2021 (11) TMI 156 - HC - GST

Petitioner granted regular bail under GST Acts due to procedural flaws & legal arguments

Krishan Lal Chopra Versus Director General of GST Intelligence

The Court granted regular bail to the petitioner under Section 132(1)(c) of the CGST Act, 2017, read with Section 20(xv) of the IGST Act, 2017. The ... Grant of regular bail - fraudulent ITC - offence committed under Section 132 (1)(c) of CGST Act, 2017 read with Section 20 (xv) of IGST Act, 2017 - HELD THAT:- This petition is allowed and the order dated 22.09.2021 passed by this Court, granting interim bail to the petitioner, is hereby made absolute. Issues:Grant of regular bail under Section 132(1)(c) of CGST Act, 2017 read with Section 20(xv) of IGST Act, 2017.Analysis:The petitioner sought regular bail for an offense under Section 132(1)(c) of the CGST Act, 2017, read with Section 20(xv) of the IGST Act, 2017. The Court had previously granted interim bail to the petitioner. The respondent had filed an application before the Chief Judicial Magistrate seeking judicial remand of the petitioner, alleging fraudulent Input Tax Credit (ITC) availed by certain traders. The petitioner's senior counsel argued that the petitioner's firm conducted business transactions through legitimate means, making payments via cheque/RTGS during the specified period. The counsel presented evidence from the respondent-Department's website to support the claim. It was contended that the respondent's case against the petitioner was based on inadmissible disclosure by Shubham Steels regarding ITC passed on to the petitioner's firm. The petitioner had already paid taxes for the relevant period as per the attached returns.The respondent's case alleged that Shubham Steels had passed a significant portion of its ITC to a single firm owned by the petitioner, making the offense non-bailable under Section 132(4) of the GST Act. The respondent had not arrested Atul, another party involved, and Shubham had made deposits with the Department. The petitioner's counsel argued that the petitioner was arrested without a show cause notice and without following the proper legal procedure, violating Article 20 of the Constitution of India. The respondent filed a written statement along with annexures in court, which was considered.After hearing arguments from both sides, the Court allowed the petition and made the interim bail granted earlier to the petitioner absolute. The judgment highlighted the procedural irregularities in the petitioner's arrest and the lack of a show cause notice. The Court's decision to grant regular bail indicates a consideration of the legal aspects raised by the petitioner's counsel regarding the alleged offense and the arrest procedure followed by the respondent-department.