2024 (10) TMI 1379 - HC - GST

Seeking grant of anticipatory bail - availing fraudulent Input Tax Credit and passing of Input Tax Credit without actual supply of goods - HELD THAT - On a perusal of the judgment of the Delhi High Court in Tarun Jain v. Directorate General of GST Intelligence DGGI 2021 (12) TMI 135 - DELHI HIGH COURT , it considered the provisions of the CST Act, the powers of inspection, seizure and arrest prescribed under Chapter XIV of the Act, the provisions under Section 69 and 132 of the CGST Act and the judgment in P.V. Ramana Reddy vs. Union of India 2019 (4) TMI 1320 - TELANGANA AND ANDHRA PRADESH HIGH COURT of this Court and the judgments in SHRAVAN A. MEHRA AND ORS. VERSUS SUPERINTENDENT OF CENTRAL TAX, ANTI-EVASION, GST COMMISSIONERATE 2019 (2) TMI 2114 - KARNATAKA HIGH COURT and of the Delhi High Court itself in Raghav Agrawal v. Commissioner of Central Tax and GST Delhi North 2020 (12) TMI 940 - DELHI HIGH COURT and of the Bombay High Court in Sapna Jain vs. Union of India 2019 (5) TMI 1610 - BOMBAY HIGH COURT , which was challenged before the Hon'ble Apex Court and the Hon'ble Apex Court without interfering into the order tagged it to be listed before the 3-Judge Bench in the case of Union of India v. Sapna Jain 2019 (6) TMI 58 - SC ORDER and the said matter was pending till date, it observed that the question regarding anticipatory bail while dealing with offences under CGST was yet unsettled and as such decided the matter by exercising its own discretion. As the facts of this case are also similar to the facts of the above case, which were pertaining to fraudulently availing input tax credit, extending to more than Rupees Five Hundred Lakhs under Section 132 of the TGST Act, 2017 and the petitioners are also apprehending their arrest, it is considered fit to grant anticipatory bail to the petitioners on the fulfilment of terms and conditions imposed - bail application allowed.

Issues Involved:

1. Whether the petitioners are entitled to anticipatory bail under Section 438 of the Code of Criminal Procedure.
2. Allegations of fraudulent availing and passing of Input Tax Credit under Section 132 of the Telangana Goods and Services Tax Act, 2017.
3. The role and actions of the GST Department and the influence of M/s. KLSR Infratech Limited.
4. Applicability of previous judgments related to economic offences and anticipatory bail.
5. Conditions to be imposed for granting anticipatory bail.

Issue-wise Detailed Analysis:

1. Entitlement to Anticipatory Bail:

The petitioners filed for anticipatory bail under Section 438 of the Code of Criminal Procedure, apprehending arrest in a case related to fraudulent Input Tax Credit (ITC) under the TGST Act, 2017. The court considered whether the petitioners could be granted anticipatory bail, taking into account the nature of the allegations and the legal precedents.

2. Allegations of Fraudulent ITC:

The petitioners, associated with M/s. Bengal Cold Rollers Private Limited, were accused of availing fraudulent ITC and passing it without actual supply of goods, amounting to Rs. 8.01 Crore. Specific allegations included fraudulent claims of ITC on purchases from various taxpayers and passing ITC on sales without movement of goods. The GST Department's investigation included seizure of documents and issuance of a show cause notice alleging tax evasion.

3. Role of GST Department and Influence of M/s. KLSR:

The petitioners argued that the GST Department acted at the behest of M/s. KLSR Infratech Limited, who allegedly lodged a complaint to avoid payment dues. The petitioners contended that the GST Department's actions were arbitrary and collusive, without conducting an independent inquiry or issuing a show cause notice. The petitioners claimed that the complaint was a counterblast to their demand notice for outstanding payments.

4. Applicability of Previous Judgments:

The court examined previous judgments, including P.V. Ramana Reddy v. Union of India and Tarun Jain v. Directorate General of GST Intelligence, to assess the applicability of anticipatory bail in economic offences. The court noted that while economic offences are serious, the punishment prescribed under the CGST Act is not severe enough to necessitate custody. The court emphasized the need to balance the liberty of the accused with the interests of the investigation.

5. Conditions for Granting Anticipatory Bail:

The court granted anticipatory bail to the petitioners, subject to conditions aimed at ensuring cooperation with the investigation and preventing tampering with evidence. The conditions included surrendering before the Investigating Officer, furnishing a personal bond, surrendering passports, and not leaving India without permission. The petitioners were also required to provide their mobile numbers and ensure they remain operational.

Conclusion:

The court allowed the Criminal Petition for anticipatory bail, imposing conditions to safeguard the investigation process while protecting the petitioners' rights. The judgment reflects a careful consideration of the allegations, legal precedents, and the need to balance competing interests in cases involving economic offences.

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