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2019 (11) TMI 37 - HC - GSTGrant of Bail application - offence under Section 132(1)(e) of Central Goods Service Tax Act, 2017 - input tax credit - HELD THAT - The partners of the firm have been granted protection by the Apex Court and petitioner is in custody from 28.08.2019; the total amount which as per Department is wrongly claimed after deposit of ₹ 3.33 Crores is less than ₹ 5 Crore, I deem it proper to allow the bail application. Bail application allowed.
Issues:
Bail application under Section 439 of Cr.P.C. for offence under Section 132(1)(e) of Central Goods & Service Tax Act, 2017 - Rejection of bail application by Sessions Judge, Jaipur Metropolitan, Jaipur - Claim of wrongly claimed Input Tax Credit by Padmavati Industries - Petitioner's role as Manager and Authorized signatory - Claim of transactions through Bank transactions - Stay obtained by owners of Padmavati Industries from coercive action - Allegation of fake invoices and wrongful claim of tax credit - Petitioner's share in the firm's profit - Amount of disputed tax credit - Opposing arguments by Union of India - Verification of existence of Firms/Companies by the Department - Precedents cited by both parties - Grant of bail by High Court. Analysis: The bail application under Section 439 of Cr.P.C. was filed by the petitioner concerning an offence under Section 132(1)(e) of the Central Goods & Service Tax Act, 2017. The petitioner, who was the Manager and Authorized signatory of Padmavati Industries, had his bail application rejected by the Sessions Judge, Jaipur Metropolitan, Jaipur. The Department alleged that Padmavati Industries wrongly claimed ?7.12 Crore Input Tax Credit. The petitioner argued that all transactions were conducted through Bank transactions and the Industries from whom purchases were made were active as per the Department's records. Additionally, an amount of ?3.33 Crore was deposited with the Department, bringing the total disputed tax credit amount below ?5 Crore, which would make the offence bailable. The petitioner also highlighted that the owners of Padmavati Industries had obtained a stay on their arrest from the Apex Court. The petitioner cooperated with the investigation, appearing before the Departmental Authorities multiple times. The Union of India vehemently opposed the bail application, citing discrepancies in the firm's turnover and alleged wrongful claims of Input Tax Credit. The Union of India argued that seven entities from whom the firm claimed to have purchased material were non-existent, and the Input Tax to the tune of ?7.12 Crore was wrongly claimed. Furthermore, it was contended that the petitioner, having a 40% share in the firm's profit, could not escape liability merely by depositing ?3.33 Crore. The High Court considered the contentions of both parties, noting that the partners of the firm had been granted protection by the Apex Court and that the total disputed amount, after the deposit of ?3.33 Crores, was less than ?5 Crore. In light of these factors, the High Court allowed the bail application. The Court directed the accused petitioner to furnish a personal bond of ?10,00,000/- and two sureties of ?5,00,000/- each. Additionally, the petitioner was instructed to deposit the passport with the Court and seek prior permission before leaving the country. The Court emphasized the importance of appearing before all subsequent hearings as required.
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