2024 (10) TMI 1020 - HC - GST

Seeking grant of bail - creating fake companies / firms and appointing Directors / Partners / Proprietors for fraudulently availing fake Input Tax Credit and further passing on the inadmissible Input Tax Credit - HELD THAT - It appears that petitioner is in judicial custody since 09.04.2024, investigation has been completed and charge sheet has been submitted. Trial has yet to commence which shall consume considerable time. The relevant evidence of the case pertains to electronic evidence, which cannot be tampered by petitioner and other witnesses are official witnesses. Considering the nature of allegation against petitioner coupled with materials available on record and period of custody of the petitioner, the above-named petitioner is released on bail. Accordingly, the petitioner named above, is directed to be released on bail on furnishing bail bond of Rs. 1,00,000/- with two sureties of the like amount each to the satisfaction of learned Additional Chief Judicial Magistrate, Special Court, Economic Offences, Jamshedpur in connection with Complaint Case No. 1281 of 2024, subject to fulfilment of conditions imposed - bail application allowed.

Summary

Issues:
Accused in a case under CGST Act, 2017 involving fake companies and fraudulent activities.

Analysis:
The petitioner is accused in a case registered under Sections 132(1)(b) and 132(1)(c) of the Central Goods and Service Tax Act, 2017, related to creating fake companies and fraudulently availing Input Tax Credit. The FIR alleges that the petitioner, as an individual, is involved in setting up fake companies/firms and appointing individuals to carry out fraudulent activities resulting in a loss of over Rs. 522.91 Crores to the Government Exchequer without actual supply of goods. The petitioner denies the allegations, claiming false implication and citing lack of criminal antecedents, willingness to cooperate with the trial, and reliance on electronic evidence as material evidence in the case.

The petitioner sought bail based on the argument that no offense under IPC is made out, and the maximum punishment under the CGST Act is five years. The defense also highlighted the petitioner's cooperation and commitment to attending all trial dates without tampering with evidence or influencing witnesses. The prosecution opposed bail, emphasizing direct allegations against the petitioner for creating fake companies and engaging in fraudulent activities related to Input Tax Credit. It was noted that the petitioner is a director of multiple companies and has allegedly created numerous fake firms.

The court, after considering the facts, nature of allegations, available evidence, and the period of the petitioner's custody, granted bail. The petitioner was directed to furnish a bail bond of Rs. 1,00,000 with two sureties, subject to conditions including mandatory physical presence at trial, refraining from similar offenses, and avoiding influence on prosecution witnesses. Violation of these conditions would result in bail cancellation and immediate custody by the trial court. The bail application was allowed, and the petitioner was ordered to be released on bail.