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of <h1>Accused in tax fraud case involving fake invoices gets regular bail after investigation completed</h1> The Punjab and Haryana HC granted regular bail to petitioner involved in economic offence relating to fraudulent Input Tax Credit accumulation through ... Seeking grant of regular bail - accumulation of very high amount of fraudulent Input Tax Credit (ITC), on the basis of bogus purchase invoices from nonexistent and fraudulent firms - showing sale invoices at lower tax rate and claiming inverted tax refund, by filing and unloading fake documents including CA certificates - same modus operandi was used by cartel of economic offenders in filing bogus applications for refund consisting of various fake firms. HELD THAT:- The petitioner is involved in economic offence and is in custody since 26.05.2022 - In case THE STATE OF BIHAR & ANR. VERSUS AMIT KUMAR @ BACHA RAI [2017 (4) TMI 1410 - SUPREME COURT], it is held by Hon’ble Apex Court that there is no straight jacket formula for consideration of grant of bail to an accused as it all depends upon the facts and circumstances of each case. The grant of bail was set aside to the kingpin of crime, publicly known as “Bihar Topper Scam”, by observing that Investigating Officer was going to file additional charge-sheet. In SANJAY CHANDRA VERSUS CBI [2011 (11) TMI 537 - SUPREME COURT], it is held that when charge-sheet is already filed before the Court, the presence of accused in custody may not be necessary for further investigation. It is held therein that the appellants were entitled to grant of bail pending trial on stringent conditions in order to ally the apprehension expressed by CBI. In this case, the investigation is already complete. The complaint has already been filed in the concerned Court. The co-accused Sunil Mahlawat and Gaurav Dhir have already been granted bail by the Coordinate Bench of this Court and the case is to be tried by the Magistrate - The further custody of the petitioner would not serve any useful purpose. The petitioner is ordered to be released on regular bail, subject to his furnishing bail/bond amounting to Rs.10 lakhs with two sureties in the like amount, to the satisfaction of trial Court/Duty Magistrate concerned and subject to him being not required in any other case - Petition allowed. Issues:The issues involved in this case include fraudulent accumulation of Input Tax Credit (ITC) through non-existent firms, misuse of UDIN credentials by Chartered Accountants, creation of bogus firms for fraudulent ITC and refunds, involvement in economic offences, and the mastermind behind a racket of fraudulently availing ITC refund.Fraudulent Accumulation of Input Tax Credit (ITC):The petitioner sought regular bail in a case involving Sections 132(1)(i) and 132(1)(c)(e)(f) of the CGST Act, 2017. The investigation revealed that non-existent firms were accumulating fraudulent ITC based on bogus invoices, with the petitioner allegedly involved in creating these firms. The prosecution contended that the petitioner was the mastermind behind the racket, accumulating ITC refund amounting to Rs. 18.73 crores through these non-existent firms.Misuse of UDIN Credentials and Creation of Bogus Firms:The investigation found that two Chartered Accountants misused their UDIN credentials to issue false/forged CA certificates for fake firms, enabling them to claim bogus refunds. The petitioner was accused of creating bogus firms, such as M/s Barista Fashion, to fraudulently avail ITC and refunds without conducting any actual business. The petitioner was alleged to recruit individuals to open bank accounts for these bogus firms, leading to the receipt of substantial amounts in fraudulent ITC and refunds.Involvement in Economic Offences:The petitioner was accused of being involved in economic offences related to tax evasion activities. It was revealed that the petitioner used fictitious identities to manipulate facts and evade taxes, recruiting individuals for fraudulent activities. The investigation highlighted the petitioner's habitual offending behavior and involvement in multiple fraudulent schemes.Mastermind Behind Fraudulent ITC Racket:The prosecution argued that the petitioner was the mastermind behind the entire fraudulent scheme of availing ITC refund through non-existent firms. The petitioner's involvement in creating these bogus firms, manipulating documents, and facilitating fraudulent activities was emphasized as the key factor in the fraudulent accumulation of ITC refund.Judicial Decision:The High Court granted the petitioner regular bail upon furnishing a bail/bond of Rs.10 lakhs with two sureties. Various conditions were imposed, including surrendering the passport, providing a registered mobile number to the court, not changing residence without intimation, and attending all court hearings. The Court clarified that the bail conditions could be modified by the Trial Court as deemed necessary. It was emphasized that the grant of bail did not reflect a final opinion on the case's merits, allowing the Trial Court to proceed independently in adjudicating the matter.
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