2021 (9) TMI 628 - DSC - GST

Grant of anticipatory bail - Circular Trading/Transactions without any supply of goods or services - entire case is based on documentary evidence for which custodial interrogation of applicant is unwarranted - section 132 of GST Act - HELD THAT - Perusal of record prima facie reveals that applicant is apprehending arrest with regard to Remand Application No.213/2020 at the best of CGST Bombay West Commissionerate for the offences punishable u/s. 132(1)(b) (c) of CGST Act 2017. As per say of the respondent company of the applicant has availed and utilized Input Tax Credit of ₹ 5.59 approximately. As per say of respondent applicant is involved along with main accused C.P.Pandey a Chartered Accountant in Circular Trading/ Transactions without any supply of goods or services to the firm companies by main accused C.P.Pandey. The said Circular Trading was made in order to enhance turnover of the company by C.P.Pandey in order to fraudulently avail loan or other benefits from the bank. Though applicant had attended the office of respondent once and handed over certain documents. But it is the contention of respondent that applicant failed to attend office of respondent on 13th January 2021 pursuant to summons issued on 7.1.2021 to that effect. As per say of respondent present applicant did not attend office of respondent on 17.12.2020 as well as on 29.12.2020. It is matter of record that my learned predecessor has directed the applicant to respond request of respondent - there are substance in the submissions made on behalf of respondent that conduct of the applicant not appearing before respondent for the purpose of inquiry /investigation and not adhering to interim order granted by my learned predecessor disentitle him from consideration of present anticipatory bail. This is not a fit case for consideration of anticipatory bail - anticipatory bail application rejected.

Issues Involved:

1. Grant of anticipatory bail under Section 438 of Cr.P.C.
2. Allegations of tax evasion and circular trading under CGST Act, 2017.
3. Applicant's cooperation with the investigation.
4. Legitimacy of the inquiry and procedural compliance by CGST authorities.
5. Applicant’s conduct and adherence to interim protection orders.

Detailed Analysis:

1. Grant of Anticipatory Bail under Section 438 of Cr.P.C.:

The applicant sought anticipatory bail under Section 438 of the Code of Criminal Procedure, 1973, fearing arrest in connection with Remand Application No.213/2020 for offences under Sections 132(1)(b) and 132(1)(c) of the CGST Act, 2017. The applicant argued that he is a law-abiding citizen, a government contractor, and has cooperated fully with the investigation. He emphasized that the inquiry against him was illegal and motivated by malafide intentions to exceed the ?5 Crore threshold, making the offence non-bailable.

2. Allegations of Tax Evasion and Circular Trading under CGST Act, 2017:

The respondent (CGST authorities) alleged that the applicant was involved in circular trading without actual supply of goods or services, enabling fraudulent utilization of Input Tax Credit (ITC). The main accused, a Chartered Accountant (C.P. Pandey), was said to have created multiple companies to facilitate these transactions. The applicant’s company allegedly availed and utilized ITC worth approximately ?5.69 Crores through such inflated turnover.

3. Applicant's Cooperation with the Investigation:

The applicant claimed to have cooperated by attending the CGST office, submitting documents, and undergoing interrogation. However, the respondent argued that the applicant failed to provide complete information and did not attend subsequent summons on multiple occasions, including 17.12.2020, 29.12.2020, and 13.01.2021. The applicant’s non-cooperation was cited as a reason to deny anticipatory bail.

4. Legitimacy of the Inquiry and Procedural Compliance by CGST Authorities:

The applicant contended that the CGST authorities conducted an inquiry spanning four financial years, which he claimed was against the rules. He alleged that the authorities pressured him to confess to tax evasion and to implicate his Chartered Accountant. The respondent, however, maintained that the investigation was legitimate and necessary to uncover the full extent of the fraudulent activities.

5. Applicant’s Conduct and Adherence to Interim Protection Orders:

The court noted that despite interim protection, the applicant did not adhere to the order to cooperate fully with the investigation. This conduct was deemed sufficient to disentitle him from the relief of anticipatory bail. The investigation was at a nascent stage, and the applicant's presence was crucial to uncover the conspiracy and the roles of all involved parties.

Conclusion:

The court, after considering the submissions and the applicant’s conduct, concluded that this was not a fit case for granting anticipatory bail. The application was rejected, emphasizing the need for the applicant to cooperate with the ongoing investigation. The court's order was as follows:

ORDER:

1. Anticipatory Bail Application No. 1655/2020 is hereby rejected.
2. Earlier order, if any, stands rejected.
3. Anticipatory Bail Application No.1655/2020 stands disposed of.

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