2022 (5) TMI 1234 - DSC - GST

Seeking grant of Bail - input tax credit - non-existent suppliers - non receipt of goods - cognizable and non-bailable or not - offence punishable under Section 132(1)(b)(c) (i)(3)(5) of the CGST Act, 2017 - HELD THAT - The applicant-accused was arrested on 16.02.2022. The investigation is at a nascent stage. Allegedly, the accused availed input tax credit by creating fake bills and during the transaction no goods were actually supplied. When the chain of suppliers were explored, most of the premises were found either closed or their GST registration cancelled. The accused has no material to show physical movement of goods. As per the complaint, the applicant-accused was the proprietor and the master mind of the alleged crime. It was him who had orchestrated the crime to camouflage the fraud into the nexus of trusted accomplices who acted as suppliers. Considering the gravity of the alleged offence, severity of the punishment provided for the alleged offence and the aforesaid reasons, this Court is of the opinion that the applicant-accused Saurabh Srivastava is not entitled to bail at this stage - Bail application dismissed.

Summary

Issues involved:
Bail application under Section 439 of the Code of Criminal Procedure, 1973 for accused involved in alleged GST input tax credit fraud of Rs. 5.65 crores.

Detailed Analysis:

1. Alleged GST Input Tax Credit Fraud:
The complainant, Directorate General of GST Intelligence, accused the firm of availing input tax credit worth Rs. 5.65 crores from non-existent suppliers without receiving goods. Investigation revealed discrepancies in supplier operations and GST registration statuses. Accused faces charges under Section 132(1)(b)(c)(i)(3)(5) of the CGST Act, 2017.

2. Bail Application Contentions:
Accused argued that a substantial amount of alleged tax evasion had been recovered by the Department from certain companies. Accused cooperated in the investigation, highlighting compliance with GST regulations, timely returns filing, and family hardships. Accused claimed arrest was illegal, citing the 'Arnesh Kumar Vs. State of Bihar' case.

3. Prosecution's Response:
Special Public Prosecutor raised objections to the bail application, citing lack of cooperation during investigation, pending non-compliance complaints, and discrepancies in accused's operations. Prosecution emphasized that the accused's actions were deliberate, availing input tax credit from non-functional suppliers.

4. Court Decision:
After hearing arguments, the Court noted the gravity of the alleged offence, severity of punishment, and lack of evidence showing physical movement of goods. The Court found the accused, allegedly the mastermind of the crime, ineligible for bail at this stage. The bail application was dismissed without expressing an opinion on the case's merits.

This detailed analysis covers the key aspects of the legal judgment, including the allegations, arguments presented in the bail application, prosecution's response, and the final decision of the Court denying bail to the accused involved in the GST input tax credit fraud case.