the offence allegedly committed by the applicant/accused, this Court is not inclined to grant concession of bail to applicant/accused Sunil Mehlawat. Application dismissed.

Summary

Issues:
Bail application of the accused based on allegations of misuse of UDIN number, ID, and password, involvement in causing loss to the Government Exchequer, and participation in economic offenses under the CGST Act 2017.

Analysis:
1. Misuse of UDIN number, ID, and password:
The applicant/accused, a practicing C.A., was alleged to have shared his UDIN login ID, password, and OTP with a co-accused for generating fraudulent UDIN certificates. The defense argued that the applicant was unaware of the submission of requests by the co-accused and was not involved in misappropriation. However, the prosecution contended that the accused actively participated in preparing forged certificates for non-existent companies, leading to a loss of Rs. 7,60,89,626 to the Government Exchequer.

2. Allegations of Economic Offense:
The prosecution argued that the accused committed an economic offense under Section 132 (1)(i) read with 132(1)(b)(c)(e)(f) of the CGST Act 2017 by aiding in filing fraudulent refund claims and causing a loss to the public exchequer. The gravity of the offense was emphasized, stating that economic offenses need to be dealt with firmly due to their impact on the country's financial health.

3. Court's Decision on Bail Application:
After considering the arguments from both sides and reviewing the case file, the Court found merit in the prosecution's allegations against the accused. Citing precedents, the Court highlighted the seriousness of economic offenses and the need for a different approach to bail in such cases. Consequently, the Court denied the bail application for the accused, emphasizing the gravity and nature of the offense allegedly committed.

4. Legal Precedents and Observations:
The Court referenced legal precedents, such as the Nimmagadda Prasad case, to support its decision on denying bail to the accused. It underscored the importance of considering the nature of accusations, evidence, severity of punishment, accused's character, witness tampering risks, and public/state interests while deciding on bail in economic offense cases.

In conclusion, the District Court, Gurugram, dismissed the bail application of the accused, Sunil Mehlawat, based on the allegations of involvement in economic offenses, causing a substantial loss to the Government Exchequer, and actively participating in the preparation of forged certificates for fraudulent refund claims. The Court's decision was influenced by the gravity of the offense and the need to address economic offenses with firmness, as highlighted in legal precedents and observations regarding bail considerations in such cases.