2022 (12) TMI 43 - HC - GST

Seeking grant of Regular Bail - wrongful availment of input tax credit - non-existent suppliers - no receipt of goods - offence punishable under Section 132(1)(b)(c)(i)(3)(5) of the CGST Act, 2017 - HELD THAT - Having regard to the facts and circumstances of the case and while noticing that the petitioner has been behind bars for a substantial period of about 9 months and that conclusion of trial is likely to consume time inasmuch as a large number of prosecution witnesses have been cited and as on date only 2 out of the cited 37 prosecution witnesses have been examined in pre-charge evidence, further detention of the petitioner will not serve any useful purpose. As such, without commenting anything as regards merits, the petition is accepted and the petitioner is ordered to be released on regular bail on his furnishing bail bonds/surety bonds to the satisfaction of learned trial Court/Chief Judicial Magistrate/Duty Magistrate concerned. Application allowed.

Summary

Issues: Grant of regular bail in a case under Section 132 of the Central Goods and Services Tax Act, 2017.

In this judgment, the petitioner sought regular bail in a complaint under Section 132 of the CGST Act, 2017, for allegedly availing input tax credit fraudulently. The Directorate General of GST Intelligence accused the firm of availing credit from non-existent suppliers without receiving goods, amounting to Rs. 5.65 crores. Investigation revealed discrepancies in supplier details, with some suppliers admitting to issuing invoices without supplying goods. The offense was deemed cognizable and non-bailable under Section 132(1)(b)(c)(i)(3)(5) of the Act.

The petitioner argued being falsely implicated, with insufficient evidence linking him to the offense. It was highlighted that the maximum punishment was 5 years, and the petitioner had already spent about 9 months in custody. The department had recovered a portion of the allegedly fraudulent amount, reducing the alleged fraud to around Rs. 3.6 crores. The counsel for the petitioner emphasized the lack of credible evidence against the petitioner.

Opposing the petition, the CGST counsel presented evidence suggesting the petitioner's direct involvement in creating 23 bogus supplier firms, with details such as mobile number and email matching those of the petitioner. Despite the petitioner being in custody for 9 months, only 2 out of 37 prosecution witnesses had been examined during pre-charge evidence.

After considering the submissions, the Court acknowledged the petitioner's extended custody and the potential trial duration due to numerous prosecution witnesses. Without delving into the merits of the case, the Court granted the petition, ordering the petitioner's release on regular bail upon furnishing satisfactory bail or surety bonds to the trial court or relevant magistrate. The decision was based on the view that further detention of the petitioner would not serve any meaningful purpose given the circumstances of the case.