2020 (12) TMI 57 - DSC - GST

Court denies bail in GST Act fraud case, citing incriminating evidence & need for fair investigation.

The court dismissed the bail application of the accused involved in fraudulent creation of proprietorship firms issuing fake invoices causing a ... Grant of Bail - illegal input tax credit - issuance of fake invoices without supplying of goods - creation of bogus firms - Section 132 of GST Act - HELD THAT:- The contention of the applicant that there is nothing on record to show that he had received any kind of benefit from the alleged bogus firms is not sustainable for the simple reason that investigation is at initial stage and even then the investigation team has recovered fake transport-bilty books and the diary having cash entries in his hand writing - Admittedly, the offence alleged against the accused falls within the ambit of economic offence. The investigation is still pending and same is at initial stage. In this circumstances, this Court is of the opinion that granting concession of bail to the accused will prejudice the fair investigation. Further, the authorities relied on by the applicant are not squarely applicable to the facts in hand. Application dismissed. Issues:Fraudulent creation of proprietorship firms to issue fake invoices causing loss to the government exchequer, bail application of the accused under Section 132 of GST Act, sufficiency of evidence for arrest without assessment order.Analysis:The judgment addresses the case involving the creation of several proprietorship firms with the ulterior motive of issuing fake invoices without actual supply of goods, resulting in a substantial loss of Rs. 13.08 crores to the government exchequer. The accused, alleged to be the proprietor of one of the firms, was accused of conniving with others to fraudulently avail and pass Input Tax Credit. The defense argued that the main accused was someone else, and the exact loss amount was not determined, questioning the grounds for arrest without a proper assessment order. The defense cited cases to support their arguments but was countered by the complainant's counsel who emphasized the broad scope of Section 132 of the GST Act, stating that the accused's connection to the fake invoices sufficed for prosecution.The court considered the allegations against the accused, highlighting his involvement in issuing fake invoices without actual goods movement to earn commissions, leading to the significant loss to the government. Despite the defense's claim of no direct benefit received by the accused, the court noted incriminating evidence recovered during the investigation, including fake transport-bilty books and a diary with cash entries in the accused's handwriting. Given the economic nature of the offense and the ongoing preliminary investigation, the court deemed granting bail to the accused could impede a fair investigation. The court found the cited legal authorities by the defense not directly applicable to the current case and subsequently dismissed the bail application.In conclusion, the court dismissed the bail application of the accused, emphasizing the need to preserve the integrity of the investigation due to the serious economic offenses alleged. The case was scheduled for further proceedings on a specified date, maintaining the legal process's continuity and indicating the court's commitment to thorough examination of the matter.