2023 (6) TMI 983 - DSC - GST

Seeking grant of Bail - irregular availment of ITC - invoices received from bogus / dummy supplier - HELD THAT - Having considered the submissions and taking note of entire facts, evidence including statements, recorded uptil now in the investigation of CGST. Although it has come in the investigation that there have been fake details of vehicle of supply of goods furnished in uploading e way bills on portal. There is also various lapses evident regarding supply of goods by suppliers of M/s Dhruv Steels and M/s Varuni Steels. As reflected in the reply filed by Department some of the suppliers at L-1 level were found to be inactive on GST portal and even inward supply chain at L-3 and L-4 supplier level was also inconsistent. Supply chain of bogus invoices started from 27 non-operational firms. All these things certain create doubt as to the inculpability of the accused in the matter. However having so noticed, taking into consideration the ratio laid down in the judgment of TARUN JAIN VERSUS DIRECTORATE GENERAL OF GST INTELLIGENCE DGGI 2021 (12) TMI 135 - DELHI HIGH COURT , since primary concern of Department is to trace and collect the GST evasion. Bail cannot be denied to accused as a punishment - Upon filing of complaint, accused would certainly be prosecuted and would be liable to pay penalty and funds availed by way of illegitimate ITC if found guilty. Application disposed off.

Summary

Issues involved: Regular bail application under Section 439 Cr.P.C for accused/applicant Dhruv Arora implicated by CGST Delhi for alleged GST evasion.

Summary:

Issue 1 - Allegations and Defense:
The accused/applicant, a trader, is accused of receiving fraudulent ITC amounting to Rs. 11 crore through bogus invoices. The defense argues that the accused has always complied with GST laws, with no pending liabilities against his firms. The Department accepted the cancellation of registration for both M/s Dhruv Steels and M/s Varuni Steels, issuing necessary certificates. The defense contends that the tax liabilities raised against the accused lack evidence and that the accused has paid substantial taxes in previous financial years.

Issue 2 - Investigation Findings:
The Department's investigation revealed discrepancies in the operations of M/s Dhruv Steels and M/s Varuni Steels. The accused's involvement in generating fake invoices using random vehicle numbers for e-way bills was highlighted. The supply chain analysis showed inconsistencies, with several suppliers at different levels being inactive or non-existent. The investigation also uncovered a network of non-operational firms involved in the issuance of bogus invoices.

Judgment:
After considering the submissions and evidence, the court acknowledged the lapses in the supply chain and the fake details in the e-way bills. However, following the precedent set in the Tarun Jain case, where bail cannot be denied as a form of punishment, the accused was granted bail. The court emphasized that the primary concern of the Department is to trace and collect GST evasion, and the accused will face prosecution and penalties if found guilty. The accused was granted bail upon furnishing a bond and surety, with conditions to cooperate with the investigation and not leave the country without court permission.