2021 (8) TMI 1123 - HC - GST

High Court denies bail in GST case citing economic offense gravity

The High Court denied the accused-petitioner's bail application in connection with a GST case under Section 132 of the CGST Act. The court highlighted the ... Seeking grant of Bail - availment of fake input tax credit - generation of invoices without actual supply of goods - offence u/s 132 of Central Goods and Service Act, 2017 - HELD THAT:- This complaint alleges commission of an economic offence of huge magnitude and therefore, a thorough and detail investigation is essential. Further, considering the enormous materials collected and placed before this Court, vide the record, in respect of manipulation of invoices, etc and thereby allegedly evading tax by the petitioner to the tune of ₹ 28,97,85,917/- by way of illegally availing ITC, the enlargement of the petitioner on bail, at this stage is likely to hamper the investigation and tamper evidence which may amount to compromising with the entire investigation of the case. This Court has also taken note of the fact that the investigation of the case, involves a huge number of documents to be examined at different levels and at different places necessitating reasonably sufficient time to the Investigating Agency. Petition disposed off. Issues:Bail application under Section 439 of Cr.PC for accused-petitioner in connection with GST Case under Section 132 of CGST Act, 2017.Analysis:The accused-petitioner, operating under the trade name M/s Maruti Traders, was found involved in generating invoices without actual supply of goods, passing on fake GST invoices, and evading tax through illegal Input Tax Credit. The petitioner's declared business address was found to be fictitious, and incriminating documents were seized during searches at undisclosed premises related to M/s Maruti Traders. The petitioner was accused of falsifying accounts and engaging in fraudulent practices.The petitioner's senior counsel argued that there was no specific allegation under Section 132(1) of CGST Act against the petitioner and that his custodial detention was unnecessary for further investigation. However, the Standing Counsel for CGST contended that the investigation was ongoing, vital clues had been collected, and the petitioner was involved in a significant economic offense amounting to a substantial tax evasion. The Standing Counsel highlighted the seriousness of the offenses under Section 132(1) and the need for detailed investigation due to the complexity of the case.Referring to a statement and E-way bills, the Standing Counsel presented evidence of discrepancies in the movement of goods as per the invoices. The court acknowledged the gravity of the economic offense alleged, emphasizing the need for a thorough investigation considering the magnitude of tax evasion and manipulation of documents. It was concluded that releasing the petitioner on bail at that stage could impede the investigation and jeopardize evidence collection, given the extensive documents and the complexity of the case.Citing the Supreme Court's stance on economic offenses, the court emphasized the seriousness of such crimes and the potential threat they pose to the economy. Considering the evidence and the nature of the offenses, the court rejected the bail application, noting the necessity for a detailed investigation involving a significant number of documents spread across various locations. The decision was made to prevent any compromise in the investigation process.In light of the above analysis, the court dismissed the bail application, emphasizing the need for a thorough investigation due to the complexity and seriousness of the economic offenses alleged. The records were returned, and the petition was disposed of accordingly.