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2022 (8) TMI 405 - HC - GSTSeeking grant of Regular Bail - wrongful availment of Input Tax Credit - allegation is that the applicant had shown the suppliers only on paper without any actual transfer of the goods and in conspiracy with the shell companies had defrauded the Government Exchequer - compounding of offences - HELD THAT - According to the applicant, the purchases have been made by tax invoices and E-Way Bills upon payment of applicable GST while dealing with the dealers having valid GSTIN. Taking into consideration the maximum punishment for the alleged offence and the provisions of compounding the offences, this Court deems it just and proper to exercise discretion is exercised in favour of the applicant, as trial will take its own time to conclude. The applicant is ordered to be released on regular bail - Application allowed.
Issues Involved:
1. Application for regular bail under Section 439 of the Code of Criminal Procedure. 2. Alleged offences under Section 132(1)(c) of the CGST Act, 2017 and GGST Act, 2017. 3. Validity and legality of the arrest under Section 69 of the GGST Act, 2017. 4. Allegations of wrongful Input Tax Credit (ITC) claims. 5. Cooperation with the investigation and previous bail applications. 6. Conditions for granting bail and compounding of offences. Detailed Analysis: 1. Application for Regular Bail: The applicant sought regular bail under Section 439 of the Code of Criminal Procedure in connection with the alleged offences under the CGST Act, 2017 and GGST Act, 2017. The applicant was arrested on 23.02.2022 by the Assistant Commissioner of State Tax-4, Enforcement Division-2. 2. Alleged Offences: The applicant was accused of offences punishable under Section 132(1)(c) of the CGST Act, 2017 and GGST Act, 2017, which pertain to availing input tax credit using fraudulent invoices or without any invoice. 3. Validity and Legality of Arrest: The applicant contended that the arrest under Section 69 of the GGST Act, 2017 was indiscriminate and lacked proper application of mind. It was argued that the Commissioner must have "reasons to believe" that an offence was committed, which should be based on material evidence and assessment of tax liability under Sections 73 or 74 of the GGST Act, 2017. 4. Allegations of Wrongful ITC Claims: The case involved allegations that M/s. Madhav Copper Limited, where the applicant is a director, availed ITC to the tune of Rs. 138.71 Crores through fake purchases from 39 fictitious entities. The applicant argued that all purchases were made from registered dealers with valid GSTINs and proper tax invoices and e-way bills. 5. Cooperation with Investigation and Previous Bail Applications: The applicant claimed to have cooperated with the investigation and highlighted that the anticipatory bail application was previously dismissed by the Hon'ble Apex Court. The Public Prosecutor argued that the applicant did not cooperate with the investigation and there was prima-facie evidence against him. 6. Conditions for Granting Bail and Compounding of Offences: The Court considered the maximum punishment for the alleged offence and provisions for compounding offences under Section 138 of the Act. The Court noted that the trial would take a significant amount of time to conclude and decided to exercise discretion in favor of the applicant. Conclusion: The application for regular bail was allowed. The applicant was ordered to be released on bail on executing a personal bond of Rs. 2,00,000 with one surety of the like amount, subject to conditions including not taking undue advantage of liberty, not acting in a manner injurious to the prosecution, surrendering the passport, not leaving India without prior permission, and furnishing the current address of residence. The authorities were instructed to adhere to COVID-19 guidelines before releasing the applicant. Order: The present application was allowed, and the applicant was granted bail with specific conditions. The rule was made absolute to the aforesaid extent, and direct service was permitted. The registry was directed to communicate the order to the concerned court/authority by fax or email forthwith.
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