Bail cancellation quashed after accused used input tax credit from electronic ledger under Section 49 GST Act Delhi HC quashed the cancellation of bail where the accused was required to deposit Rs.2.70 crores as a bail condition. The accused deposited part amount ...
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Bail cancellation quashed after accused used input tax credit from electronic ledger under Section 49 GST Act
Delhi HC quashed the cancellation of bail where the accused was required to deposit Rs.2.70 crores as a bail condition. The accused deposited part amount in cash and adjusted Rs.1.60 crores through input tax credit (ITC) from electronic ledger. The respondent argued this violated the deposit condition, but the court held that Section 49 of GST Act permits utilizing ITC from electronic ledger for tax payments. Since the accused had Rs.260 crores ITC credit with only Rs.42 crores under investigation as fraudulent, the partial adjustment was legally permissible and satisfied the bail condition.
Issues: Challenge to cancellation of bail order and quashing of proceedings under CGST Act.
Analysis: 1. The petitioner challenged the order cancelling bail granted on December 23, 2019, by the learned CMM, Patiala House Courts. The petitioner sought setting aside of the cancellation order and restoration of the bail. The prosecution alleged the petitioner's involvement in fraudulent ITC worth crores through non-existent suppliers.
2. The respondent contended that the petitioner failed to deposit the full amount of Rs. 2.70 crores as a bail condition, leading to the cancellation of bail. The petitioner deposited Rs. 1.10 crores in cash and Rs. 1.60 crores through ITC reversal, which the respondent objected to.
3. The respondent argued that since the ITC availed was fraudulent, depositing part of the amount through ITC reversal was impermissible. The investigation revealed fraudulent ITC worth Rs. 27.05 crores and total ITC availed of Rs. 260 crores.
4. The petitioner cited GST rules allowing deposit through electronic credit ledger. The respondent highlighted Rule 86A, introduced in December 2019, restricting the use of electronic credit ledger for fraudulent credits.
5. The Court found that the petitioner's partial deposit through ITC reversal was valid, as the investigation did not establish all ITC as fraudulent. The Court emphasized that bail conditions were met, and the cancellation was unwarranted.
6. The Court set aside the order cancelling bail, concluding that the petitioner complied with the deposit condition. The judgment was uploaded on the Court's website, disposing of the petition and application.
This detailed analysis of the judgment highlights the legal arguments, bail conditions, and the Court's reasoning in setting aside the cancellation order based on the petitioner's compliance with the deposit condition.
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