2022 (6) TMI 356 - DSC - GST

Seeking grant of bail - wrongful availment and passing of Input Tax Credit - whimsical and arbitrary action on the part of the investigating agency, for treating the person committing graver offence with softer glove - HELD THAT - GST has been hailed as a major tax reform in the post liberalisation era to check the cascading effects of taxation. However, unfortunately, some of the mischievous brains are busy removing the nuts and bolts from the vehicle of tax reforms to hinder the forward course of growth. The Courts of this country cannot afford to take a lenient view against such mischief - Economic offences cannot be treated as an ordinary crime and deserves to be dealt with sternly. In the case at hand, applicant/accused is a key member of a crime syndicate involved in a multi crores GST fraud. As per Section 132 of CGST Act, not only the person who issued goodsless invoices but even the person who causes the issuance of such invoices is also liable to be prosecuted - the contention of Ld. Defence counsel that he has not been dealt evenly by the investigating agency as compared with principal offenders i.e. the persons behind M/s Imperial Merchants Pvt. Ltd. deserves some consideration. As per the remand application of the complainant department, it is reported that Sanjeev Goel, controller of M/s Imperial Merchants Pvt. Ltd has admitted that he issued goodsless invoices involving Input Tax Credit to the tune of Rs.69.13 crores. Admittedly, the liability of the applicant/accused reported by the complainant department is much less as compared to M/s Imperial Merchants Pvt. Ltd. Therefore, letting off persons behind M/s Imperial Merchants Pvt. Ltd is infact disturbing. The failure of the investigating agency to deal with M/s Imperial Merchants Pvt. Ltd sternly would not absolve the applicant/accused of his individual liability. Thus, the contention of Ld. Defence counsel that the applicant/accused also deserves bail as others have not been arrested is merit less and the same deserves to be discarded. The investigations in the instant matter smacks of whimsical and arbitrary action on the part of the investigating agency. It is infact baffling as to why two accused persons have been treated with different gloves by the investigating agency and the person whose role appears to be more graver and serious with respect to the alleged offences seems to have been treated with a softer glove. Considering the nature of offence, seriousness of allegations and the crucial juncture of the investigation, there are no merits in the application at hand and the same is accordingly dismissed.

Summary

Issues:
Grant of bail to the applicant/accused in a GST fraud case involving issuance of goods-less invoices and fraudulent Input Tax Credit (ITC).

Analysis:
The applicant/accused sought bail contending that no offence is made out against him and that he had already paid the due GST amount for the relevant period. He argued that he was falsely implicated based on the disclosure of an individual from a different company and alleged that the investigating agency favored other culprits. The applicant/accused denied any business transactions with certain firms and emphasized his cooperation in the ongoing investigations. The defense highlighted the applicant's societal roots and requested bail.

The complainant department opposed the bail application, presenting incriminating documents recovered during the search of the premises, indicating fake firms and suspicious transactions. They revealed that the applicant/accused was involved in issuing goods-less invoices and availing fraudulent ITC for M/s Laxmi Trading Company. The department argued that the applicant/accused had control over multiple entities suspected of fraudulent activities, and his past was tainted with financial frauds.

The Judge emphasized the seriousness of economic offences, citing relevant legal precedents. The Court noted the involvement of the applicant/accused in a multi-crore GST fraud syndicate and the liability under Section 132 of the CGST Act for causing the issuance of goods-less invoices. The Judge rejected the defense's arguments of isolation from M/s Laxmi Trading Company, considering the evidence provided by witnesses. The Court dismissed the defense's claim of lower liability compared to M/s Imperial Merchants Pvt. Ltd and criticized the investigating agency's differential treatment of accused parties.

The Judge expressed concerns about the arbitrary actions of the investigating agency and highlighted the need for fair investigations to uphold public trust. The order was directed to the Principal Director General of the investigating department to address the raised concerns and ensure a transparent investigation. Considering the gravity of the allegations and the ongoing investigation stage, the bail application was dismissed, emphasizing the importance of maintaining public confidence in the legal process.

The Court's decision highlighted the complexity of the case, the significance of fair investigations, and the need to address economic offences with severity. The judgment underscored the responsibility of investigating agencies to conduct thorough and unbiased inquiries to uphold the rule of law and public trust in the legal system.