2024 (8) TMI 1384 - HC - GST

Accused granted bail in GST fraud case involving fraudulent input tax credit claims from suspicious suppliers

The Allahabad HC granted bail to an accused in a GST fraud case involving fraudulent input tax credit claims from suspicious suppliers with mismatched ... Grant of bail - availment of ITC from the suspicious suppliers who have either self mismatch or very high mismatch in its inward supply from GSTR-2A and GSTR-3B to the said firm - HELD THAT:- The attention of the Court is also drawn to a relevant pronouncement made by Hon'ble Apex Court in SATENDER KUMAR ANTIL VERSUS CENTRAL BUREAU OF INVESTIGATION & ANR. [2022 (8) TMI 152 - SUPREME COURT] wherein dealing specifically with the economic offences, it has been held by the Hon'ble Apex Court that 'The gravity of the offence, the object of the Special Act, and the attending circumstances are a few of the factors to be taken note of, along with the period of sentence. After all, an economic offence cannot be classified as such, as it may involve various activities and may differ from one case to another. Therefore, it is not advisable on the part of the court to categorise all the offences into one group and deny bail on that basis. Suffice it to state that law, as laid down in the following judgments, will govern the field.' In SANJAY CHANDRA VERSUS CBI [2011 (11) TMI 537 - SUPREME COURT], the Hon'ble Apex Court noticed that it was a case of fraud wherein by cheating and dishonestly inducing delivery of property by using as genuine a forged document was involved but the punishment for the offence was imprisonment for a term which may extend to seven years. The Hon'ble Apex Court held that it is, no doubt, true that the nature of the charge may be relevant but at the same time the punishment to which the party may be liable, if convicted, also bears upon the issue. Therefore, in determining whether to grant bail, both the seriousness of the charge and the severity of the punishment should be taken into consideration. Keeping in view the fact that in the instant matter trial has not started even yet and the complicity of the accused applicant is yet to be determined in trial and everything relevant to the matter is under control of the department itself and there is probably nothing on record to demonstrate that the applicant, if enlarged on bail, would in any way adversely affect the trial; further no final verdict of any Court / Authority for any criminal liability to the credit of the applicant has been brought to the notice of this Court and noticing that the alleged offence is punishable with the maximum period of imprisonment of five years, the applicant is in jail since 1.5.2024, without commenting upon the merits of the case, it is opined that the applicant has made out a case for bail. Let the applicant be released on bail on furnishing a personal bond and two heavy sureties each in the like amount to the satisfaction of the court concerned subject to fulfilment of conditions imposed - bail application allowed. Issues Involved:1. Bail application for the accused under Sections 132(1)(c) and 132(1)(i) of the C.G.S.T. Act, 2017.2. Alleged fraudulent availment of Input Tax Credit (ITC) by the accused.3. Compliance with legal provisions and procedural safeguards.4. Relevance and admissibility of statements and evidence.5. Conditions for granting bail.Issue-wise Detailed Analysis:1. Bail Application for the Accused:The applicant, Lalit Kumar Chaudhary, sought bail in Case No. 1164 of 2024 under Sections 132(1)(c) and 132(1)(i) of the C.G.S.T. Act, 2017. The court considered the supplementary affidavit and heard arguments from both sides.2. Alleged Fraudulent Availment of ITC:The prosecution alleged that M/s Okito Tradeco LLP, where the applicant is a partner, engaged in fraudulent ITC availment from non-existent suppliers. Searches revealed that suppliers like M/s Pure Bitumen, M/s Global Enterprises, M/s Sky Suppliers, M/s G.S. Traders, and M/s Encore Inc. were non-existent and had obtained GST registration using forged documents. Incriminating documents and WhatsApp chats indicated the applicant's involvement in transactions with these suppliers, leading to a fraudulent ITC amount of Rs. 8,47,08,391.3. Compliance with Legal Provisions and Procedural Safeguards:The applicant argued that he was falsely implicated and that provisions of Sections 41, 41-A of CrPC, and Section 69 of the C.G.S.T. Act were not complied with. He claimed no revenue loss or tax evasion and contended that the prosecution lacked the Commissioner's sanction. The court noted the applicant's cooperation and the absence of a recovery notice against him.4. Relevance and Admissibility of Statements and Evidence:The applicant contended that statements recorded during the investigation were irrelevant unless tested in court. He alleged coercion in obtaining his signature on certain documents. The court considered the evidence, including WhatsApp chats and statements from the applicant and other partners, indicating the applicant's role in fraudulent activities.5. Conditions for Granting Bail:The court referred to precedents, including Satender Kumar Antil vs. CBI and P. Chidambaram vs. Directorate of Enforcement, emphasizing the gravity of economic offences and the principle that bail is the rule and refusal the exception. Considering the applicant's long imprisonment since 1.5.2024, the pending trial, and the maximum imprisonment of five years, the court concluded that the applicant made a case for bail.Conclusion:The court allowed the bail application, ordering the release of the applicant on furnishing a personal bond and two heavy sureties. Conditions for bail included appearing before the trial court, not committing similar offences, not tampering with evidence, not engaging in criminal activities, and surrendering the passport. The prosecution could seek bail cancellation in case of any breach.Order:The bail application of Lalit Kumar Chaudhary was allowed, subject to conditions ensuring his compliance and cooperation with the ongoing trial.