Accused denied bail in 96 crore fake ITC scam due to evidence tampering risk and witness influence concerns

Sessions Court Meerut rejected bail application of accused involved in fake ITC scam worth 96 crores. Applicant, though not formally a director, was found running company affairs through signing authority and creating firms using documents of unsuspecting persons. Court noted non-cooperation during investigation, risk of evidence tampering, and witness influence. Despite co-accused receiving HC bail, court distinguished applicant's separate offences under CGST Act and denied parity, considering gravity of charges and ongoing investigation.

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Issues Involved:

1. Allegations of fraudulent availing and passing on of ineligible Input Tax Credit (ITC).
2. Legality and circumstances of the applicant's arrest.
3. Arguments for and against the grant of bail.
4. Judicial precedents and principles applicable to economic offences.

Summary:

1. Allegations of fraudulent availing and passing on of ineligible Input Tax Credit (ITC):
The prosecution alleged that M/s Sanraj Metals Pvt. Ltd. (SMPL) availed and passed on ineligible ITC of Rs. 79.12 Crore based on bogus invoices without the supply of goods or services. Investigations revealed that SMPL received fake ITC from non-existent firms and further passed on the same. The applicant, Rajnish Jain, was identified as the controller of SMPL, managing monetary and accounts-related matters.

2. Legality and circumstances of the applicant's arrest:
The applicant argued that he was illegally arrested by the complainant's officers on 19.05.2023 during a search operation at his residence. He claimed that he was not involved in the day-to-day operations of SMPL and was only associated with banking operations on behalf of his daughter, a sleeping partner. The applicant also contended that the investigation by the State Tax Authorities should not have been transferred to the Central Tax Authority.

3. Arguments for and against the grant of bail:
The applicant's counsel argued that the applicant is a respectable citizen, willing to cooperate with the investigation, and there is no likelihood of absconding or tampering with evidence. The applicant prayed for bail, emphasizing that the alleged offence is not punishable with death or life imprisonment. In contrast, the counsel for the CGST Department contended that the applicant was running SMPL using other persons as directors and was involved in procuring and supplying fake invoices to avail and pass on fraudulent ITC. The prosecution argued that the applicant's release on bail could lead to tampering with evidence and influencing witnesses.

4. Judicial precedents and principles applicable to economic offences:
The court considered various judicial precedents, including Radheyshyam Kejriwal vs. State of West Bengal, which held that adjudicating and criminal proceedings could be launched simultaneously, and economic offences should be treated with a different approach concerning bail. The court also referred to Satender Kumar Antil, emphasizing the seriousness of the charge and the severity of punishment in economic offences.

Judgment:
Considering the gravity of the offence, the involvement of multiple crime partners, and the substantial amount involved in availing and passing off fake ITC, the court found the charges against the applicant grave. The court concluded that releasing the applicant on bail could result in tampering with evidence and influencing witnesses. Consequently, the bail application of Rajnish Jain was rejected.

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