2020 (2) TMI 428 - HC - GST

Court denies bail for tax invoice fraud, citing impact on public funds.

The court denied the petitioner's request for regular bail under Section 69 read with Section 132 of the Central Goods and Services Tax Act, 2017. The ... Grant of Regular Bail - Section 69 read with Section 132 of CGST Act - input tax credit - business of generation and selling of fake tax invoices without supplying the goods through various firms/companies - HELD THAT:- The allegations against the petitioner are serious and magnitude of fraud is to the extent of ₹ 127 crores. It is to early to conclude that arrest can't be effected or prosecution can't be launched without issuing notice under Section 74 of the Act particularly when the power of arrest has been given under Section 69 of the Act. Furthermore, merely because no police remand of the petitioner was sought and he has been remanded to judicial custody, it cannot be construed as a circumstance which may entitle him to be released on bail. In the instant case, there are serious allegations against the petitioner that fake invoices of approximately ₹ 931 crores involving GST of approximately ₹ 127 crores without movement of goods have been issued and input tax credit has been availed. No justified ground is made out to grant concession of bail to the petitioner - Petition dismissed. Issues: Grant of regular bail under Section 69 read with Section 132 of the Central Goods and Services Tax Act, 2017.The judgment pertains to a petition seeking regular bail for the petitioner arrested under Section 69 read with Section 132 of the Central Goods and Services Tax Act, 2017. The allegations against the petitioner involve the creation and sale of fake tax invoices without supplying goods, resulting in irregular availment and utilization of input tax credit, causing substantial loss to government revenue. The arrest was made based on the creation of liability amounting to Rs. 127 crores for the government. The petitioner's counsel argued that no notice under Section 74 of the Act has been issued, and the evasion mentioned in the complaint is only Rs. 13 crores. On the other hand, the respondent contended that the petitioner, being the kingpin, is involved in a serious economic offense amounting to Rs. 127 crores, justifying arrest and prosecution without prior notice. The court referenced previous decisions emphasizing the seriousness of economic offenses and the need for a different approach to bail in such cases.The court highlighted that economic offenses involving deep-rooted conspiracies and substantial loss of public funds must be viewed seriously, considering their impact on the country's financial health. Referring to previous judgments, the court emphasized the need to consider various factors while granting bail, such as the nature of accusations, evidence, potential punishment, accused's character, witness tampering risks, public and state interests, and other relevant considerations. In this case, the allegations involve the issuance of fake invoices amounting to approximately Rs. 931 crores, with an input tax credit of around Rs. 127 crores, without any actual movement of goods. After considering the facts and circumstances, the court concluded that no justified ground exists to grant bail to the petitioner and dismissed the petition.