2023 (2) TMI 586 - HC - GST

Economic Fraud Mastermind Denied Bail for Systematic Tax Credit Manipulation Involving Extensive Fake Document Scheme

HC denied bail in economic fraud case involving bogus Input Tax Credit (ITC) and fake documents. Court emphasized the gravity of economic offenses causing ... Seeking grant of Regular Bail - utilization of bogus Input Tax Credit (ITC) through fake documents - allegation is that that the taxpayer had not done any business at the address provided in the registration certificate - HELD THAT:- It can safely be presumed that the petitioner in connivance with his co-accused-Ashok, had actively participated in making bogus firms i.e. Aqua Traders and R.K. Enterprises, in the names of Ankit and Rahul by preparing fake documents without their consent and knowledge. He had also prepared several other fake firms. He was involved in utilizing bogus ITC through fake documents by floating the firm M/s A.S. Enterprises, on papers only, thereby causing a loss to the Government Exchequer. Needless to say, such type of cheating is rampant in our society and is often adopted by fraudsters and unscrupulous persons by causing loss to the Government Exchequer. This has become a cakewalk to amass wealth illegally over night which needs to be curbed with an iron hand. In the instant case, as already noticed that the 'pointing finger of accusation' against the petitioner is 'the seriousness of the charge' - the offences alleged are economic offences which have resulted in loss to the Government exchequer. Considering the material on record, gravity and seriousness of the offence, prima facie involvement and complicity of the petitioner, it is opined that this Court do not find any ground to grant concession of regular bail to the petitioner. Petition dismissed. Issues:Grant of regular bail in a case involving FIR under Sections 420, 467, 468, and 471 IPC for utilizing bogus Input Tax Credit (ITC) through fake documents leading to loss to the Government Exchequer.Analysis:The FIR was filed based on a complaint by an Excise and Taxation Officer regarding M/s A.S. Enterprises' fraudulent activities involving bogus ITC through fake documents. The accused firm was found to be non-existent, conducting only paper transactions, and causing a significant loss to the Government Exchequer. The petitioner, seeking bail, claimed innocence, stating no prior proceedings were initiated against him, and the alleged tax evasion amount falls under a bailable offense category. However, the State counsel opposed the bail, alleging the petitioner's involvement in forging documents and causing substantial losses. The court noted the seriousness of economic offenses causing government revenue loss and denied bail based on the gravity of the offense and the petitioner's involvement in creating fake firms and utilizing bogus ITC.The prosecution presented evidence showing the accused firm's fraudulent activities, including showing false transactions to evade taxes and causing a substantial loss to the Government Exchequer. The petitioner was accused of registering fake firms and forging documents without the knowledge or consent of others. Co-accused statements confirmed the petitioner's involvement in creating bogus firms and utilizing fake ITC, leading to financial losses. The court emphasized the prevalence of such fraudulent activities and the need to deter such behavior to protect government revenue. The court highlighted the seriousness of the charges and the economic offenses committed, leading to the denial of bail due to the gravity of the offense and the petitioner's active involvement in the fraudulent activities.The judgment emphasized the seriousness of economic offenses causing losses to the Government Exchequer and the need to address such fraudulent practices firmly. The court considered the material on record, the gravity of the offense, and the petitioner's involvement in creating fake firms and utilizing bogus ITC through fraudulent means. The decision to deny bail was based on the substantial loss caused, the petitioner's active participation in the fraudulent activities, and the need to prevent such offenses from occurring. The court's ruling was grounded in the gravity of the offense, the petitioner's complicity, and the importance of curbing fraudulent practices to protect government revenue.The court dismissed the bail plea, citing the gravity of the economic offenses committed, the loss caused to the Government Exchequer, and the petitioner's active involvement in creating fake firms and utilizing bogus ITC through fraudulent means. The decision was based on the seriousness of the charges, the material evidence presented, and the need to prevent such fraudulent activities from recurring. The judgment underscored the importance of deterring fraudulent practices that lead to financial losses and emphasized the need to address such offenses with strict measures to safeguard government revenue.