2024 (12) TMI 50 - HC - GST

Anticipatory bail granted to petitioners charged with fraudulent Input Tax Credit claims despite serious fraud allegations

Jatinder Menro and Mandeep Singh Versus State of Punjab

The HC granted anticipatory bail to petitioners charged with fraudulent Input Tax Credit claims through fake bills and fictitious transactions. While ... Seeking grant of anticipatory bail - fraudulent claims of Input Tax Credit (ITC) - creation of fake forms - forging and fabrication of fake bills showing inter se transactions of sales and purchases - HELD THAT:- The allegations are broadly to the effect that the petitioners had availed of ‘Input Tax Credit’ by raising false bills and showing fictitious transactions effected through dummy firms which were actually not in business. Such allegations, on the face of it would certainly attract offence under IPC for allegedly availing ‘Input Tax Credit’ fradulently on the basis of false documents and sham transactions. At the same time, since fraud had allegedly been committed with respect to availing ‘Input Tax Credit’ under provisions of GST, the penal provisions of GST would also attracted. Section 26 of the General Clauses Act, 1897 suggests that there is no absolute bar to try an offender under two different enactments, but the bar is only to the punishment of the offender twice for the offence. The same set of facts, in conceivable cases, can constitute offences under two different laws. An act or an omission can amount to and constitute an offence under the IPC and at the same time, an offence under any other law - This Court however, finds that the said judgments particularly the Supreme Court’s judgments have not directly dealt with the issue where act constitutes offence under two enactments particularly in reference to Section 26 of General Clauses Act. However, Hon’ble the Supreme Court has specifically dealt with the said issue on several occasions in some other cases. Hon’ble Supreme Court in TS BALIAH VERSUS TS RANGACHARI, INCOME-TAX OFFICER, CENTRAL CIRCLE VI, MADRAS [1968 (12) TMI 1 - SUPREME COURT], held that where an act or an omission constitutes an offence under two enactments, the offender may be prosecuted and punished under either or both enactments but shall not be liable to be punished twice for the same offence. In STATE OF RAJASTHAN VERSUS HAT SINGH & ORS. [2003 (1) TMI 723 - SUPREME COURT] Hon’ble Apex Court discussed the doctrine of double jeopardy and section 26 of the General Clauses Act to observe that prosecution under two different Acts is permissible if the ingredients of the provisions are satisfied on the same facts. Admittedly, the petitioners have also been proceeded in a complaint filed against them under Section 132 of CGST Act, which is pending at Ludhiana wherein petitioner-Jatinder Menro remained in custody for 1 year and 8 months and petitioner-Mandeep Singh remained behind bars for about 1 year. It is also not in dispute that the petitioners were not on the run and had associated themselves with the authorities concerned. However, the petitioners now apprehend their arrest on account alleged disclosure statement dated 2.11.2013 by Sammy Dhiman and addition of offences punishable under Sections 465, 467, 468, 471 IPC. It is now pursuant to recording of said disclosure statement that the petitioners came to be nominated as accused in the present FIR on 02.11.2023. Having regard to the position wherein it is prima facie found that the allegations as in the complaint under Section 132 of CGST Act and in the FIR are more or less overlapping and also that the allegations pertaining to raising of false bills for showing false transactions would specifically be covered under offences under CGST and also that the petitioners have remained behind bars for a substantial period in respect of a complaint under Section 132 of CGST Act and neither the petitioners are alleged to been on the run during these five years nor the police had chosen to arrest them ever since lodging of the FIR, this Court is of the opinion that it is a fit case for grant of anticipatory bail to the petitioners. Petition allowed. Issues:Grant of anticipatory bail in a FIR involving fraudulent claims of 'Input Tax Credit' (ITC) through fake documents and fictitious transactions. Allegations of creating dummy firms and causing loss to the Government. Application of penal provisions under IPC and GST Acts. Consideration of double jeopardy principle. Interpretation of Section 26 of the General Clauses Act, 1897.Analysis:1. The judgment pertains to two petitions seeking anticipatory bail in a FIR involving fraudulent activities related to 'Input Tax Credit' (ITC) under the GST Act. The accused are alleged to have created fake forms, forged documents, and conducted sham transactions, causing substantial financial loss to the Government. The FIR includes accusations against multiple individuals for creating dummy firms and engaging in fraudulent practices.2. The defense argued that the ongoing proceedings were an abuse of process, highlighting that the accused had already faced incarceration in a separate complaint under the Central GST Act. The defense contended that the addition of IPC offenses at a later stage was a tactic to unjustly implicate the petitioners. Moreover, they raised concerns regarding potential double jeopardy due to parallel proceedings under the CGST Act and the FIR.3. The defense emphasized the provisions of the CGST Act and Punjab GST Act, asserting that the accused should not be arrested under IPC offenses added belatedly. They argued that special enactments should take precedence over general laws like the IPC when dealing with specific offenses. Various legal precedents were cited to support the defense's contentions.4. The prosecution, however, argued that the severity of the offenses and the substantial financial implications warranted custodial interrogation. They contended that the accused's bail in the CGST Act complaint did not prevent their arrest in the current FIR, especially considering the gravity of the added IPC offenses.5. The judgment analyzed the applicability of Section 26 of the General Clauses Act, which allows prosecution under multiple enactments for the same offense but prohibits double punishment. The court examined relevant legal precedents, including Supreme Court judgments, to determine the interpretation and application of this provision in the present case.6. Ultimately, the court granted anticipatory bail to the petitioners, considering the overlapping nature of the allegations in the CGST Act complaint and the FIR. The court acknowledged the petitioners' previous custody and cooperation with authorities, concluding that their apprehended arrest based on the disclosure statement and added IPC offenses warranted anticipatory bail. The petitioners were directed to cooperate with the investigation and adhere to specified conditions under the Cr.P.C.