2022 (5) TMI 699 - HC - GST

Grant of anticipatory bail - illegal activities of passing fraudulent Input Tax Credit (ITC) by generating fake firms - Sections 132(1) (b), 132 (1) (i) C.G.S.T. Act, 2017 - HELD THAT - The instant matter is pertaining to large evasion of tax and to investigate the matter in depth the possibility of custodial interrogation of the applicant could not be ruled out. The offences pertaining to tax evasion or economic in nature are having a class of their own as they are effecting the economy of the country. In the considered opinion of this Court, for the reasons stated herein before the custodial interrogation of the applicant could not be ruled out and thus having regard to all the facts and circumstances of the case it does not appear to be a fit case where anticipatory bail may be granted to the applicant/ accused. The anticipatory bail application moved on behalf of the applicant Shishir Gupta @ Parul Gupta is hereby rejected.

Summary

Issues:
1. Anticipatory bail application in a case involving fraudulent Input Tax Credit (ITC) under the C.G.S.T. Act, 2017.

Detailed Analysis:
1. The applicant, Shishir Gupta, sought anticipatory bail in a case related to fraudulent ITC under the C.G.S.T. Act, 2017. The prosecution alleged that the applicant was involved in passing fraudulent ITC along with another individual, Abhishek Jain, who was arrested earlier. The applicant claimed innocence, stating he was an employee of Jain and not consciously involved in any illegal activities. He argued that he had no direct financial benefit from the fraudulent transactions and should not be held criminally liable for Jain's actions.

2. The defense further contended that the applicant was not involved in managing the business or receiving any money from the fake firms associated with Jain. They highlighted that the main accused, Jain, had been granted default bail, and the applicant should also be granted anticipatory bail based on parity. The defense criticized the investigating agencies for targeting small individuals while sparing the main beneficiaries of the illegal transactions.

3. On the other hand, the Union of India argued that multiple suppliers had mismatches in their ITC records, indicating fake transactions. They claimed that Jain implicated the applicant in receiving commissions for supplying fake invoices without goods, leading to fraudulent ITC claims. The Union emphasized the need for custodial interrogation due to the gravity of tax evasion involved and the applicant's alleged lack of cooperation in the investigation.

4. After considering the arguments and legal precedents, the court found that Jain's statement implicated the applicant in facilitating fraudulent ITC claims. Given the economic impact of tax evasion offenses, the court concluded that custodial interrogation of the applicant could not be ruled out. Consequently, the court rejected the anticipatory bail application, advising the applicant to file a regular bail application before the appropriate court for further proceedings.

5. The judgment referenced various legal cases and highlighted the importance of thorough investigation in cases of economic offenses. The court emphasized the need to uphold the law and ensure proper legal procedures are followed in dealing with offenses related to tax evasion. The decision underscored the seriousness of the allegations and the necessity for a detailed investigation to preserve the integrity of the legal system.