Bail denied to accused of fake invoices due to ongoing investigations to unearth more fake suppliers

[CA Bimal Jain]

The Hon’ble Supreme Court of India in Basudev Mittal v. Union of India [2023 (1) TMI 793 - SC ORDER] has refused to interfere with the order passed by the Hon’ble Chhattisgarh High Court, wherein bail was denied to the accused in the alleged matter for availment of wrong Input Tax Credit (“ITC”), on the ground that investigations were still going on for detecting more fake suppliers and investigations might be hampered if bail was granted.

Facts:

Basudev Mittal (“the Petitioner”) is the proprietor of M/s Shree Sainath Enterprises, Raipur. A search was conducted at its residential premises on March 28, 2022 in order to recover documents related to evasion of the Goods and Services Tax (“GST”). During search and scrutiny of documents, it was found that the Petitioner purchased iron scrap from various firms whose GST Registrations had already been cancelled and has fraudulently availed ITC of more than INR 5 Crore thereby committing offence under Section 132(1)(c) of the Central Goods and Service Tax Act, 2017 (“the CGST Act”). The Petitioner was taken into custody on March 30, 2022.

The Petitioner had applied for bail under Section 439 of the Code of Criminal Procedure (“the CrPC”) on the ground that it was arrested in a total false case of GST evasion and further that the alleged offence falls under the category of bailable offences. However, the Hon’ble Chhattisgarh High Court vide order dated July 15, 2022 (“the Impugned Order”) denied the Petitioner’s request of bail, on the ground that further investigation is going on to find out more suspicious and fake suppliers with whom the Petitioner is alleged to have made transactions in order to avail ITC illegally. Further, if the Petitioner is released on bail, there is a possibility of it hampering with the evidence and interfering with the investigation.

Being aggrieved this special leave petition is filed.

Issue:

Whether the Petitioner is entitled to get bail under Section 439 of the CrPC?

Held:

The Hon’ble Supreme Court of India in 2023 (1) TMI 793 - SC ORDER held as under:

• Denied Bail to the Petitioner.
• Declined to interfere with the Impugned Order at this stage, where further investigation is going on and there is probability of detecting more fake and suspicious firms.

Relevant Provisions:

Section 132(1)(c) of the CGST Act:

“Punishment for certain offences-

(1) Whoever commits, or causes to commit and retain the benefits arising out of, any of the following offences, namely:-

(c) avails input tax credit using the invoice or bill referred to in clause (b) or fraudulently avails input tax credit without any invoice or bill;

(Author can be reached at [email protected])