2022 (4) TMI 399 - DSC - GST

Tax consultant gets default bail in GST input credit fraud case after detention deemed unwarranted

The Pune DC granted default bail to an applicant charged with fraudulently availing and passing input tax credit. The court found that the applicant ... Seeking grant of Default Bail - availment and passing input tax credit fraudulently - HELD THAT:- From the say of the prosecution and more particularly from the prosecution papers placed on record, it is evident that the three main accused Sameer Khan, Imran Bahalwan and Ketan Dugad were responsible for availing and passing on input tax credit by raising fake invoices and the applicant acted upon the instructions of the main accused with whom he was working as a tax consultant. It appears that the applicant received remuneration of ₹ 20,000/per month for doing his job. It does not appear that the applicant is beneficiary of the transactions involved. The three main accused are already released on default bail. The evidence is in the form of documentary nature which has already been collected during investigation and earlier inquiry. It does not appear that there is anything to be recovered from the present applicant. It seems that investigation can be carried out without further detention of the applicant. Under such circumstances, the further detention of the applicant-accused is not warranted although the investigation is shown to be still in progress, especially when till this date there are no formal accusations against the applicant in the form of FIR or complaint. The evidence in this case is mostly of documentary nature and also consists of digital record and it is in the custody of GST department and therefore, there does not appear any chances of tampering with the prosecution evidence, if the accused is released on bail - applicant-accused can be released on bail subject to certain conditions. Bail application allowed. Issues:Bail application under Section 439 of Cr.P.C for offenses under Central Goods and Service Tax Act, 2017.Analysis:1. The applicant sought bail, claiming innocence and lack of involvement in the alleged offenses. He argued that he was merely an employee working as an accountant for the concerned enterprises and had no connection to the fraudulent activities. The investigation was almost complete, and no further discoveries were expected from him. Moreover, the main accused were already out on bail, and the applicant had cooperated with the investigating agency.2. The respondent, Directorate General of GST Intelligence (DGGI), Pune Zonal Unit, opposed the bail application, alleging that the applicant was an active participant in the fraud scheme. They claimed that the applicant, despite being a tax consultant, was involved in generating fake invoices to pass illegal Input Tax Credit, defrauding the government of legitimate GST revenue. The prosecution argued that the applicant's role was significant and that he might influence witnesses if released on bail.3. The defense argued that the applicant acted upon the instructions of the main accused and should not be held solely responsible. They cited legal provisions and judgments to support the claim that as a tax consultant, the applicant's liability was limited. The defense also emphasized that the main accused had already been granted bail.4. The judge considered the arguments from both sides and reviewed the prosecution's evidence. It was noted that the applicant had been in custody since his arrest, and the investigation primarily relied on documentary and digital evidence already collected. The judge found no grounds for further detention, especially since no formal accusations had been made against the applicant in the form of an FIR or complaint.5. Considering the nature of the evidence, the applicant's background, and the absence of criminal antecedents, the judge granted bail to the applicant. The bail was subject to specific conditions, including a personal recognizance bond, solvent sureties, restrictions on influencing witnesses or tampering with evidence, surrendering the passport, and cooperating with the investigating officer.6. The judge referred to various legal precedents cited by both parties in reaching the decision to grant bail to the applicant. The order allowed the applicant to be released on bail upon fulfilling the specified conditions, ensuring his compliance with the legal requirements and preventing any potential interference with the ongoing investigation.