2023 (2) TMI 91 - HC - GST

Businessman Denied Pre-Arrest Bail in Tax Fraud Case Involving Fraudulent Company Registration and False Documents

HC denied pre-arrest bail in tax fraud case involving fraudulent company registration. Allegations included producing false documents under IPC and ... Seeking grant of pre-arrest bail - production of fraudulent documents and fraudulent NOC while obtaining the registration itself - Sections 132(1)(e), (1)(f) and 132(1)(iv) of the Maharashtra Goods and Services Tax Act, 2017 - HELD THAT:- It is after the statement of the Chartered Accountant was recorded that the involvement of the present applicant came to light. The persons who are shown to be directors namely Dilkhush Abdul Jabbar and Vijay Singh Naruka are factually working as gas cylinder delivery boy and welder in whose accounts the transaction worth Rs.1,35,00,000/- is shown to have taken place. According to the prosecution, it is the applicant who is the person behind Sneheshwara Enterprises Private Limited operating the affairs with these two Directors as fronts. The statement of the Chartered Accountant reveals that it is the applicant who had approached him for the work relating to the formation of the company. This is not a fit case to grant relief of pre-arrest bail to the applicant. The anticipatory bail application is rejected. Issues:Application for pre-arrest bail in connection with offences under IPC and Maharashtra Goods and Services Tax Act, 2017.Analysis:The judgment pertains to an application for pre-arrest bail concerning offences under Sections 409, 420, 465, 468, 471, 120-B of the IPC, and Sections 132(1)(e), (1)(f), 132(1)(iv) of the Maharashtra Goods and Services Tax Act, 2017. The case involves allegations against the applicant related to fraudulent activities in connection with the formation of a private limited company. The GST department raised suspicions regarding the company's operations, leading to investigations uncovering discrepancies in documents and NOCs submitted during registration. The applicant was accused of producing fraudulent documents and NOCs to obtain registration under the said Act, as revealed by the statement of the premises' owner and the Chartered Accountant.The applicant's counsel argued that the case primarily relies on documentary evidence and contended that the maximum punishment for the alleged offence under the said Act is imprisonment up to six months or a fine or both. The counsel further emphasized that when a special statute like GST prescribes punishment for an offence, the provisions of the IPC should not be invoked. Reference was made to a decision by the Punjab and Haryana High Court to support this argument, highlighting the exclusion of subjects covered by special provisions from general provisions.Contrarily, the State's APP asserted that the applicant did not cooperate with the investigation and that the involvement of the applicant surfaced only after the Chartered Accountant's statement. The prosecution alleged that the applicant operated Sneheshwara Enterprises Private Limited using two individuals as fronts, who were actually working as a gas cylinder delivery boy and welder. The APP emphasized that the applicant approached the Chartered Accountant for setting up the company, indicating a deeper involvement in the fraudulent activities.Ultimately, the Court denied the relief of pre-arrest bail to the applicant, considering the nature of the accusations and the evidence presented. The judgment highlighted the seriousness of the allegations, particularly the production of fraudulent documents and NOCs during the company's registration process, leading to the rejection of the anticipatory bail application.