2020 (7) TMI 342 - HC - GST

Grant of Bail - Input Tax Credit - fake bills - allegation against the petitioner who is a Chartered Accountant is of making fake firms who later on claimed input tax credit - HELD THAT - It is deemed proper to allow the bail application. This bail application is, accordingly, allowed and it is directed that accused-petitioner shall be released on bail provided he furnishes a personal bond in the sum of ₹ 1,00,000/- together with two sureties in the sum of ₹ 50,000/- each to the satisfaction of the trial Court with the stipulation that he shall appear before that Court and any Court to which the matter be transferred, on all subsequent dates of hearing and as and when called upon to do so.

Summary

Issues:
1. Bail application under Section 439 Cr.P.C.
2. Allegation of wrong input tax credit based on fake bills.
3. Enlargement on bail of co-accused.
4. Incorporation of fake firms for input tax credit.
5. Opposition by Union of India.

Analysis:
1. The petitioner filed a bail application under Section 439 Cr.P.C. in a case related to the Directorate General of GST Intelligence, Jaipur Zonal Unit, for offenses under Sections 132(1)(b)(c)(f)(l) of the Central Goods and Service Act, 2017.

2. The petitioner, a Chartered Accountant, was accused of facilitating the claim of wrong input tax credit through fake firms created for this purpose. Co-accused Vijay and Kapil, who had claimed input tax credit of over ?100 crore, were previously granted bail. The charge-sheet alleged an input tax credit of about ?7.85 crore against specific entities, with a portion already deposited, reducing the total claim to less than ?7 crore.

3. Twenty-one fake firms were incorporated, and input tax credit exceeding ?100 crore was claimed by the co-accused, who were earlier released on bail by a Co-ordinate Bench of the Court. The petitioner's involvement in incorporating fake firms to claim input tax credit was a significant contention.

4. The Union of India opposed the bail application, arguing that the petitioner played a key role in setting up fake firms to fraudulently claim input tax credit. The petitioner allegedly obtained documents and facilitated the incorporation of these fake entities for the purpose of tax credit claims.

5. After considering the contentions from both sides, the Court found it appropriate to grant bail to the petitioner. The bail application was allowed, subject to the condition that the accused-petitioner furnishes a personal bond of ?1,00,000 and two sureties of ?50,000 each. The petitioner was required to appear before the trial Court and any other relevant Court on all future hearing dates as needed.