2022 (8) TMI 461 - DSC - GST

Accused granted bail in GST fraud case involving conspiracy and illegal Input Tax Credit through bogus billing and shell companies

DGGI Versus Gorav Gupta

The Patiala House Courts granted bail to an accused in a GST fraud case involving conspiracy and illegal Input Tax Credit availment through bogus billing ... Seeking grant of bail - Conspiracy - Illegal and fraudulent availment of fake Input Tax Credit - it is also alleged that the funds from bogus billing have been transferred through shell companies - recording of statements - retraction of statements - HELD THAT:- There is no specific mention of M/s. Retro Electric Pvt. Ltd.. It is pertinent to observe that mere absence of the name of M/s. Retro Electric Pvt. Ltd. in the factual matrix summarized before the Hon’ble High Court does not per-se exonerate the accused. However, in the summarization of factual matrix before the Hon’ble High Court in TARUN JAIN VERSUS DIRECTORATE GENERAL OF GST INTELLIGENCE DGGI [2021 (12) TMI 135 - DELHI HIGH COURT], the reply filed in the present bail application and the observation of Ld. ASJ / Bail Roster Judge in order dated 05.03.2022 of the bail application of accused Mukesh Gupta it appears that whenever the bail application of any particular accused is argued before the court, his role is highlighted. In such circumstances and at this stage it is not possible for the court to observe with certainty as to who is the main culprit in the present case. At this stage this court does not see any reason to believe that the role of any other accused is substantially more or less than the present accused in the present case. It is pertinent to observe that Section 70 of CGST Act provides for recording of statements with regard to the proceedings under the Act. This section nowhere specifically says that such statements can be used against the maker of such statements during the trial. The complainant has not pointed out any legal provision which makes it impossible for the maker of the statement under Section 70 of CGST Act to retract the same - The complainant department has not given any specific reason why the accused was not summoned after 22.06.2022. The applicant / accused Gorav Gupta is allowed to be released on bail in the event of arrest on furnishing of personal bond in the sum of Rs. 5 lakhs with two solvent sureties in the like amount to the satisfaction of Investigating officer / Apprehending Authority with the terms and conditions imposed - application allowed. Issues involved:Alleged conspiracy for fraudulent Input Tax Credit (ITC) availing, non-cooperation in investigation, comparison with co-accused, bail application, legal provisions for statements under CGST Act, sufficiency of evidence, bail conditions.Analysis:1. Alleged Conspiracy for Fraudulent ITC Availing:The case involves accusations of a conspiracy to fraudulently avail of fake Input Tax Credit (ITC) amounting to Rs. 72 crores by several firms, orchestrated by the accused and other individuals. The accused and co-accused were allegedly controlling a network of bogus transactions involving non-existent suppliers and buyers, with funds transferred through shell companies. The accused's modus operandi involved showing non-existent suppliers to avail fake ITC, benefiting entities like M/s. Jetibai Grandsons Services India Pvt. Ltd.2. Non-Cooperation in Investigation:Despite repeated summons, the accused did not initially cooperate in the investigation. It was only after interim protection was granted that the accused appeared, but still did not fully cooperate. The accused's lack of cooperation, involvement in managing multiple firms, and association with an absconding co-accused raised concerns about flight risk and managing illegal activities.3. Comparison with Co-Accused:The defense argued for the accused's innocence by comparing his role with that of a co-accused who had been granted anticipatory bail. The defense highlighted differences in the accused's involvement, emphasizing the accused's alleged central role in the fraudulent activities, managing multiple firms, and controlling operations at specific locations.4. Legal Provisions for Statements under CGST Act:The court analyzed the legal provisions under Section 70 of the CGST Act regarding recording of statements and the use of such statements during trial. The court noted that statements under Section 70 may not be specifically admissible during trial, while emphasizing the binding nature of affidavits submitted by the accused. The court found filing a written affidavit to be more compelling and difficult to retract compared to verbal statements.5. Sufficiency of Evidence and Bail Application:The court considered the evidence presented, including statements, affidavits, and factual matrices from related cases. Despite arguments regarding the accused's role and level of involvement, the court found insufficient grounds to determine the main culprit definitively at that stage. The court granted bail to the accused, emphasizing the need for cooperation in the investigation and adherence to specified conditions.6. Bail Conditions:The court granted bail to the accused on the condition of furnishing a personal bond and providing sureties. The bail conditions included surrendering the passport, cooperation in the investigation, refraining from offenses, maintaining communication, and allowing monitoring of location. Any breach of conditions could lead to the cancellation of the granted bail.In conclusion, the judgment addressed the complex web of fraudulent activities, the accused's role in the alleged conspiracy, the comparison with co-accused individuals, legal provisions governing statements, sufficiency of evidence, and the granting of bail with specific conditions to ensure compliance and cooperation in the ongoing investigation.