2021 (2) TMI 555 - DSC - GST

Grant of anticipatory bail - origin of fake invoices and layer by layer of firms was revealed - issuance of only paper invoices and no goods were actually received - HELD THAT - Though it is submitted in bail application that accused Sushil Goel do not play any day to day role in purchase of the company however this fact cannot be appreciated at this stage when there is a active involvement of the company is found to have alleged for using fake invoices through ITC. Ld. Counsel relied upon the judgment of Apex Court in case titled C. PRADEEP VERSUS THE COMMISSIONER OF GST AND CENTRAL EXCISE SELAM ANR. 2019 (11) TMI 659 - SUPREME COURT that the accused was released on bail upon depositing 10% of total liability and in present case more than 10% has been deposited therefore, the present accused persons be released on anticipatory bail however accused appears to be knowingly used fake ITC in commission of offences. The offences caused grave economic loss to exchequer and this practice appears writ large in business community. The offence of fake ITC bill u/s 132 is not dependent upon the adjudication proceedings. Considering the seriousness of offence and the modus operandi in commission of said offence and the fact that it caused grave economic loss to exchequer, the applicants/accused Pawan Goel and Sushil Goel are not entitled to be released on anticipatory bail hence the present application qua accused Pawan Goel and Sushil Goel stands dismissed.

Summary

Issues:
Anticipatory bail application under section 438 Cr.PC for accused Pawan Goel and Sushil Goel.

Analysis:
The judgment delivered by AJAY KUMAR JAIN, SPL. JUDGE, NDPS/N. DELHI, pertains to the anticipatory bail application filed on behalf of accused Pawan Goel and Sushil Goel. The case involves a search conducted under the CGST Act at various premises related to KMG Industrial Traders Ltd and other firms, revealing discrepancies in the supply of goods and the existence of fake invoices. Accused individuals were arrested, and a significant amount of Input Tax Credit (ITC) availed by the accused company was highlighted during the investigation.

The defense argued that no stock discrepancies were found during the search, the liability remained unadjudicated, and the accused had cooperated with the investigation. They emphasized the willingness to deposit a substantial amount to safeguard revenue, citing precedents where anticipatory bail was granted after depositing a percentage of the liability. The defense stressed the age and size of the company, the accused's reputation, and the potential adverse impact on employees and the business if the accused were arrested.

However, the prosecution contended that the mere deposit of a sum was insufficient grounds for anticipatory bail, referencing judgments that upheld the statutory power for arrest under GST laws. They argued that the seriousness of the offense, its impact on the economy, and the absence of protection from arrest in similar cases warranted denying anticipatory bail.

After hearing arguments from both sides, the judge found that the accused individuals, as directors of the company, were actively involved in using fake ITC through fraudulent invoices, causing significant economic loss to the exchequer. Drawing on precedents where serious economic offenses led to denial of bail, the judge dismissed the anticipatory bail application for Pawan Goel and Sushil Goel, considering the gravity of the offense, the modus operandi involved, and the impact on the economy.

In conclusion, the judgment highlights the importance of considering the seriousness of economic offenses, the impact on the exchequer, and the active involvement of accused individuals in fraudulent practices when deciding on anticipatory bail applications. The decision to dismiss the application for Pawan Goel and Sushil Goel was based on these factors, emphasizing the need to prevent such practices that cause substantial economic harm.