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2022 (8) TMI 389 - DSC - GSTSeeking grant of bail - Availment and passing of ineligible Input Tax Credit - fake invoices without supply of goods - evasion of GST - cancellation of registration of the three firms, with which the applicant was directly concerned - power of officers to issue summon - relevancy of statements made - HELD THAT - It is pertinent to observe that appropriate officer under Section 70 of the CGST Act is given the powers to summon like a civil court. This power is only procedural, for compelling the attendance of the person summoned, this power does not have any direct bearing upon the manner in which such statements are to be used during inquiry, trial or other proceedings. Section 70(2) provides that every inquiry under Section 70(1) of the CGST Act shall be deemed to be judicial proceedings . However, this deeming provision is only for the purposes of Section 193 and 228 IPC, i.e. perjury and contempt on the face of the court - there is nothing specific in Section 70 of the CGST Act and Section 136 of the CGST Act to show that statements recorded under Section 70 of this Act can be used as confessional statements against the maker of the same. In the present case, much reliance has been placed by the complainant department on the statements recorded under Section 70 of the CGST Act. The truth of these statements shall be seen at the time of trial - The applicant / accused has been examined thrice by the complainant. The time period for seeking custodial interrogation of the applicant / accused has already lapsed in terms of Section 167(2) CrPC. The applicant / accused Aman Chhatwal @ Aman Singh S/o Ajit Singh is allowed to be released on bail on furnishing personal bond in the sum of Rs.5,00,000/- with two solvent sureties in the like amount to the satisfaction of the Ld. CMM concerned / Ld. Link CMM concerned / Ld. Duty MM concerned, subject to the conditions imposed - application allowed.
Issues Involved:
1. Allegations of availing and passing on ineligible Input Tax Credit (ITC). 2. Examination of the accused's role and involvement. 3. Relevance and admissibility of statements under Section 70 of the CGST Act. 4. Applicability of previous judgments cited by the defense. 5. Consideration of bail application and conditions for granting bail. Issue-wise Detailed Analysis: 1. Allegations of Availing and Passing on Ineligible ITC: The complainant department alleged that the applicant/accused availed and passed on ineligible ITC amounting to Rs. 6.63 Crores through firms created and operated by him and Rs. 77.11 Crores through firms managed by others on a commission basis. The total defrauded amount was Rs. 83.74 Crores. The modus operandi involved issuing fake invoices without actual supply of goods, similar to a racket busted in Chennai and Madurai. The accused was identified as the authorized signatory of multiple firms and was alleged to be the mastermind of the entire syndicate. 2. Examination of the Accused's Role and Involvement: The defense argued that the remand application only mentioned three companies related to the accused, involving Rs. 6.63 Crores. The remaining Rs. 77.11 Crores was linked to companies owned by another individual, Lt. Smt. Aarti Kapoor. The defense contended that only the Rs. 6.63 Crores should be considered for non-bailable offenses. The court noted that while the accused's involvement in Rs. 6.63 Crores was direct, his role in the larger scheme, including the Rs. 77.11 Crores, involved receiving commissions, indicating a lesser role than alleged by the department. 3. Relevance and Admissibility of Statements under Section 70 of the CGST Act: The department relied heavily on the statements recorded under Section 70 of the CGST Act, arguing their relevance under Section 136. The defense countered that these statements could not be used against the maker as confessional statements. The court clarified that while Section 70 allows summoning similar to civil court procedures and deems inquiries as judicial proceedings, there is no specific provision allowing these statements to be used as confessions against the maker. 4. Applicability of Previous Judgments Cited by the Defense: The defense cited several judgments, including "Make My Trip (India) Pvt. Ltd. Vs. Union of India," to argue against the arrest without determining tax liability. The court found the cited case inapplicable as it dealt with service classification issues rather than fraudulent ITC claims. The court also referenced the "Tarun Jain Vs. Directorate General of GST Intelligence" judgment, highlighting that the CGST Act's offenses, though economic, do not warrant custody as a sine qua non due to the prescribed punishment. 5. Consideration of Bail Application and Conditions for Granting Bail: The court considered the accused's cooperation in the investigation, the cancellation of GST registrations of the firms involved, and the period of judicial custody since 06.06.2022. Given these factors and the arguments presented, the court granted bail to the accused with specific conditions, including surrendering the passport, cooperating with the investigation, not making any inducements, maintaining an operational mobile number, ensuring location availability via Google Maps, and committing no offenses during the bail period. Any breach of these conditions would allow the investigating authority to seek bail cancellation. Conclusion: The court granted bail to the accused, emphasizing the need for cooperation in the ongoing investigation and adherence to the specified conditions to ensure compliance and prevent further offenses.
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