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2023 (4) TMI 343 - HC - GSTSeeking grant of bail - wrongfully claiming, utilizing and passing bogus input tax credit on the strength of forged documents purportedly issued in th - e name of non-existent and ghost business entities created and operated by them - whether there exists any prima facie materials or accusations against the accused person and the accused has otherwise made out a case for grant of bail in his favour? - HELD THAT - There is prima facie allegations against these three petitioners and other for operating numbers of fictitious and ghost business entities for fake transaction with existing companies as well as non-existing company and by means of fake invoices, allegedly availed crores of input tax credit without physical purchase and supply of goods, which according to the GST Department has resulted fraud upon the State Exchequer to the tune of Rs.316 crores and some odd which is a serious allegation against these petitioners for commission of economic offences. It is true that the petitioners are in custody for little more than seven months and charge sheet has already been filed in the meantime, but considering the allegation of huge amount of financial fraud being leveled against the petitioners by itself in the facts and circumstance of the case not entitle them for grant bail at this stage. Besides, the alleged manner and method of commission of offence involving such huge amount of tax evasion by way of issuing fake invoices and availing input tax credit without physical purchase and supply of goods in the guise of business of non-existing entities with existing and non-existing companies and thereby, resulting in defraud of State Exchequer for such a huge amount, would by itself constitute prima facie materials against the petitioners for not considering their bail applications positively. In such circumstance and taking into consideration the availability of prima facie allegations against the petitioners for their involvement in commission of economic offences to the tune of Rs.316 crores and some odd and keeping in mind the fact that some of the co-accused are still at large avoiding their apprehension, this Court does not consider it proper to extend the benefit of bail to the petitioners. The bail applications of the petitioners stand rejected.
Issues Involved:
1. Bail applications under Section 439 Cr.P.C. 2. Allegations of wrongful claiming, utilizing, and passing bogus input tax credit under OGST Act. 3. Arguments by petitioners for bail. 4. Arguments by CT & GST opposing bail. 5. Court's consideration and decision on bail applications. Summary: Issue 1: Bail Applications Under Section 439 Cr.P.C. Since all these three bail applications arise out of one and same case in 2(c) CC Case No. 27 of 2022, for convenience, the same are heard together and disposed of by this common order with consent of the learned counsel for the respective parties. Issue 2: Allegations of Wrongful Claiming, Utilizing, and Passing Bogus Input Tax Credit Under OGST ActThe allegations as set out in the prosecution report which eventually led to institution of complaint by the Additional Commissioner of CT & GST, Rourkela, are that on the basis of confidential information of involvement of Directors as well as Ex-Directors of three companies...for wrongfully claiming, utilizing and passing bogus input tax credit on the strength of forged documents purportedly issued in the name of non-existent and ghost business entities created and operated by them, without physical receipt and supply of goods... It is claimed in the investigation that M/S. Sairam Ingot Private Limited is a physically non-existent company... petitioner Dhanman Shaw and his family members continued to control its activities... utilized the said company for passing of bogus input tax credit... petitioner Dhanman Shaw was alleged to have operated the activities of said non-existent company and caused evasion of GST running to crores of Rupees... ...petitioner Dhanman Shaw and his family members continue to act as de-facto Directors/operators of the companies and the three petitioners along with others have used false tax invoices issued in the name of non-existent and ghost business entities for wrongfully passing of bogus input tax credit... Issue 3: Arguments by Petitioners for BailMr.Biswajit Nayak, learned counsel for the petitioner- Niku Singh in BLAPL No. 9319 of 2022...has submitted that the petitioner is no way connected in this case and all the allegations are directed against the Directors of three companies... Mr.B.Mansinga, learned counsel for the petitioners Dhanman Shaw in BLAPL No. 9835 of 2022 and Ram Bharose Shaw in BLAPL No. 9836 of 2022 has submitted that the petitioners were neither Directors of M/S. Swastik Ingot Private Limited nor M/S. Sunayana Metal Industries Limited... ...the petitioners have cooperated the Authorities in the course of investigation and thereby, all the three petitioners are entitled to bail on that score... Issue 4: Arguments by CT & GST Opposing BailMr. Sunil Mishra, learned counsel for the CT & GST has submitted that the petitioners are not merely fraudsters, but are accused of committing economic offence upon the State by defrauding approximately an amount of Rs.316.33 crores... ...the petitioners are influential persons and have the capacity to influence the witnesses in case they are being released on bail and they also pose flight risks... ...it would not be proper to grant bail to the petitioners as the petitioners can influence the witnesses in the course of trial... Issue 5: Court's Consideration and Decision on Bail ApplicationsAfter having heard the rival submissions for the parties, this Court clarifies that for the limited purpose of considering the bail application of a person accused of an offence, neither it is desirable nor is it necessary to weigh the evidence meticulously... ...there exists any prima facie materials or accusations against the accused person and the accused has otherwise made out a case for grant of bail in his favour... ...the authority under GST after making a detailed investigation has submitted prosecution report against the petitioners for commission of offences U/Ss. 132(1)(b)(c)(f) & (l) of the OGST Act... ...it appears that there is prima facie allegations against these three petitioners and other for operating numbers of fictitious and ghost business entities for fake transaction with existing companies as well as non-existing company... ...the petitioners have relied upon the decisions of this Court in Ajaj Ahamad, Rohit Berlia, Pramod Kumar Sahoo and Smruti Ranjan Mohanty (supra), but the magnitude of allegation of tax evasion in each case therein appears to be small as compared to the amount alleged in the present case... ...no liberal approach should be adopted, especially when the extent of economic offence runs to more than hundreds of crores... ...considering the allegation of huge amount of financial fraud being leveled against the petitioners by itself in the facts and circumstance of the case not entitle them for grant bail at this stage... Hence, the bail applications of the petitioners stand rejected. Since cognizance has already been taken as stated at the Bar, trial be expedited, if there is no other legal impediment. Accordingly all the three BLAPLs stand disposed of.
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