2019 (7) TMI 840 - DSC - GST

Grant of Bail - wrongful availment of input tax credit - HELD THAT - In the case in hand, applicant / accused is stated to be the proprietor of M/s. Swift Enterprises, whereas, his father and brother are stated to be the Directors of M/s. Megabyte I.T. Pvt. Ltd. and his employee Rakesh Kumar Gupta is stated to be the proprietor of firm namely M/s. I.T. Solution. The applicant/ accused is stated to be managing entire affairs of all the three firms and IO has mentioned in his reply that by way of circular movement of invoices by way of fictitious sales without actual supply of goods, input tax credit (ITC) to the tune of more than ₹ 20 crores has been wrongfully availed by the applicant/ accused causing loss to the government exchequer. The evidence has been collected by the IO showing that various invoices were issued (inter-se) by the abovesaid three firms and all the said three firms are allegely being manged by the applicant / accused. Considering the totality of the facts and circumstances, nature of allegations and the initial stage of investigation, I am not inclined to grant bail to the applicant/ accused Supreet Singh Bakshi. Bail application dismissed.

Summary

Issues: Bail application in a case involving fraudulent evasion of taxes exceeding ?20 Crore through wrongful availing of input tax credit by issuing invoices without actual supply of goods.

Analysis:
- The applicant/accused is alleged to have fraudulently evaded taxes exceeding ?20 Crore by wrongfully availing input tax credit through issuing invoices without actual supply of goods from three different firms managed by him.
- The defense counsel argued that the accused is not involved in the alleged offense and that his custodial interrogation is unnecessary. It was contended that the adjudicating authority can address the issuance of invoices during adjudication proceedings. The defense highlighted the accused's cooperation with the investigation and his role as the sole provider for his family, urging for bail.
- On the contrary, the prosecution, represented by the Senior Standing Counsel and the Investigating Officer, asserted that substantial evidence has been gathered during the investigation, indicating the wrongful availing of input tax credit by the accused through circular movement of invoices among the three firms. They emphasized the gravity of the offense and opposed the grant of bail.
- The court noted that the accused managed all three firms involved in the fraudulent activity and wrongfully availed input tax credit through fictitious sales without actual supply of goods, causing a significant loss to the government exchequer. The defense did not contest the lack of actual supply against the claimed input tax credit. Considering the seriousness of the allegations, the early stage of investigation, and the overall circumstances, the court declined to grant bail to the accused.
- Consequently, the bail application of the accused was dismissed and disposed of. The court ordered the issuance of a copy of the order for immediate action.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented by both parties, and the court's reasoning leading to the decision to deny bail to the accused in the case of fraudulent tax evasion.