2022 (8) TMI 51 - HC - GST

Applicant granted bail in CENVAT credit fraud case despite allegations of fake firm creation for bogus Input Tax Credit

Shri Roopak Vashishth Versus Union Of India Through Principal Secretary Finace New Delhi And Another

The Allahabad HC granted bail to an applicant accused of illegal CENVAT credit availment and GST registration fraud using others' documents. Despite ... Seeking grant of Bail - illegal availment of CENVAT Credit - allegation against the applicant that he is involved in GST registration of fake firms by using pan card, adhaar card and other information of other persons procured fraudulently and by showing fraudulent transaction of such firms for availing fake / bogus Input Tax Credit (ITC) - HELD THAT:- This court finds that there is no firm registered in the name of the applicant and he claims that he has no concern with 11 firms registered on pan number of the applicant. From the bank accounts of the applicant, no monetary benefit from illegal availment of ITC were found. The complaint has already been filed against the applicant. The investigation has been conducted and necessary statements have been recorded the details of manipulation by the applicant have been found during the investigation. The details of the alleged shell companies have also been gathered. The facts in the complaint are required to be proved by the prosecution before the special court. The Commissioner is empowered to recover the due amount and propose for abating the proceedings and as the trial will take its own time to conclude, this Court finds this to be a fit case where discretion could be exercised in favour of the applicant. The applicant is in jail since 10.3.2022 and has no criminal history - Keeping in view the nature of the offence, argument advanced on behalf of the parties, evidence on record regarding complicity of the accused, larger mandate of the Article 21 of the Constitution of India and the dictum of Apex Court in the case of DATARAM SINGH VERSUS STATE OF UTTAR PRADESH AND ANR. [2018 (2) TMI 410 - SUPREME COURT] and without expressing any opinion on the merits of the case, the Court is of the view that the applicant has made out a case for bail. Let the applicant be released on bail on his furnishing a personal bond and two sureties each in the like amount to the satisfaction of the court concerned subject to following conditions. Further, before issuing the release order, the sureties be verified - Application allowed. Issues: Bail application under Sections 132(1), (b), (c), (f), (l), and (i) of C.G.S.T. Act, 2017 in Case Crime No. 325 of 2020.Analysis:1. The applicant sought bail in a case involving allegations of involvement in GST registration of fake firms for fraudulent Input Tax Credit (ITC) under various sections of the CGST Act, 2017.2. The defense argued that the applicant was not directly involved in the registration or issuance of bills for the fake firms, attributing the actions to co-accused individuals who misused the applicant's personal details.3. The defense highlighted the lack of evidence linking the applicant to the fraudulent activities, emphasizing the absence of monetary benefits in the applicant's bank accounts from the illegal ITC availment.4. The prosecution contended that the applicant was rightfully implicated, citing evidence such as the registration of bogus firms with the applicant's mobile number and statements made by the applicant during the investigation.5. The court considered the seriousness of the economic offenses, noting the provisions of the CGST Act regarding tax evasion and the cognizability of offenses involving evasion exceeding five crore rupees.6. In evaluating the bail application, the court referenced legal precedents emphasizing the balance between the accused's liberty and societal interests, cautioning against prolonged judicial custody before trial conclusion.7. The court acknowledged the absence of a criminal history for the applicant and the potential delay in trial conclusion due to the complexity of the case, leading to the exercise of discretion in favor of granting bail.8. Bail was granted to the applicant subject to conditions including surrendering the passport, furnishing a bank guarantee, refraining from tampering with evidence or engaging in criminal activities, and complying with trial procedures to avoid abuse of bail privileges.This detailed analysis of the judgment provides a comprehensive overview of the legal considerations, arguments presented by both parties, and the court's reasoning in granting bail in the context of the specified issues.