2022 (10) TMI 772 - DSC - GST

Seeking grant of anticipatory bail - availment of illegal input tax credit - non-existent firms - HELD THAT - As per section 70 of CGST Act power has been given to the Department to summon a person concerned to give evidence and to produced documents. In the present case summon/notice dated 05.05.2022 does not mention any such detail as required from the applicant. It has come on the record that prior to issuance of summons to the applicant CFO and Chief of Account Department of companies involved have joined the investigation with the Department and required documents, informations have already been provided. First of all it be noted that there is no specific bar under CGST Act from seeking pre-arrest bail. No doubt such matters are economic offences involving tax evasion etc. This court is very much aware about the legal proposition that economic offences are considered to be grave offence and approach of the court is required to be different while examining the case of the accused seeking relief in such cases - the court has to strike a balance to ensure that no unwarranted abuse of process is allowed to impinge upon life and liberty of applicant and at the same time also to ensure that investigation is not hampered, procedure of administration of justice is not adversely impacted. In the present case also taking into consideration overall facts and circumstances and the gravity of the offence under CGST Act, it is found that once the necessary documents, information has already been provided to the Department regarding the alleged evasion of tax under Input Tax Credit facility, if at all applicant is required to join the investigation, he to my mind is entitled to protection against any possible arrest, particularly when officers/officials of the companies have been rendering all necessary information/ documents to the Department; the summon issued to the applicant does not enumerate any details required from him by the Department - it is directed that in the event of any possible arrest of the accused, he be released on bail upon furnishing of bail bond for Rs.50,000/- with two sureties each in like amount and subject to the condition imposed. Bail Application allowed.

Summary

Issues:
- Application for anticipatory bail under section 438 Cr.P.C. in relation to alleged GST offenses.

Detailed Analysis:
The applicant, a CEO of two companies and a partner in another, filed an application seeking anticipatory bail under section 438 Cr.P.C. The companies were registered with the GST department and had paid substantial GST amounts. The applicant was engaged in manufacturing pesticides domestically and internationally. The department alleged irregularities in Input Tax Credit utilization and excess stock during a search. The applicant cooperated with providing documents but feared arrest, prompting the bail application.

The Department's reply accused the applicant of availing ITC without goods receipt, involving non-existent entities controlled by the applicant's company. Circular transactions among these entities raised suspicion of fictitious invoicing for ITC benefits. The applicant's senior counsel argued against the department's case, emphasizing the lack of undue gain from ITC and the cooperation of company officials in previous summons responses.

The court examined the summon issued to the applicant and noted the absence of specific details required from him. While economic offenses are serious, the court acknowledged the absence of a specific bar on pre-arrest bail under the CGST Act. Citing relevant case law, the court emphasized the need to balance the applicant's rights and investigative requirements. Noting the provision of necessary information and documents to the department, the court granted anticipatory bail with conditions, including joining the investigation, depositing a percentage of the claimed amount, and refraining from leaving the country or influencing involved parties.

In conclusion, the court granted anticipatory bail to the applicant, considering the circumstances, the gravity of the alleged offense under the CGST Act, and the applicant's cooperation with the investigation. The court imposed stringent conditions to prevent abuse of process while ensuring the applicant's protection against arrest.