2022 (12) TMI 820 - HC - GST

Seeking grant of Regular Bail - availment of irregular input tax credit - creation and operation of bogus firms not only for availing inadmissible input tax credit (ITC) on the strength of fake invoices but also for passing on of fraudulent ITC to buyers on the strength of invoices which were not accompanied with any goods - HELD THAT - Both the petitioners are alleged to have created bogus firms for the purpose of availing input tax credit (ITC) on the basis of fake invoices. The total amount involved is stated to be more than Rs.31 crores. However, this Court finds that the petitioners have been behind bars for a substantial period of 1 year and 4 months and the prosecution agency has not chosen to prosecute the accused for any of the offences under the IPC and the only offence for which they are sought to be prosecuted is offence under Section 132 of the Central Goods and Services Tax Act, 2017 read with Section 20 of the Integrated Goods and Services Tax Act, 2017 wherein a maximum sentence of rigorous imprisonment for 5 years is prescribed. Conclusion of trial is likely to consume time inasmuch as the trial has not even commenced till date and 13 prosecution witnesses have been cited. In these circumstances, further detention of the petitioners would not be justified. Both the petitions, as such, are accepted and the petitioners are ordered to be released on regular bail on their furnishing bail bonds/surety bonds to the satisfaction of learned trial Court/Chief Judicial Magistrate/Duty Magistrate concerned. Application allowed.

Summary

Issues involved:
Grant of regular bail in proceedings under Section 132 of the Central Goods and Services Tax Act, 2017 read with Section 20 of the Integrated Goods and Services Tax Act, 2017 based on allegations of creating and operating bogus firms for fraudulent input tax credit.

Detailed Analysis:

1. Allegations and Charges:
The accused were alleged to have created a network of bogus firms for availing inadmissible input tax credit and passing on fraudulent ITC to buyers. The accused faced proceedings under Section 132 of the CGST Act, 2017 and Section 20 of the IGST Act, 2017. The total amount involved in the fraudulent activities exceeded Rs. 31 crores.

2. Petitioners' Submissions:
The petitioners claimed they were falsely implicated, lacked convincing evidence against them, and argued for bail due to the substantial time already spent in custody. They highlighted that the maximum sentence for the offenses was 5 years and that the trial had not yet started.

3. State's Opposition:
The State opposed bail, emphasizing the significant amount siphoned off by the accused and the severity of the offenses. The main accused was identified as the petitioner Sunil Kumar, while the other petitioner faced additional proceedings under Section 340 Cr.P.C. Charges were yet to be framed, and multiple prosecution witnesses were cited.

4. Court's Decision:
Considering the arguments, the court noted the petitioners' lengthy detention without prosecution for IPC offenses. The court found the delay in trial commencement and the likelihood of a protracted trial. Given these factors, the court deemed further detention unjustified and granted bail to the petitioners upon furnishing necessary bonds.

5. Conclusion:
Both petitions were accepted, and the petitioners were ordered to be released on regular bail based on the circumstances presented. The court directed the petitioners to provide bail bonds/surety bonds to the satisfaction of the trial court or relevant judicial authority.

This detailed analysis outlines the key aspects of the judgment, including the allegations, submissions, opposition, court's decision, and the final conclusion leading to the grant of bail to the petitioners.