2023 (11) TMI 1052 - DSC - GST

Seeking grant of bail - avalling and passing on of ineligible ITC on the strength of fake invoices issued without actual supply of goods - HELD THAT - In the present matter, the tax liability above bailable offence of 5 Cr. is Rs. 38,81,443, the entities who supplied articles to the applicant are active on GST Portal but not verified by the department, there is no chance of accused fleeing from the country nor he is a habitual offender and applicant is no more required for custodial interrogation when the custodial interrogation of applicant was not sought by the department and applicant was sent to judicial custody directly on 14.10.2023, the offence falls within preview of Section 41 A CrPC having punishment of 5 years but no notice u/s 41 A CrPC has been given, therefore, in view of the abovesaid facts and circumstances, the present applicant Iftikar Malik is admitted to bail, on furnishing personal bond in the sum of Rs. 1,00,000/- with two sureties of like amount and subject to the satisfaction of Ld. MM/Ld. Link MM/Ld. Duty MM with the conditions imposed. Bail application disposed off.

Summary

Issues involved:
The issues involved in this case include fraudulent availing of Input Tax Credit (ITC) worth Rs. 5,38,81,443, non-existence of major suppliers, jurisdictional concerns, compliance with Section 41A of CrPC, and the grant of bail to the accused.

Fraudulent Availing of ITC:
The accused admitted to availing ineligible ITC worth Rs. 5,38,81,443 from various firms without actual supply of goods, leading to a significant loss to the government exchequer. The accused disclosed purchasing goods without bills from unregistered suppliers and obtaining fake invoices through local agents, thereby admitting to wrongful availment and utilization of ITC.

Non-Existence of Major Suppliers:
Upon investigation, major suppliers of the accused were found to be non-existent at their registered principal places of business. This raised suspicions regarding the legitimacy of the transactions and the authenticity of the ITC claimed by the accused.

Jurisdictional Concerns:
The defense argued that entities outside the jurisdiction of CGST West, such as MK Trading Company, Malik Junk Merchant, and Hitachi Trading Company, should be excluded from the calculation of the alleged ITC. After removing the ITC of these entities, the remaining amount falls within the threshold for bailable offenses.

Compliance with Section 41A of CrPC:
The defense contended that the accused was arrested without following the mandatory provisions of Section 41A of the CrPC. They argued that the accused should have been granted bail as the alleged offenses were bailable, and custodial interrogation was no longer necessary.

Grant of Bail:
Considering the circumstances and legal precedents, the court granted bail to the accused on the condition of furnishing a personal bond and complying with various requirements, including providing contact details to the investigating officer, maintaining communication, attending CGST office periodically, refraining from influencing witnesses, and not leaving the country without court permission.