2024 (8) TMI 837 - HC - GST

Seeking grant of bail - creation of fake firms and passing of fake ITC - HELD THAT - Considering the nature of the offence, the punishment and the material available on record and none availability of any device by using which fake firms are said to be created and the fact that co-accused Gaurav Singhal having more serious role has been released on bail by the coordinate Bench of this Court, and without expressing any opinion on the merits of the case, the Court is of the view that the applicant has made out a case for bail. Let the aforesaid applicant be released on bail on furnishing a personal bond and two heavy sureties each in the like amount to the satisfaction of the court concerned subject to fulfilment of conditions imposed - The bail application is allowed.

Summary

Issues: Bail application under Sections 132(1)(b), 132(1)(c), 132(1)(f), 132(1)(1) and 132(1)(i) of C.G.S.T. Act, 2017

In this case, the applicant filed a bail application seeking relief in a matter related to tax evasion under the C.G.S.T. Act, 2017. The case involved the creation of fake firms and issuance of bogus invoices without actual supply of goods or services, resulting in a significant amount of fraudulent Input Tax Credit (ITC) being passed on. The applicant, along with other accused persons, was arrested by the police, and their roles in the scheme were disclosed during the investigation. A criminal complaint was filed under Sections 132(1)(b)(c)(f) of the Act, naming certain individuals as masterminds and the applicant as someone who actively assisted in the commission of the offenses.

The applicant's counsel argued that no recoveries were made from the applicant, and the case relied solely on alleged confessions by other accused individuals. It was contended that the source of registration of the fake firms and passing of ITC remained unknown. The counsel also highlighted that no liability for GST had been assessed, penalties or taxes determined, and the offenses were compoundable and punishable with imprisonment up to five years. It was emphasized that the applicant had no criminal history, had been in custody without liability being established, and was willing to cooperate in the trial. Reference was made to a co-accused being granted bail by another Bench of the Court.

The D.G.G.I. opposed the bail plea, alleging that the applicant operated a racket for evading Input Tax Credit through fake firms. They pointed to a confessional statement by the applicant and the risk of the applicant repeating similar activities if released on bail. The Court considered the arguments from both sides, the seriousness of the offenses, the absence of evidence regarding the creation of fake firms, and the fact that a co-accused with a more significant role had been granted bail. Without delving into the case's merits, the Court granted bail to the applicant under specific conditions to ensure compliance and prevent interference with the trial process.

The Court ordered the applicant's release on bail upon furnishing a personal bond and sureties, subject to conditions such as non-tampering with evidence, appearance before the trial court, refraining from criminal activities, surrendering the passport, and not influencing witnesses. The prosecution was granted the right to move for bail cancellation in case of any breach of the conditions. It was clarified that the observations made in the bail order were solely for that purpose and should not influence the trial court's final decision.