2022 (8) TMI 252 - HC - GST

Bail granted to applicant charged with GST evasion and issuing bogus invoices under Section 132(1)(B)(I) CGST Act 2017

The HC granted bail to an applicant charged with GST evasion and issuing bogus invoices without supplying goods under Section 132(1)(B)(I) of CGST Act, ... Grant of Bail - evasion of GST - issuance of bogus invoices without supply of goods, in the name of fake firms created by him - Sections 132 (1) (B) (I), Central Goods & Services Tax Act, 2017 - HELD THAT:- In Y.S. JAGAN MOHAN REDDY VERSUS CENTRAL BUREAU OF INVESTIGATION [2013 (5) TMI 896 - SUPREME COURT], the Hon'ble Supreme Court was dealing with allegations of offences which were punishable with upto life imprisonment, but in the present case, the maximum punishment that can be imposed upon the applicant is five years' imprisonment. Moreover, the offence is compoundable as per the provision contained in Section 138 of the CGST Act, sub-Section (1) whereof provides that 'Any offence under this Act may, either before or after the institution of prosecution, be compounded by the Commissioner on payment, by the person accused of the offence, to the Central Government or the State Government, as the case be, of such compounding amount in such manner as may be prescribed'. Thus, the applicant has been implicated on the basis of the statement of a co-accused Chandra Prakash Kriplani, who has already been granted bail by this Court - applicant himself had been granted anticipatory bail by this Court - the department had initiated proceedings on 31.12.2019 by issuing a summons under Section 70 of CGST Act and after completion of the investigation, on 22.11.2021 the department has filed a complaint in the Court of Special Chief Judicial Magistrate, Agra and, therefore, it cannot be said that now the applicant is in a position to influence the investigation of the case - the applicant is languishing in jail since 26-09-2021; (6) the maximum punishment that can be imposed upon the applicant is five years' imprisonment - the offence is compoundable as per the provision contained in Section 138 of the CGST Act, the applicant is entitled to be released on bail. Let the applicant be released on bail - the instant bail application is allowed. Issues Involved:1. Bail application under Section 132(1)(B)(I) of the Central Goods & Services Tax Act, 2017.2. Allegations of GST evasion and creation of fake firms.3. Statements and evidence presented by the prosecution.4. Applicant's defense and counter-arguments.5. Legal precedents and principles regarding bail in economic offences.Detailed Analysis:1. Bail Application Under Section 132(1)(B)(I) of the CGST Act, 2017:The applicant sought release on bail during the pendency of trial in Case No. IV - CE (9) CP / Agra / Nitin / 25119 251/2019, under Sections 132(1)(B)(I) of the CGST Act, 2017. The applicant was accused of issuing bogus invoices without the supply of goods through fake firms.2. Allegations of GST Evasion and Creation of Fake Firms:The prosecution alleged that the applicant was involved in a large-scale GST evasion scheme by creating 126 fake firms and issuing bogus invoices to pass on inadmissible input tax credit. During searches at four locations, numerous incriminating items were recovered, including mobile phones, laptops, and documents indicating the applicant's control over the fake firms. The total invoice value of the fake supplies was Rs. 691.35 Crores, with a GST evasion of Rs. 100.30 Crores.3. Statements and Evidence Presented by the Prosecution:The prosecution presented statements from Chandra Prakash Kriplani, an alleged employee of the applicant, who implicated the applicant in creating fake firms and issuing bogus invoices. Additional evidence included recovered documents and electronic data showing the applicant's involvement in the scheme. The prosecution argued that the applicant was the mastermind behind the GST evasion, causing significant loss to the government exchequer.4. Applicant's Defense and Counter-Arguments:The applicant claimed to be a property dealer and denied involvement in the alleged GST evasion. He argued that he had been falsely implicated by his tenant, Chandra Prakash Kriplani. The applicant also highlighted that the co-accused, Kriplani, had already been released on bail, and he sought bail on the ground of parity. The applicant's counsel contended that no fake invoices or e-way bills were recovered from the applicant's possession and that the payments for the flats were made through banking channels, negating the involvement of black money.5. Legal Precedents and Principles Regarding Bail in Economic Offences:The court considered various legal precedents, including judgments from the Supreme Court, emphasizing that socio-economic offences require a different approach in bail matters. The court noted that while economic offences are serious, the maximum punishment for the alleged offence is five years, and the offence is compoundable under Section 138 of the CGST Act. The court also considered factors such as the applicant's lack of criminal history, the completion of the investigation, and the applicant's incarceration since 26-09-2021.Conclusion:Based on the analysis of facts and legal principles, the court allowed the bail application, considering the applicant's entitlement to bail under the specific circumstances. The court set conditions for bail, including non-tampering with evidence, non-influence of witnesses, and regular appearance before the trial court.Order:The applicant was granted bail on furnishing a personal bond and two sureties, subject to conditions ensuring non-tampering with evidence, non-influence of witnesses, and regular court appearances. The prosecution was given the liberty to seek cancellation of bail in case of any breach of these conditions.