2022 (9) TMI 1203 - HC - GST

Anticipatory bail denied for fraudulent Input Tax Credit claims using fake invoices under Section 70

Rajesh Kumar Dudani Versus State of Uttarakhand and Another

The Uttarakhand HC dismissed an anticipatory bail application in a case involving fraudulent availment of Input Tax Credit through forged and fake ... Seeking grant of Anticipatory Bail - availment of Input Tax Credit (ITC) based on forged and fake invoices - applicant summoned under Section 70 of the Act - HELD THAT:- The allegations are much grave. It is the case of generating fake and forged invoices so as to claim ITC. In their objections, the respondent no.2 has given categorical details of such dubious transactions and has also submitted as to how in one day, the money has routed in different accounts. The applicant transferred the money in his wife’s account and, subsequently, from her account, it comes to the applicant’s account. It is a kind of act, which effects the economy of the country. Added to it is the non-cooperative attitude of the applicant during enquiry. Having considered the gravity of offence and its implications, this Court is of the view that the applicant is not entitled for anticipatory bail - the instant anticipatory bail application deserves to be dismissed. The anticipatory bail application is dismissed. Issues:1. Anticipatory bail application under Section 70 of the Central Goods and Services Tax Act, 2017.2. Allegations of generating fake and forged invoices to claim Input Tax Credit.3. Non-cooperation of the applicant during the investigation.4. Consideration of factors for granting anticipatory bail as per legal precedents.Analysis:1. The applicant, running two businesses, sought anticipatory bail after being summoned under Section 70 of the Act. The applicant cooperated with the authorities, producing numerous documents. The defense argued that the alleged offense is bailable under Section 132(4) of the Act due to the claimed amount not exceeding Rs. 500 Lakhs. Additionally, it was contended that the respondent was investigating a company unrelated to the applicant. The defense relied on legal principles established in previous cases, emphasizing that custodial interrogation may not be necessary.2. The respondent accused the applicant of evading tax payments through fraudulent means, involving fake invoices and a complex network of firms. The respondent highlighted discrepancies in tax payments before and during the COVID-19 pandemic, revealing suspicious transactions and transportation practices. The respondent detailed the investigation findings, linking the applicant to the operation of multiple firms engaged in fraudulent activities. The State emphasized the significant financial transactions involving the applicant's firm.3. The respondent alleged that despite initial protection granted to the applicant, he failed to cooperate during the inquiry, providing evasive answers and displaying a non-cooperative attitude. The respondent pointed out instances where the applicant did not provide satisfactory explanations regarding the transportation of goods and the location of certain vehicles, raising doubts about his involvement.4. The Court considered various factors for granting anticipatory bail, as outlined in legal precedents. These factors included the nature and gravity of the accusation, the applicant's antecedents, the likelihood of fleeing from justice, and the impact on the investigation and potential witnesses. The Court cited specific parameters to be considered, such as the genuineness of the prosecution, the possibility of witness tampering, and the balance between investigation integrity and preventing unjustified detention. Ultimately, based on the gravity of the offense, the Court concluded that the applicant was not entitled to anticipatory bail, leading to the dismissal of the application.