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2025 (1) TMI 1310 - HC - GSTSeeking grant of bail - false availment of Input Tax Credit without receiving any scrap or goods - HELD THAT - The substantial matrix of the case prima facie indubitably points out the present petitioner s culpability. The seizure of the fake rubber stamps of the transport company fake E Bills purported to be demonstrated as transportation of scrap from Delhi to Jaipur coupled with the statement of the transport company owner stating the actual route through which his truck has moved on such dates the report of the concerned authority confirming the non-existence of the firms from whom the petitioner had received so-called scrap affirmatively validates that petitioner fraudulently caused loss to the government revenue by claiming input tax credit in tune to 10.67 crores. The material collected by the respondent prima facie exhibits that the petitioner was fraudulently profited from the ITC based on sham bills obtained or procured in the name of non-existing firms. As far as judgment of Hon ble Apex Court in Prabir Purkayastha Vs. State (NCT of Delhi) 2024 (5) TMI 1104 - SUPREME COURT and Pankaj Bansal Vs. Union of India 2023 (10) TMI 175 - SUPREME COURT are concerned the said judgments pertain to Section 19 of the PMLA under which the provisions are stringent under Section 69 (2) of the Act of 2017. There is no such provision that before arresting a person written reasons should be assigned to the petitioner. Further the petitioner has not raised this question at the instance when he was arrested and not challenged before the Competent Court. It is also pertinent to mention here that the statement rendered by the petitioner was recorded under Section 70 of the Act of 2017 empowers the Authority to record the statements. The Hon ble Apex Court in the matter of Y.S. Jaganmohan Reddy Vs. Central Bureau of Investigation 2013 (5) TMI 896 - SUPREME COURT categorically held that the economic offences are to be dealt with iron hands as such offences are committed with cool calculation and deliberate design and they affect economic fabric of the whole country therefore considering the above facts it is not required to enlarge the petitioner on bail. Conclusion - The evidence presented by the respondents including the fraudulent availing of ITC and the use of forged documents established a prima facie case against the petitioner. Bail application dismissed.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS 1. Compliance with Legal Requirements for Arrest The petitioner argued that the arrest was illegal as it did not comply with the mandate requiring written reasons for arrest, as established in the judgments of Prabir Purkayastha Vs. State (NCT of Delhi) and Pankaj Bansal Vs. Union of India. These cases pertain to the PMLA, which has similar provisions to Section 69 (2) of the Act of 2017. The petitioner contended that the arrest memo lacked written reasons, violating the legal requirement. The Court, however, noted that Section 69 (2) of the Act of 2017 does not explicitly require written reasons for arrest, unlike the PMLA. The Court emphasized that the petitioner did not challenge the arrest at the time or before a competent court, undermining this argument. 2. Entitlement to Bail The petitioner sought bail, arguing that the arrest was illegal and that the trial would take considerable time. The petitioner also claimed that there was no risk of evidence tampering, as most witnesses were public servants. The petitioner highlighted that the charge sheet had been filed, and the alleged offenses were triable by a Magistrate with a maximum punishment of five years. The Court considered the evidence presented by the respondents, including the fraudulent availing of Input Tax Credit (ITC) amounting to Rs.10.87 crores through non-existent firms and forged documents. The Court found that the evidence, such as fake E-way bills and forged rubber stamps, prima facie demonstrated the petitioner's culpability. Given the seriousness of economic offenses, the Court was not inclined to grant bail. 3. Applicability of Precedents on Written Reasons for Arrest The petitioner relied on precedents requiring written reasons for arrest under the PMLA. However, the Court distinguished these cases, noting that the provisions under Section 69 (2) of the Act of 2017 do not impose such a requirement. The Court also noted that the petitioner did not raise this issue at the time of arrest, weakening the argument. 4. Admissibility of Petitioner's Statements The petitioner argued that their statements recorded under Section 70 of the Act of 2017 were coerced and should not be admissible. The Court noted that Section 70 empowers authorities to record statements, and these are relevant under Section 136 of the Act. The Court held that the question of coercion is a matter for trial and that other evidence, such as the fraudulent transactions, corroborated the allegations against the petitioner. SIGNIFICANT HOLDINGS The Court emphasized the seriousness of economic offenses, citing the judgment in Y.S. Jaganmohan Reddy Vs. Central Bureau of Investigation, which underscores the need to address such offenses with severity due to their impact on the country's economic fabric. The Court concluded that the evidence presented by the respondents, including the fraudulent availing of ITC and the use of forged documents, established a prima facie case against the petitioner. Consequently, the Court dismissed the bail application, reflecting its stance on the gravity of the alleged offenses and the sufficiency of the evidence.
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