2022 (8) TMI 390 - DSC - GST

Seeking grant of anticipatory bail - allegation of availment of fraudulent ITC from fictitious firms and passing on the said fraudulent ITC with an intention to evade payment of GST - HELD THAT - In the present case there are allegations that the Page no.2 of total 4 applicant/accused is managing three firms i.e. M/s Shreya Impex, M/s Akshita Enterprises and M/s Modern Metal Industries. During investigation Smt.Babli Sharma, Proprietor of M/s Akshita Enterprises made the statement in the Office of Commissioner, GST that she has no idea of the business undergone by the said firm and all the affairs are being managed by the applicant/accused. Sh. Vikas Gupta Proprietor of M/s Modern Metal Industries also made a statement before the office of Commissioner GST that the applicant/accused used to pay him Rs.15,000/- to Rs.30,000/- per month for expenses and all the documents are maintained by the applicant/accused and he does not know about the turnover or income tax return of the said firm. Statements of Smt. Babli and Sh. Vikas gupta, Proprietors of other two firms prima facie establishes that the accused was managing these firms. There are allegations of fraudulently availing Input Tax Credit(ITC) of Rs.10 crores approximately from 30 non existing firms. In the additional reply filed on behalf of department it is stated that on verification the mobile numbers of all the vendors were found to be fake. The allegations against the applicant/accused are grave and serious in nature. Investigation is at the initial stage. The applicant/accused is the main conspirator and beneficiary of the alleged cheated amount. The custodial interrogation of the applicant/accused is required. In view of aforesaid facts and circumstances, anticipatory bail cannot be granted - bail application dismissed.

Summary

Issues:
1. Anticipatory bail application under Section 438 Cr. PC
2. Allegations of fraudulent ITC availing and GST evasion
3. Management of non-existing firms by the accused
4. Compliance with undertaking and non-deposit of committed amount

Analysis:

1. The judgment pertains to the disposal of an anticipatory bail application under Section 438 Cr. PC filed by the applicant/accused. The applicant argued that he had cooperated with the investigating agency, attended all summons, and assisted during searches. He contended that there was no need for coercive steps as the evidence was primarily documentary and available on the GST Portal. The applicant cited precedents from the Delhi High Court and Allahabad High Court to support his case. On the contrary, the CGST department opposed the bail application, alleging that the accused had fraudulently availed Input Tax Credit (ITC) from fictitious firms to evade GST payment. The department highlighted the seriousness of the allegations and non-compliance with previous orders.

2. The allegations against the accused included availing fraudulent ITC amounting to approximately Rs.9.53 crores from non-existing firms under the jurisdiction of the Commissionerate. Additionally, Rs.49 lacs were obtained from non-existent firms under another Commissionerate. The accused was accused of passing on the fraudulent ITC with the intent to evade GST payment. The CGST department argued that the gravity of the offense and the amount involved warranted the dismissal of the bail application.

3. The judgment detailed the management of three firms by the accused, where the proprietors of two firms stated that the accused managed the affairs and financial transactions of the businesses. Statements from these proprietors indicated the accused's active involvement in the operations of the firms. The accused was alleged to have paid monthly expenses to one proprietor and maintained all documents, indicating his control over the businesses.

4. The accused had agreed to deposit a specified amount within a set timeframe and provide certain documents to reflect a lesser liability. However, the accused failed to comply with the undertaking, leading to non-deposit of the committed sum. The court noted the non-compliance and the accused's involvement in a well-planned conspiracy to fraudulently avail ITC and evade GST payment. Considering the seriousness of the allegations, the court declined to grant anticipatory bail, emphasizing the need for custodial interrogation due to the accused's role as the main conspirator and beneficiary of the alleged fraudulent activities. The judgment concluded by dismissing the bail application and ordering the distribution of the order copy to the applicant's counsel.