2021 (8) TMI 1306 - HC - GST

Petitioner granted bail in fraud case despite financial impact concerns

The Court granted regular bail to the petitioner in a criminal case involving allegations of fraud and causing loss to the public exchequer through ... Seeking grant of Regular Bail - passing of undue input tax credit by making invoices without movement of goods and caused loss of revenue - Sections 420, 467, 468 and 471 of the Indian Penal Code, 1860 - HELD THAT:- In view of the facts and circumstances of the case, nature of accusation and evidence against the petitioner, the period of his custody, the fact that all the offences are triable by the Judicial Magistrate First Class and also the fact that the trial is likely to take long time due to restrictions imposed to prevent spread of infection of Covid-19, but without commenting on the merits of the case, the concession of regular bail is extended to the petitioner. The petitioner is ordered to be released on regular bail on furnishing of bail bonds by him to the satisfaction of the Trial Court/Chief Judicial Magistrate/Duty Magistrate concerned - Petition allowed. Issues:Grant of regular bail in a criminal case involving allegations of fraud, wrongful claim of input tax credit, and causing loss to the public exchequer.Analysis:The petitioner filed a petition seeking regular bail under Section 439 of the Code of Criminal Procedure in a case involving FIR No.259 dated 09.03.2019, which alleged offenses under Sections 420, 467, 468, and 471 of the Indian Penal Code, with later additions of Sections 120-B and 201. The FIR was based on a complaint by the Excise Taxation Officer, accusing the firm M/s Ganesh Trading Co. of passing undue input tax credit without movement of goods, causing revenue loss. Investigations revealed discrepancies in firm details and fraudulent practices leading to arrests and charge-sheet filings against the petitioner and co-accused individuals.The State Counsel opposed the bail plea, highlighting the creation of a fake firm, issuance of invoices without goods movement for wrongful input tax credit claims, resulting in a substantial loss to the public exchequer exceeding Rs.9.68 crores. The State Counsel argued against granting regular bail to the petitioner based on the severity of the allegations and the financial impact of the fraudulent activities.After considering the submissions from both sides, the Court noted the nature of accusations, evidence, custody period, and the likelihood of a prolonged trial due to Covid-19 restrictions. Without delving into the case's merits, the Court decided to grant regular bail to the petitioner. The bail was subject to the condition that the petitioner must not commit similar offenses post-release, and any future similar offense would lead to the cancellation of bail upon prosecution application.In the status report, details were provided regarding the investigation progress, including the formation of a Special Investigation Team, arrests, recoveries, and financial transactions involving multiple firms linked to M/s Ganesh Trading Co. The Excise and Taxation Department reported on the amounts involved in business transactions and tax considerations, along with actions taken to realize tax amounts and prevent GST Input Tax Credit frauds.Overall, the judgment allowed the petitioner's plea for regular bail, considering various factors while emphasizing the need to prevent similar offenses in the future. The decision was made without commenting on the case's merits, focusing on procedural aspects and the petitioner's custody period.