2022 (6) TMI 1078 - HC - GST

Seeking grant of bail - wrongful availment of Input Tax Credit - by procuring invoices from fake and fictitious firm - supply of goods without payment of tax and without issuing invoices - bailable offence or not - non-cognizable offence or not - HELD THAT - Considering the fact that the allegation against the present applicant is of wrongfully utilizing Input Tax Credit of Rs.6, 95, 32, 472/- and supplied taxable goods without payment of taxes and without issuing invoices to the tune of Rs.27, 70, 559/- totalling Rs.7, 23, 03, 031/- and that offence under the Act are bailable and non-cognizable except for the offence under Section 132 (5) of the Act further considering that the applicant can be punished with maximum sentence of 5 years with fine he is in jail since 27.10.2021 further considering that Proprietor of the firm namely Rohan Tanna and Abhishek Pandey have already been enlarged on bail by the co-ordinate Bench and also considering that the applicant in the bail application raised a ground that the offence is compoundable in nature and therefore this Court after considering all the aspects of the matter particularly the period of detention and the amount involved finds appropriate that if the applicant deposits Rs.70 lakhs under protest or admission of the disputed amount which would be adjusted in accordance with law the applicant can be enlarged on bail with the conditions imposed. Bail application allowed.

Summary

Issues:
Grant of bail in connection with a case under Sections 132 (1)(a) & 132 (1)(c) of the Central Goods and Service Tax Act, 2017.

Detailed Analysis:

1. Applicant's Submission:
The applicant, a Proprietor of a trading firm, was arrested for alleged tax evasion. The defense argues innocence, claiming false implication and lack of due procedure. It is contended that the offense is compoundable and bailable for amounts up to Rs. 5 crores. Co-accused have been granted bail. The defense asserts cooperation with authorities, challenges the allegations, and highlights flaws in the GST system for cross-checking Input Tax Credit.

2. Opposing Counsel's Argument:
The prosecution opposes bail, alleging habitual involvement in fake invoice procurement leading to tax evasion. The defense's conduct during investigation is questioned, emphasizing violations of tax laws. Legal precedents are cited to stress the seriousness of economic offenses and the need for a stringent approach towards bail in such cases.

3. Court's Decision:
Considering both arguments, the court notes the substantial amount involved in the alleged offenses and the potential severity of punishment. However, it acknowledges the applicant's prolonged detention without completion of the investigation. Previous bail grants to co-accused are also considered. The court orders bail upon the deposit of Rs. 70 lakhs, subject to various conditions including personal bond, appearance before the trial court, property declaration, and non-alienation of assets.

4. Precedents and Legal Principles:
The judgment references legal principles emphasizing the seriousness of economic offenses, the need for evidence supporting charges during bail considerations, and the importance of securing public interest in such cases. The court balances these principles with the specific circumstances of the case to arrive at a decision regarding bail.

5. Conclusion:
The court allows the bail application under specified conditions, taking into account the nature of the alleged offenses, the period of detention, and the amount involved. The decision reflects a balance between the seriousness of economic crimes and the individual's rights pending trial, ensuring compliance with legal requirements and protection of public interest.