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TMI Blog2022 (3) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... ailed input tax credit by showing fake purchases from fictitious firms would be a matter of trial. The offence alleged against the applicant is economic offence, which has resulted in loss to the State exchequer. Of course, economic offences are grave in nature, being a class apart, which arises out of deep-rooted conspiracies and therefore, the effect on the community as a whole is to be kept in view while consideration for bail is made. But, at the same time, seriousness of charge is not the only relevant factor to be considered while dealing with bail applications. Considering the statutory limit provided under the GGST Act CGST Act for filing complaint as also the facts and circumstances of the case and without discussing the evidence in detail, this Court is inclined to grant regular bail to the applicant, subject to conditions imposed - bail application allowed. - R/CRIMINAL MISC. APPLICATION NO. 23127 of 2021 - - - Dated:- 16-3-2022 - HONOURABLE MS. JUSTICE GITA GOPI Appearance: MR YOGESH LAKHANI, SR. ADVOCATE WITH MR PANKAJ D RACHCHH (11401) for the Applicant(s) No. 1 MR. RAHUL R DHOLAKIA (6765) for the Applicant(s) No. 1 NOTICE SERVED B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es along with their photographs were made available to the tax authority. The vehicles loaded with the goods had approached the way-bridge and after following due process, the goods were unloaded in the factory premises. It is alleged against the applicant that out of the 270 firms with which the applicant was doing business, 41 firms were shell companies and that false / fabricated documents were generated for the purpose of availing ineligible Input Tax Credit. However, from amongst the said 41 firms, the applicant s firm had received goods in 1,145 different Trucks, which had undertaken 4,896 trips in all for delivering the goods. 2.3 It is further submitted that goods worth ₹ 225 Crores were received with genuine legal documents, which are also reflected on the Government portal and the applicant s firm has paid ₹ 40 Crores as GST through the banking channels. It is contended that had the applicant s firm generated false / fabricated documents for availing illegal Input Tax Credit, then 41 firms should have been arraigned as accused. If the applicant s firm has committed fraud by receiving kick-backs through Aangadia sources, then the same is required to be for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant. He pointed out that the monthly expenditure incurred by the factory towards electricity bill alone runs to the tune of ₹ 2 Crores. Further, for the alleged evasion of ₹ 41 Crores of Input Tax Credit, the Department had attached immovable properties of the applicant worth ₹ 57 Crores, which is much beyond the alleged demand. Out of the properties so attached, this Court has ordered detachment of properties worth ₹ 13 Crores in separate proceedings. Therefore, properties worth ₹ 44 Crores are still under attachment with the respondent Department, which would be sufficient to safeguard its interest. It was, therefore, urged that the entire action of the respondent Department is without any basis. 2.6 It was further submitted by the learned Senior Advocate that from the transactions entered into by the applicant s firm with different Companies, the Department has attempted to show that the applicant s firm was acting in connivance with firms, named Blue Star Trading Co. Ltd., Sabar Resources Ltd., Royal Trading Company and M.M. Trading Company. It is contended that the Department has to establish from documentary evidence that such connivance e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the applicant s firm had shown fake purchases to the tune of ₹ 172.36 Crores from 24 fictitious entities and had thereby, availed ineligible Input Tax Credit to the tune of ₹ 31.02 Crores. On further inquiry from the 41 companies, 30 more companies, who appear to be fictitious, are under investigation. The modus operandi of the applicant s firm is that it used to purchase raw materials from the grey market, without any invoices and it would obtain fake invoices from bogus firms to justify the final products. Such firms would be entities, who have no place of business or are merely in the activity of issuing fake invoices without physical movement of goods. 3.2 The learned Public Prosecutor further submitted that the case involves a larger conspiracy relating to evasion of crores of rupees of tax money involving several accused. Those who have been arrested have admitted their involvement in the fake billing activity and have also admitted that they had issued the fake invoices, without any actual physical movement of goods from the firms operated by their syndicate. They have admitted that their role was to issue fake invoices, E-way bills and to conve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant is an influential person and financially sound. Therefore, his release from jail at this stage, may hamper the investigation in a big way. It was, therefore, urged that the present application may be rejected. 4. Heard learned advocates on both the sides and perused the material produced on record. In the impugned arrest memo, the allegation against the applicant is of committing offence under section 132(1)(c) of the GGST Act CGST Act. Section 132 of the GGST Act is pari materia to the provisions under the CGST Act. It relates to Punishment for certain offences . For ready reference, section 132(1) is reproduced hereunder; Section 132.(1) - Whoever commits, or causes to commit and retain the benefits arising out of, any of the following offence, namely :- (a) supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made thereunder, with the intention to evade tax; (b) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilization of input tax credit or refund of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds one hundred lakh rupees but does not exceed two hundred lakh rupees, with imprisonment for a term which may extend to one year and with fine; (iv) in cases where he commits or abets the commission of an offence specified in clause (f) or clause (g) or clause (j), he shall be punishable with imprisonment for a term which may extend to six months or with fine or with both. 5. The applicant is alleged to have fraudulently claimed input tax credit to the tune of ₹ 31.02 Crores by showing fake purchases from 24 fictitious entities to the tune of ₹ 172.36 Crores. In pursuance of the summons issued by the respondent tax authority in December 2021, the applicant appears to have supplied documentary evidence to the complainant-tax authority relating to the consignment of goods as also the vehicles used for transporting the goods. It is the say of the respondent-tax authority that it is seized with a list of fictitious firms from whom the applicant s firm is said to have made fake purchase transactions. However, in this petition fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bail, both the seriousness of the charge and the severity of the punishment should be taken into consideration. The said case was a case of financial irregularities and in the said circumstance this Court in addition to taking note of the deep-rooted planning in causing huge financial loss, the scope of consideration relating to bail has been taken into consideration in the background of the term of sentence being seven years if convicted and in that regard it has been held that in determining the grant or otherwise of bail, the seriousness of the charge and severity of the punishment should be taken into consideration. 23. Thus, from cumulative perusal of the judgments cited on either side including the one rendered by the Constitution Bench of this Court, it could be deduced that the basic jurisprudence relating to bail remains the same inasmuch as the grant of bail is the rule and refusal is the exception so as to ensure that the accused has the opportunity of securing fair trial. However, while considering the same the gravity of the offence is an aspect which is required to be kept in view by the Court. The gravity for the said purpose will have to be gathered from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es specified in clauses (a) to (f) of sub-section (1) of section 132 as also the offences specified in clause (l), which are relatable to offences specified in clauses (a) to (f) of the said sub-section. The Court is informed that except the impugned complaint, no other complaint under the GGST Act or CGST Act has been registered against the applicant. The applicant is reported to be suffering from Prostrate Cancer and is presently, undergoing treatment at Nadiad in pursuance of the order dated 05.01.2022 passed by this Court. 9. Considering the statutory limit provided under the GGST Act CGST Act for filing complaint as also the facts and circumstances of the case and without discussing the evidence in detail, this Court is inclined to grant regular bail to the applicant. In the result, the application is allowed and the applicant is ordered to be enlarged on regular bail in connection with the Memorandum of Arrest dated 30.11.2021 in File No. DCST/Enf.-10/Rajkot/AC-3/UT LLP/2021-22 on executing a personal bond of ₹ 2,00,000/- with one surety of the like amount to the satisfaction of the trial Court and subject to the conditions that he shall: [a] not take undue adv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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