2021 (12) TMI 371 - DSC - GST

Seeking grant of Regular Bail - fraudulent transfer of ITC - fake bills have been obtained without supply and receipt of the goods so as to wrongfully claimed input tax credit - HELD THAT - The applicant has alleged to have played role in offence. Looking to the fact of the case, evidence on record, it appears that the applicant has fraudulently availed Input Tax Credit (ITC) amounting to ₹ 6.04 crores by using modus operandi of issuing fake invoices and passed on fraudulent ITC to their buyers situated at various places without supply of corresponding goods mentioned in the said invoices. Further huge and voluminous documents related to the transactions of sales and purchases were seized. The punishment prescribed for the alleged commission of offence is with imprisonment for a term which may extend to five years and with fine. Thus, the charge upon the applicant are not of the nature so as to inflict punishment of Death penalty. The whole case is based on the documentary evidence and the Investigating Agency has already seized the related documents. The present applicant is permanent resident of Bhavnagar and have deep root in the Society and therefore, the chances of fleeing away from justice is remote. The offence is triable by learned Magistrial Court. Denial of bail to the applicant, would amount to pretrial conviction. It is not that the applicant would flee from the trial. The apprehension of repetition of offence can be taken care by some stringent conditions. There is no justifiable ground to keep the present applicant in the judicial custody till the completion of investigation / trial. This is a fit case to exercise the discretionary powers of the Court in favour of the applicant by putting some stringent conditions. The discretion vested in this Court can be exercised in favour of applicant-accused - Applicant is hereby released on bail on his furnishing a personal bond and subject to conditions imposed. Application allowed.

Issues Involved:
1. Application for regular bail under Section 439 of the Code of Criminal Procedure, 1973.
2. Alleged commission of offenses under Sections 132(1)(b) and 132(1)(c) of the Central Goods & Services Tax Act, 2017 (CGST) and Gujarat Goods and Service Tax Act, 2017 (SGST).
3. Fraudulent transfer of input tax credit and evasion of GST.
4. Consideration of the applicant’s role and the nature of the offense.
5. Evaluation of the applicant’s potential to abscond, tamper with evidence, or repeat the offense.
6. Application of legal principles regarding bail as per precedents.

Issue-wise Detailed Analysis:

1. Application for Regular Bail under Section 439 of Cr.P.C.:
The applicant sought regular bail under Section 439 of the Code of Criminal Procedure, 1973. The accused was arrested for alleged offenses under Sections 132(1)(b) and 132(1)(c) of the CGST Act, 2017 and SGST Act, 2017. Since his arrest on 27.10.2021, he has been in judicial custody and thus applied for bail.

2. Alleged Commission of Offenses under CGST and SGST Acts:
The applicant was accused of fraudulent activities involving the wrongful claim of input tax credit amounting to ?6.04 crores through fake bills without actual supply and receipt of goods. The investigation alleged that the transactions of sales and purchases were without actual receipt and supply of goods, leading to GST evasion.

3. Fraudulent Transfer of Input Tax Credit and Evasion of GST:
The applicant's company, engaged in trading ferrous scrap, iron, and steel scrap, was accused of procuring invoices without actual supply of goods, resulting in fraudulent input tax credit claims. The search and investigation by DGGI, Ahmedabad, revealed these fraudulent activities.

4. Consideration of the Applicant’s Role and Nature of the Offense:
The applicant argued that he was falsely implicated, had no criminal history, and the case was based on documentary evidence with no need for custodial interrogation. The prosecution contended that the applicant committed a serious economic offense, causing significant loss to the State Exchequer, and might tamper with evidence or abscond if released on bail.

5. Evaluation of the Applicant’s Potential to Abscond, Tamper with Evidence, or Repeat the Offense:
The court considered the applicant's permanent residency, lack of criminal history, and the nature of the offense. It noted that the offense was based on documentary evidence, and the applicant had been in custody since 27.10.2021. The court emphasized that denial of bail would amount to pretrial conviction and that stringent conditions could mitigate the risk of absconding or tampering with evidence.

6. Application of Legal Principles Regarding Bail as per Precedents:
The court referred to various judgments, including those of the Hon'ble Karnataka High Court and the Hon'ble Supreme Court, which highlighted that bail is the rule and committal to jail an exception. The court noted that the maximum punishment for the alleged offense was five years, and the offense was compoundable. It emphasized that the object of bail is to secure the appearance of the accused at trial, not to punish or preventively detain them.

Conclusion:
Considering the nature of the offense, the applicant's circumstances, and legal precedents, the court found it appropriate to grant bail with stringent conditions to ensure the applicant's cooperation with the investigation and prevent any risk of absconding or tampering with evidence. The application was allowed, and the applicant was released on bail with specific conditions, including furnishing a personal bond, surrendering his passport, and not leaving Gujarat without permission.

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