Businessman Secures Bail in Rs. 41 Cr GST Credit Case After Demonstrating Cooperation and Commitment to Resolve Allegations

HC granted bail in GST tax credit case involving Rs. 41 crores evasion. Court found no fraudulent intent after applicant reversed input tax credit and offered monthly payments. Bail granted with conditions including bond, monthly deposits, cooperation with investigation, and travel restrictions.

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Issues:
Application for bail under Section 439 of Cr. P.C. based on alleged GST Act violations involving inadmissible input tax credit and evasion of GST amounting to Rs. 41 crores.

Detailed Analysis:
The applicant, involved in a contract farming business, sought bail contending that the GST Authorities have not filed any complaint against him and that the offense under Section 132 of the GST Act is compoundable. The applicant's firm, dealing with agricultural business, claimed they are not liable to pay GST as per Notification No.12/2017/Central Tax. The applicant offered to pay any liability and deposit Rs. 5 crores per month till settlement, asserting cooperation with the investigating agency and readiness to comply with legal obligations.

The GST Authorities opposed the bail application, highlighting that the applicant and his firm utilized inadmissible input tax credit, leading to an evasion of Rs. 41 crores. They argued that the offense is serious due to the significant amount involved, constituting an economic offense warranting detention.

Upon examination, it was revealed that the applicant's firm had reversed the inadmissible input tax credit and deposited a substantial amount. The prosecution did not allege forgery of documents by the applicant or his firm for tax benefits. The applicant's willingness to deposit Rs. 5 crores monthly, along with the disputed tax liability, indicated no fraudulent intent in availing the input tax credit illegally.

The Court noted the lack of progress in the investigation during the 55-day custody period and the applicant's cooperation by reversing the input tax credit and making payments. Considering the applicant's proposal to pay monthly installments, the Court found no prima facie intention to evade taxes fraudulently. Consequently, the Court granted bail to the applicant under specified conditions, emphasizing cooperation with the investigating authorities and compliance with legal obligations.

In the final order, the Court allowed the bail application, directing the applicant to furnish a personal recognizance bond and sureties, comply with the proposed monthly payments, attend the investigating officer's office, provide contact details, refrain from influencing witnesses, and seek court permission before leaving India. The Court disposed of the bail application accordingly.

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