Two applicants granted anticipatory bail in Rs. 70 crore inadmissible input tax credit case under Section 70 CGST Act

Patiala House Court granted anticipatory bail to two applicants charged with claiming inadmissible input tax credit under Section 70 of CGST Act. Despite department's claim of Rs. 70 crores inadmissible credit, applicants had already paid Rs. 10 crores. Court relied on SC precedent in C. Pradeep case and Delhi HC judgment in Tarun Jain case. Bail granted on personal bonds of Rs. 1 lakh each with two local sureties of like amount, subject to standard conditions.

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Issues:
1. Alleged inadmissible input tax credit availed by the accused.
2. Search and seizure conducted at the company's premises.
3. Statements recorded under Section 70 of the CGST Act.
4. Arguments for and against bail applications.
5. Precedents cited in support of contentions.
6. Concessions made during proceedings.
7. Bail conditions imposed by the court.

Issue 1: Alleged inadmissible input tax credit availed by the accused:
The accused are alleged to have availed inadmissible input tax credit from non-existent/fictitious firms, amounting to approximately Rs. 43 crores, with Rs. 21.58 crores established so far. These facts were admitted by the accused in their statements recorded under Section 70 of the CGST Act.

Issue 2: Search and seizure conducted at the company's premises:
A search and seizure operation was conducted at the company's premises on 23.03.2022 under Section 67(2) of the CGST Act. The principal place of business was found non-operational, and raids on two other suppliers revealed that they had issued invoices without providing any goods or services.

Issue 3: Statements recorded under Section 70 of the CGST Act:
The accused were summoned under Section 70 of the CGST Act and their statements were recorded during the search and seizure operation. They were allegedly pressurized to deposit a sum of Rs. 5 crores each against their will.

Issue 4: Arguments for and against bail applications:
The defence counsel argued that the accused had cooperated with the investigation, and no custodial interrogation was required as they were law-abiding citizens. The Senior Standing Counsel opposed the bail applications, citing the magnitude of the alleged tax credit fraud and ongoing investigation.

Issue 5: Precedents cited in support of contentions:
The defence counsel cited various judgments to support their contentions, including the case of Tarun Jain vs. DGGI and other relevant cases to argue that the accused's case was covered under those judgments.

Issue 6: Concessions made during proceedings:
During the proceedings, it was revealed that the accused had already deposited Rs. 10 crores against the alleged liability, which may exceed Rs. 70 crores. There were no current allegations of tampering with evidence or hindering the investigation against the accused.

Issue 7: Bail conditions imposed by the court:
Considering the facts and arguments presented, the court directed the release of the accused on furnishing personal bonds and sureties, subject to conditions such as not hampering the investigation, joining when required, providing contact details, and informing any change in personal information or travel plans.

This comprehensive analysis covers the key issues addressed in the judgment, detailing the arguments, concessions, and final decision of the court regarding the bail applications in the context of the alleged tax credit fraud investigation.

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