2023 (11) TMI 1055 - HC - GST

Economic Fraud Case: Bail Granted After Careful Examination of Systematic Tax Credit Manipulation and Prolonged Custody Considerations

HC granted bail in a GST tax fraud case involving fraudulent firm registration and input tax credit manipulation. Despite prosecution's opposition ... Seeking grant of Regular Bail - involvement in utilizing bogus Input Tax Credit (ITC) through fake documents - mala fide intention of not paying taxes - HELD THAT:- From the record it is apparent that the petitioner is in custody since 20.09.2022 i.e for the last more than one year. All the offences are triable by the Court of Magistrate and the conclusion of the trial may take quite a long time. Thus, the fact as to whether the FIR in the present case is maintainable or not, shall be adjudicated by the Trial Court during the course of trial. The petitioner is ordered to be released on bail subject to his furnishing bail bonds/surety bonds to the satisfaction of the trial Court/Duty Magistrate/Chief Judicial Magistrate - Petition allowed. Issues involved: Regular bail application u/s 439 Cr.PC in a case involving Sections 420, 467, 468, and 471 of IPC and Section 201, 120-B IPC, related to fraudulent registration of a firm under GST Act for tax evasion.Regular Bail Application:The petitioner filed a bail application u/s 439 Cr.PC seeking release in a case involving Sections 420, 467, 468, and 471 of IPC and Section 201, 120-B IPC related to fraudulent registration of a firm under GST Act for tax evasion.Allegations and Investigation:The FIR was based on a complaint by an Excise and Taxation Officer alleging fraudulent activities by M/s A.S. Enterprises in utilizing bogus Input Tax Credit (ITC) through fake documents, causing a loss to the Government Exchequer. The firm was found to be non-existing, with no physical transactions of goods, leading to the registration of the firm solely for fraudulent purposes.Petitioner's Contentions:The petitioner claimed innocence, arguing that the FIR was registered after a significant delay from the alleged incident, with no assessment order or penalty verified. The petitioner contended that the alleged tax evasion amount was below the threshold for arrest under the CGST Act and had no direct association with the main accused, Ashok.Legal Arguments:The petitioner's counsel argued that the FIR was not maintainable under the CGST Act, as the case fell under specific provisions of the Act, questioning the legality of the arrest and investigation. Reference was made to relevant sections of the CGST Act and previous legal precedents to support the contention that the FIR was not valid against the petitioner.Court's Decision:After considering the arguments from both sides and reviewing the record, the Court noted the petitioner's prolonged custody and the potential delay in trial proceedings. The Court allowed the bail application, ordering the petitioner's release on bail upon furnishing appropriate bonds to the satisfaction of the trial Court.Prosecution's Opposition:The State counsel opposed the bail application, emphasizing the seriousness of the offenses and the petitioner's involvement in a systematic fraud scheme causing substantial losses to the Government exchequer.