2021 (8) TMI 304 - HC - GST

Managing Director Granted Bail in GST Fraud Case: Presumption of Innocence Upheld

The High Court granted bail to the petitioner, the managing director of a company, in a criminal petition under Sections 132(1)(i) and 132(1)(h)(c) of the ... Seeking for grant of regular bail - wrongful availment or utilization of input tax credit - Section 132 (1) (i) read with Section 132 (1)(h)(c) of the Central Goods and Services Tax Act, 2017 - HELD THAT:- Admittedly, the petitioner herein was arrested on 02.11.2020 and since then he is jail. As discussed above, the respondent’s authorities have to collect evidence and record statements of witnesses. It appears from the counter in both the bail applications filed by the respondent’s authorities that it will take considerable time to complete the investigation. It is settled principle of law that unless guilt of the accused is proved, it has to be presumed that the accused is an innocent. This Court is inclined to grant regular bail to the petitioner herein on the conditions imposed - the petitioner - Accused shall execute a personal bond for ₹ 25,000/- with two (02) sureties for a like sum each to the satisfaction of the Special Judge for Economic Offences, Nampally, Hyderabad - application allowed. Issues:Grant of regular bail in a criminal petition under Sections 132(1)(i) and 132(1)(h)(c) of the Central Goods and Services Tax Act, 2017.Analysis:The petitioner, the managing director of a company, is accused of issuing GST invoices and e-way bills without actual supply of goods, leading to wrongful availment of input tax credit. The allegations state that the petitioner facilitated the enhancement of the company's turnover by issuing fake invoices and helped other parties show false expenses. The petitioner is accused of availing input tax credit on the basis of fake invoices, amounting to Rs. 10.89 Crores, a violation of Sections 16 and 132 of the CGST Act.The petitioner's counsel argued against the delay in lodging the complaint and emphasized that the company was not sold. The respondent argued that the petitioner committed a serious offense by availing Rs. 10.89 Crores in input tax credit without actual supply of goods. The respondent highlighted the petitioner's modus operandi and lack of established premises for the company.The court noted that the investigation is ongoing and the seriousness of the allegations. The respondent's authorities have recorded the petitioner's statement under Section 70 of the CGST Act, revealing discrepancies in the petitioner's operations. The court acknowledged the need for further investigation into the petitioner's activities and the irregular input tax credit claimed.As it was the petitioner's second bail application, the court considered the lack of progress in the investigation and the petitioner's continued incarceration since November 2020. The court granted bail with conditions, including executing a personal bond, cooperating with the Investigating Officer, and not interfering with the investigation. The court emphasized the presumption of innocence until guilt is proven and granted bail to the petitioner under specified conditions.