2024 (3) TMI 168 - HC - GST

Seeking grant of bail - availment of credit without actual movement of goods on the basis of forged and fictitious documents of suppliers, procured from various non-existing firms - HELD THAT - This Court finds that there is no dispute that prima facie , applicant is involved in availing excess input tax credit as well as cancellation of e-way bill of the huge value by the proprietorship of his firm without any reasonable reason. The department has already issued notice under Section 70 and 74 of the GST Act against the firm of the applicant. Further the record reveals that till date no adjudication order has been passed by the competent authority quantifying the excess availing the input tax credit. The record further reveals that neither any order has been passed by the competent authority cancelling the registration of selling dealer in question nor the registration of the applicant s firm has been cancelled. Section 69 read with section 132 of the Act provides for punishment of wrong availment of input tax credit with imprisonment for a term which may extend to five years and fine. It further provides that every second or thereof all the offense committed by the registered person shall be punishable. Further Section 138 of GST Act provides the compounding all the offence committed by the registered person being caused after payment of tax and interest to the amount of such wrong availment of input tax credit - the Commissioner is empowered to recover the due amount and propose for abating the proceedings and as the trial will take its own time to conclude, this Court finds this to be a fit case where discretion could be exercised in favour of the applicant. Keeping in view the nature of the offence, argument advanced on behalf of the parties, evidence on record regarding complicity of the accused, larger mandate of the Article 21 of the Constitution of India and the dictum of Apex Court in the case of DATARAM SINGH VERSUS STATE OF UTTAR PRADESH AND ANR. 2018 (2) TMI 410 - SUPREME COURT and recent judgement of the Apex Court in the case of SATENDER KUMAR ANTIL VERSUS CENTRAL BUREAU OF INVESTIGATION ANR. 2022 (8) TMI 152 - SUPREME COURT and without expressing any opinion on the merits of the case, the Court is of the view that the applicant has made out a case for bail. Let the applicant namely Qamar Ahmed Kazmi be released on bail on his furnishing a personal bond and two heavy sureties each in the like amount to the satisfaction of the court concerned subject to conditions imposed and further, before issuing the release order, the sureties be verified - The bail application is allowed.

Summary

Issues Involved:
1. Bail Application in Economic Offense under GST Act
2. Prosecution's Allegations and Evidence
3. Applicant's Defense and Arguments
4. Rebuttal by the State
5. Legal Precedents and Judgments Referenced
6. Court's Decision on Bail

Summary:

1. Bail Application in Economic Offense under GST Act
The bail application was filed by the applicant in Case Crime No. 394/2023 under Sections 419, 420, 467, 468, 471 & 120-B IPC, Police Station - Civil Lines, District - Meerut, seeking release on bail during the pendency of the trial.

2. Prosecution's Allegations and Evidence
The prosecution alleged that the applicant availed input tax credit of over Rs. 4,28,37,362/- from 2017-18 to 2022-23 without actual movement of goods, using forged documents from non-existing firms. Additionally, e-way bills worth Rs. 17,33,83,966 were canceled without valid reasons. Verification revealed the selling firms were non-existent or not conducting business, and no trucks were found at toll plazas on the alleged routes.

3. Applicant's Defense and Arguments
The applicant argued innocence, claiming all purchases were made from registered parties under the GST Act, with no red flags against them. The registration of the selling dealers was valid at the time of transactions. The applicant also stated that no incriminating material was found during a survey on 12.6.2023, and shortcomings were explained with requisite tax deposited. The defense emphasized that no adjudication order had been passed quantifying excess input tax credit, nor was any power exercised under Section 69 read with Section 132 of the GST Act.

4. Rebuttal by the State
The State opposed the bail, highlighting the economic offense's seriousness and the applicant's involvement in fake transactions. The prosecution argued that there was no actual movement of goods, and purchases were shown from bogus firms. They presented evidence from toll plazas and inspection reports showing non-existent firms and lack of RFID tags on trucks. The State cited various judgments supporting the rejection of bail in economic offenses.

5. Legal Precedents and Judgments Referenced
The applicant relied on several bail orders and judgments, including those from the Supreme Court, emphasizing the importance of not prejudicing the accused during bail considerations. The State cited judgments underscoring the gravity of economic offenses and the necessity of considering the entire material collected by the investigating agency.

6. Court's Decision on Bail
The Court acknowledged the prima facie involvement of the applicant in availing excess input tax credit and the pending adjudication proceedings. It noted the absence of any order canceling the registration of the selling dealers or the applicant's firm. Citing the Supreme Court's observations on the delay in concluding trials and the statutory period of punishment, the Court found it fit to exercise discretion in favor of the applicant. The bail application was allowed with specific conditions, including surrendering the passport, depositing Rs. 25 lacs, and regular court appearances.

The applicant was granted bail with conditions to ensure compliance and prevent misuse of liberty.