2021 (10) TMI 253 - HC - GST

Seeking grant of Bail - irregular availment and passing of bogus Input Tax Credit (ITC) on the strength of those fake invoices - offences punishable under section 132 (1)(b)(c) and (1) of OGST Act, 2017 - HELD THAT - It is stated that the Petitioner as the proprietor of M/s. S.R. Enterprises has availed bogus ITC worth of ₹ 9.35 crores without physical receipt of goods on the strength of fake invoices obtained in the name of fake and non-existent firms and passed on bogus ITC worth ₹ 9.65 cores without the supply of goods in the reality and those are in favour of recipient firms inside and outside the State of Odisha. All those firm members have given their statements in the directions - In order to regularize the transactions, it is said that at the time of effecting sales, he was arranging purchase invoices against the goods purchased out of account from fake and non-existent firms and was taking adjustment of ITC in violation of law. In this way, it is said that the Petitioner was going on defrauding the State exchequer which so far stand at ₹ 19.04 crores (both passing and availment of ITC). The Petitioner is said to have been involved in the above specific economic offences of quite significant magnitude which are considered to be grave. Such dubious roles alleged to have been played by the Petitioner stand in the direction of making hefty unlawful and unimaginable financial gain by giving the show that for such sincere involvement in the business and carrying out the same, his entitlement to the huge sum as incentive in the form of Input Tax Credit (ITC) flowed which he received, but in reality as per the case laid, it is having the tendency of foiling the whole idea behind the introduction of the new Tax Regime so as to achieve the objective of speeding up the run of the Nation to stand at the forefront having a key position in the economic map of the globe. The BLAPL stands dismissed.

Summary

Issues:
- Application for bail under Section-439 of the Code of Criminal Procedure
- Allegations of defrauding the State exchequer by availing and passing on bogus Input Tax Credit (ITC)
- Involvement in economic offences punishable under OGST Act, 2017
- Opposing arguments on the involvement of the Petitioner in fraudulent activities
- Consideration of bail based on submissions and documents presented

Analysis:
The petitioner, a proprietor of a business, filed an application seeking bail under Section-439 of the Code of Criminal Procedure. The allegations against the petitioner include involvement in defrauding the State exchequer by availing and passing on bogus Input Tax Credit (ITC) through fake invoices and non-existent firms. The petitioner's counsel argued that the accusations were based on erroneous grounds and that the petitioner had no direct involvement in the offenses as alleged. It was emphasized that the petitioner's continued custody served no useful purpose, especially since the complaint had already been filed in court. The petitioner's counsel also highlighted the lack of evidence showing the petitioner's direct participation in the fraudulent activities, urging for bail due to the petitioner's permanent residence and the absence of a flight risk.

On the contrary, the Addl. Standing Counsel vehemently opposed the bail application, asserting that the petitioner played a significant role in defrauding the State exchequer by availing and passing on bogus ITC amounting to crores. The counsel pointed out the creation of fake firms, manipulation of documents, and the petitioner's active involvement in fraudulent transactions. It was argued that the investigation was ongoing, with more materials expected to surface, and releasing the petitioner on bail could lead to evidence tampering and hinder the investigation process. The counsel stressed the complexity and magnitude of the economic offenses allegedly committed by the petitioner, indicating a substantial financial impact and the need for a thorough investigation.

After considering the submissions and examining the complaint and related documents, the Hon'ble Justice concluded that the petitioner's alleged involvement in significant economic offenses of grave magnitude, defrauding the State exchequer through fraudulent practices, was a serious matter. The judge expressed concerns about the potential tampering of evidence and the ongoing nature of the investigation, indicating that releasing the petitioner on bail could impede the progress of uncovering further details related to the fraudulent activities. Consequently, the bail application was dismissed, and no relief was granted to the petitioner based on the gravity of the offenses and the potential risks associated with granting bail at that stage.