2023 (10) TMI 1153 - HC - GST

Seeking grant of Anticipatory Bail - Misuse of PAN number of the Chartered Accountant (CA) for fraudulent transaction and evasion of GST - correctness of contents of the status report filed by the Investigating Officer - HELD THAT - It is stated that in the objections filed to the aforesaid status reports, it has been stated that the requisite documents have been provided. However, it is pertinent to note that in the application for bail as well as in the objections filed to the status report, the stand of the applicants are contradictory with regard to the dealings with M/s Madhu Enterprises. They have also further denied any involvement with Sanjay Kumar, whose statement was recorded by the Investigating Officer. It is pertinent to note that as per investigation, the mobile number with which the said M/s Madhu Enterprises was registered with the GST Department belonged to the aforesaid Sanjay Kumar, who is stated to be a security guard of the applicants. The investigation from the GST Department has also revealed that the aforesaid M/s Madhu Enterprises made business transactions worth crores of rupees with three entities of which the present applicants were director and despite that said fact, the applicants have been evading from giving details of the said transaction. The ratio of the judgment of Hon ble Supreme Court in Pankaj Bansal 2023 (10) TMI 175 - SUPREME COURT relied upon by the learned Senior Counsel for the applicants has no application to the facts of the present case as the answers being given during investigation of the case, are on the face of it, totally evasive. This Court is of the considered opinion that custodial interrogation of the applicants is necessary to unearth entire chain of transactions linked with M/s Madhu Enterprise at the behest of the present applicants and the entities in their control - Application dismissed.

Summary

Issues Involved:
1. Allegations of fraudulent GST registration and transactions.
2. Applicants' cooperation with the investigation.
3. Necessity of custodial interrogation.

Summary:

1. Allegations of Fraudulent GST Registration and Transactions:
The case involves allegations that a GST number was fraudulently generated in the name of M/s Madhu Enterprises using the complainant's PAN number, resulting in transactions worth Rs. 14.80 Crores. The investigation revealed that the address used for GST registration was false, and the mobile number used was linked to an employee of the applicant. Further interrogation indicated that the applicants, along with their father, were involved in opening bank accounts and registering firms in the names of their employees for fraudulent transactions. The investigation also uncovered significant business transactions between the fraudulently registered firm and entities controlled by the applicants.

2. Applicants' Cooperation with the Investigation:
The applicants claimed to have complied with all notices and provided necessary documents. However, the investigating officer reported that the applicants were evasive and did not provide crucial details about their transactions with the fraudulent firm. The applicants argued that the documents were seized by the GST Department, Jamshedpur, but the court noted contradictions in their statements regarding their dealings with M/s Madhu Enterprises.

3. Necessity of Custodial Interrogation:
The court found that the applicants' evasive responses and the need to uncover the entire chain of fraudulent transactions necessitated custodial interrogation. The court cited the Supreme Court's observation that custodial interrogation is more effective in eliciting information than questioning under the protection of anticipatory bail.

Judgment:
The applications for anticipatory bail were dismissed, and the interim protection granted to the applicants was withdrawn. The court emphasized that custodial interrogation was necessary to unearth the entire chain of transactions linked with M/s Madhu Enterprises. The judgment explicitly stated that the observations were only for the purpose of the present applications and not an opinion on the merits of the case.