2023 (8) TMI 891 - DSC - GST

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 ... Seeking grant of bail - availing and passing off fake ITC - issuance of bogus invoices - HELD THAT:- A perusal of demand papers sent case diary a relives that there are two directors in M/s Sanraj Metals Private Limited namely, Shri Sanjeev Kadiyan and Miss Nivita Jain. Nivita Jain is bedridden due to her medical conditions and she is not looking after any affairs of a said company and her father Shri Rajneesh Jain (applicant herein) is conducting day to day affairs in the garb of Signing Authority for banking. He is also paying salary to another director Sanjeev Kadiyan. Data retrieved from his phone confirms that he is actually running the company. It has also been confirmed that some of companies/firms were created by misusing documents of unsuspecting persons, who denied opening any company. Thus, although, the applicant is neither director or any officer in the said company but, he is running the affairs of the said company and dealing with various persons. It also transpires that Directorate General of G.S.T Intelligence (DGGI) Meerut was probing matter of one Amit Gupta in connection with case No. 2415 of 2022 who was running several companies and receiving fake invoices from non-existent firms. The purpose of applicant was to enrich himself through receiving and issuing fake invoiced which were used for commission of offence. The applicant did not co-operate with the investigation and refused to give his statement and showed himself ill and he was rushed to hospital where he was found stable as per discharge summary dated 19-05-2023 of Manipal Hospital. Due to the acts of the applicant, the appropriate authority authorized his arrest and he was arrested. Investigation is still going on and there is strong possibility that if the applicant is released on bail, he will temper with the evidence and try to influence the witnesses. Considering the gravity of offence involving multiple crime partners and huge amount involved in availing and passing off fake ITC, which is 96 crores, the seriousness of charges is grave in nature and therefore, in the case of the applicant, this Court is not inclined to enlarge the applicant on bail. It is true that co-accused Amit Gupta has been granted bail by the Hon'ble High Court but the offence of the present applicant, although connected with the offence of Amit Gupta, is distinct and separate and therefore no parity can be extended to the applicant. Apart from that, this Court can only granted parity of its own orders and cannot equate its powers with that of the Hon'ble High Court. The bail application of the applicant/accused Rajnish Jain Under Section 132(1)(b)&(c), 132(1)(i) CGST Act, DGGI, Meerut is hereby rejected. 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.