2022 (6) TMI 963 - HC - GST

Seeking grant of Anticipatory Bail - Fraudulent availment of Input tax credit - present applicant is alleged to be the mastermind of the entire scam - relevancy of statement under Section 70 of the GCST Act - HELD THAT - This Court based upon the submissions of the learned Public Prosecutor more particularly relying upon confidential documents provided to this Court, is of the opinion that the present applicant, who was mastermind of the entire scam, whereby the entity in question one M/s Madhav Copper Limited had availed input tax credit to the tune of Rs.137.28 Crores. It also clearly appears from the said documents that the present applicant was also a prime beneficiary of the scam in question. In the considered opinion of this Court, when learned Co-ordinate Bench of this Court has thought it fit not to exercise its discretion in favour of a person who had almost similar or slightly lesser role than that played by the present applicant in the scam in question, then certainly this Court would not exercise its discretion in favour of the present applicant. Insofar as the submissions made by the learned Senior Advocate for the present applicant that the only material with the Investigating Officers, is the statement of co-accused, which may not be a basis, to implicate the present applicant, in the considered opinion of this Court, at this stage, the department based upon the material that had been collected by them, are inquiring/ investigating in the scam and whereas in the considered opinion of this Court, more particularly in view of the material shown to this Court by the learned Public Prosecutor, it could not be stated that the statements of the co-accused would be the only material which is available with the department. The submissions made by learned Senior Advocate for the applicant more particularly with regard to admissibility of the statement under Section 70 of the CGST Act would not be appreciated by this Court at this stage - in the considered opinion of this Court, this should not be the case where this Court would exercise discretionary jurisdiction under Section 438 of the Code of Criminal Procedure to release the present applicant on anticipatory bail - Application dismissed.

Summary

Issues Involved:
1. Applicant's apprehension of arrest under GGST and CGST Acts.
2. Validity and implications of summons issued under Section 70 of GGST and CGST Acts.
3. Allegations and evidence against the applicant in the tax fraud case.
4. Relevance and admissibility of statements under Section 70 of the CGST Act.
5. Necessity of custodial interrogation and the applicability of anticipatory bail.

Issue-wise Detailed Analysis:

1. Applicant's apprehension of arrest under GGST and CGST Acts:
The applicant, a proprietor of M/s Lucky Steel, filed an application fearing arrest in connection with a case registered by the Deputy Commissioner of State Tax, Enforcement Division, Ahmedabad. The applicant was summoned under Section 70 of the GGST Act, 2017, and Section 70(1) of the CGST Act, 2017.

2. Validity and implications of summons issued under Section 70 of GGST and CGST Acts:
The summons required the applicant to present documents regarding an inquiry against M/s Gurukrupa Traders and M/s Lucky Steel. The applicant, unable to attend due to being out of town, requested a later date and submitted the required documents. Despite this, the applicant did not appear personally, leading to a complaint under Sections 174 and 175 of the IPC read with Section 70 of the GGST and CGST Acts.

3. Allegations and evidence against the applicant in the tax fraud case:
The Public Prosecutor argued that the applicant was the mastermind behind a scam involving M/s Madhav Copper Limited, which showed fake purchases from fictitious entities amounting to Rs. 762.66 Crores and availed input tax credit of Rs. 137.28 Crores. Electronic evidence and WhatsApp chats linked the applicant to the scam, suggesting he was a prime beneficiary.

4. Relevance and admissibility of statements under Section 70 of the CGST Act:
The applicant's counsel argued that statements made under Section 70 have limited evidentiary value unless specific conditions under Section 136 of the CGST Act are met. However, the court noted that this argument was not pertinent at the anticipatory bail stage, emphasizing the need to consider broader legal parameters.

5. Necessity of custodial interrogation and the applicability of anticipatory bail:
The court referenced a previous decision denying anticipatory bail to a co-accused with a similar role, highlighting the necessity for custodial interrogation in complex scams. The court also noted that the applicant's cooperation was essential for the investigation. Given the gravity of the allegations and the material evidence presented, the court decided not to exercise discretion in favor of granting anticipatory bail.

Conclusion:
The court, after considering the submissions and evidence, concluded that the applicant's anticipatory bail application should be rejected. The court emphasized the need for custodial interrogation due to the complexity and scale of the alleged tax fraud, aligning with previous judicial decisions and guidelines from the Hon'ble Apex Court.