2024 (8) TMI 901 - HC - GST

Seeking grant of regular bail - freezing of bank account of petitioner - wrong claim of Input Tax Credit - The first allegation against the petitioner is that he claimed amount of Rs. 3,65,23,076/- by way of ITC, but that tax amount was not deposited by the firms, which supplied the goods - HELD THAT - As per provisions of Section 132 of the CGST Act, if a person fraudulently obtains refund, then he is liable to be prosecuted under Section 132 of the CGST Act. Such prosecution can only be launched with the previous sanction of the Commissioner as per Section 132 (6) of the CGST Act. Since it is a special Act, so, it is debatable whether provisions contained in Code of Criminal Procedure are applicable for prosecution of such person by lodging FIR. The second allegation against the petitioner is that he furnished fake GST Certificate in the name of his alleged firm M/s Salasar Balaji Industry at the time of opening bank account, in which there are debit and credit entries of Rs.196 crores on each side - HELD THAT - The Challan in this case has already been presented. Regarding first allegation, complaint under Section 132 of the CGST Act is maintainable. Regarding second allegation that the petitioner has used fake Certificate for opening bank account, no evidence has been collected, whether from the bank account in question, the petitioner has cheated anybody or not. The entire case is based on the documentary evidence. The case is triable by Magistrate. Culpability of the petitioner would be decided during trial of the case - since completion of trial will take a long time, no useful purpose would be served by keeping the petitioner behind bars for a long time. The petitioner is directed to be released on regular bail, on his furnishing bail bonds/surety bonds in the sum of Rs.10,00,000/-, with one surety of the like amount, to the satisfaction of learned Trial Court/Duty Magistrate concerned subject to fulfilment of conditions imposed - bail application allowed.

Summary

Issues:
Grant of regular bail under Section 439 Cr.P.C in FIR involving Sections 420, 465, 468, 471, and 120-B IPC, 1860.

Analysis:

Issue 1: Allegations of Wrong Claim of Input Tax Credit (ITC)
The petitioner argued that the allegations of wrong ITC claim are false as he made genuine purchases from registered firms, but those firms did not pay the tax to the Government. The petitioner contended that any fraud was committed by the selling dealers/suppliers, not him. An ex-parte order imposing tax, penalty, and interest was passed against the petitioner, who has appealed against it. The petitioner highlighted that penal action under Section 74 of the CGST Act is the appropriate course, not invoking IPC provisions.

Issue 2: Submission of Fake GST Certificate
The petitioner was accused of submitting a forged GST certificate to open a bank account for M/s Salasar Balaji Industry. The State counsel alleged substantial business transactions and cash withdrawals from the account, indicating fraudulent activities. The petitioner was arrested and remained in custody. The court noted that the police did not investigate this aspect thoroughly. The case is based on documentary evidence, and the culpability will be determined during trial.

Judgment
The court allowed the petition for regular bail, directing the petitioner's release on furnishing bail bonds and surety bonds. The petitioner must comply with conditions, including surrendering the passport, providing a mobile number to the court, not changing residence without notice, and attending all court hearings. The court clarified that bail could be canceled for non-compliance. The decision was made considering the lengthy trial process and without expressing any opinion on the case's merits.