AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (8) TMI 24
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....firms including M/s G.S Unitrade, M/s G.S. Steels and Alloys Co. M/s B.B Associates, M/s Om Shri Ganesh Traders. Sri Amit Beriwal/Petitioner herein, Sri Ronak Beriwal, Sri Subhash Chandra Swain and Sri Basanta Kumar are the proprietors of M/s GS Unitrade, M/s G.S. Steels & Alloys Co, M/s B.B. Associates and M/s Omm Shree Ganesh Traders respectively. The above persons, individually and in collusion with each other, are stated to have created several dummy and non-existent entities to avail bogus Input Tax Credit (ITC), for the purpose of defrauding the Revenue. 3. The typology and modus operandi of such fraudulent activities involved in the creation of these dummy and non-existent firms, it appears, have been a matter of grave concern for the authorities. They were predominantly engaged in passing bogus input tax credit, secured on the strength of fake and fabricated invoices, without supply of any physical goods to such other existing and non-existing firms, thereby enabling the recipients to avail and utilize the same while discharging tax liabilities. These fake and fraudulent transactions have, among others, caused huge loss to the State exchequer at least to the tune of Rs. ....
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....ock the purported goods; and no equipment to measure or weigh the same were available in the premises. 8. The records further reveal that during the period February, 2018 to October, 2019, the petitioner, through his firm M/s G.S. UNITRADE has availed input tax credit of Rs. 4.18 crores and has passed on the same, without physical receipt or supply of goods. Further, the total bogus input tax credit availed and passed on by the petitioner in the name of these fake firms is around Rs. 8.63 crores. In addition to the above, the Department also uncovered as many as 21 fictitious firms fraudulently floated and operated by the petitioner. Interestingly, these fictitious firms have been created in the name of many daily labourers, private tutors, housewives etc., with the help of their identity documents like PAN, Aadhaar Card, Mobile phone, Voter Card, etc.. The said documents, it appears, were obtained on the pretext of offering them employment. The records also reveal that the accused has raised bogus input tax credit to the tune of Rs. 71 Crores, by utilizing such fake invoices and has passed on that bogus ITC The petitioner has thus spearheaded the tax fraud of massive proportions....
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....Union of India (2016 (44) (DEL)- Delhi High Court) Jayachandran Alloys (P) Ltd. Vs. Superintendent of GST & C.Ex. SALEM 2019 (25) GSTL 321 (Mad)-Madras High Court, Clear Trip Pvt. Ltd. Vs. Union of India, (2016) 42 STR 948 (Bom)- Bombay High Court, Akhil Krishna Maggu Vs. Dy. DIR., D.G. of GST Intelligence, (2020 (32) GSTL. 516 (P & H)-Punjab & Haryana HC) P.V. Ramana Reddy Vs. Union of India, 2019 (25) GSTL 185 (Telengana), Siddharam Satlinagappa Mehetre Vs. State of Maharastra & Ors. 2011 (1) SCC 694, P.Chidambaram Vs Central Bureau of Investigation 2019 (14) SCALE 157. 11. Per contra, Mr. Sunil Mishra, learned Addl. Standing Counsel appearing for the State submitted that the proceeding has been rightly initiated against the present petitioner and after complying with the all formalities relating to arrest, he has been arrested. The petitioner is engaged in choreographing a complex variant of GST fraud. The provision of Section 41 and 41(A) of the Cr.P.C. is not applicable to the facts involved in the present case. He made detailed submissions regarding the economic perspective of the fraud, the nature and modus operandi of the crime, the relevant provisions of GST regime and it....
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....n report prepared by the GST department. The case in hand, indicates the increasing trend of GST fraud of , by creating many fake firms. As stated above, the records produced before this Court make out a prima facie case against the accused for having indulged in a fraud of enormous magnitude. 14. Before dealing with the specific submissions raised by the respective parties, it may be relevant to note the following observations of the Hon'ble Supreme Court in State of Gujarat vs. Mohanlal Jitamalji Porwal and Ors. (1987)2SCC364 "...The entire Community is aggrieved if the economic offenders who ruin the economy of the State are not brought to books. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the Community can be manifested only at the cost of forfeiting the trust and faith of the Community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye unmindful of the....
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....T Act which empower Proper Officer to arrest a person who has committed any offence involving evasion of tax more than Rs. 5 crore and prescribed maximum sentence of 5 years which falls within purview of Section 41A of Cr.P.C, we are of the opinion that power of arrest should not be exercised at the whims and caprices of any officer or for the sake of recovery or terrorizing any businessman or create an atmosphere of fear, whereas it should be exercised in exceptional circumstances during investigation, which illustratively may be: (i) a person is involved in evasion of huge amount of tax and is having no permanent place of business, (ii) a person is not appearing in spite of repeated summons and is involved in huge amount of evasion of tax, (iii) a person is a habitual offender and he has been prosecuted or convicted on earlier occasion, (iv) a person is likely to flee from country, (v) a person is originator of fake invoices i.e. invoices without payment of tax, (vi) when direct documentary or otherwise concrete evidence is available on file/record of active involvement of a person in tax evasion. The reliance placed on the above case by counsel for the Petitioner is....
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.... January, 2020, was issued by the Commissioner and the reasons for the arrest have been recorded in detail. In view of the above, the contention raised by the petitioner regarding non-compliance of Section 41 and 41(a) of Cr.P.C. is unsubstantiated. As such, the objection of the petitioner that the prosecution, as against him, is without determination of tax is also misconceived. In this regard, it may be necessary to take note of the following findings rendered by the High Court of Telangana in P.V. Ramana Reddy vs. Union of India (2019) 73 GST 727 "50. The contention of the petitioners is that the CGST Act, 2017 prescribes a procedure for assessment even in cases where the information furnished in the returns is found to have discrepancies and that unless a summary assessment or special audit is conducted determining the liability, no offence can be made out under the Act. Therefore, it is their contention that even a prosecution cannot be launched without an assessment and that therefore, there is no question of any arrest. 51. It is true that CGST Act, 2017 provides for (i) self assessment, under Section 59, (ii) provisional assessment, under Section 60, (iii) scrutiny of r....
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....e is a good possibility of the accused influencing the witnesses, triggering derailment of investigation process and also absconding. 20. It may also be seen that there are four named accused persons in the present case and two of them are still evading arrest. Given the factual scenario, at this stage, this court is inclined to accept the submission of the Respondent State that if the accused persons are granted bail, the same could also pose difficulties in apprehending the other accused persons. It is brought to the notice of the court that the authorities have made a prayer before the trial court for issuance of NBW against the absconding co-accused. Further, there flight risk of the petitioner herein cannot be ruled out. 21. There is no hard and fast rule regarding grant or refusal to grant bail. Each case has to be considered on the touchstone of its own generic facts and individual merits. However, the discretion of the court has to be exercised judiciously sans any element of arbitrariness. Even if the "bail is the rule and jail is the exception" -- the basic bail jurisprudence remains unaltered, but in the instant case, the alleged GST fraud committed by the petitioner i....
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....f new technologies. The Government officials have also been making all efforts to ensure efficient collection of tax, so that the burden on the genuine tax payers can be reduced. All these efforts cannot be permitted to be sabotaged by such criminals who prey on the public exchequer. The text book notion of tax collection needs to be overhauled by conjuring with the emerging technologies so as to get rid of practical hiccups. 25. Furthermore, the larger ramification of the fraud involved was taken note of by the GST Council while issuing the Standard Operating Procedure (SOP) Office Memorandum dated 12.05.2019 issued by GST Investigation Wing, Central Board of Indirect Taxes and Customs, Department of Revenue, Ministry of Finance for utilizing the fake invoice issuers dataset by SGST authorities. In particular, it was observed that: "Large number of GST fraud cases involving the use of fake invoices for wrong availment of input tax credit (ITC), which is further used to pay GST on outward supply have been detected since the rollout of GST by the Central GST authorities as well as the State GST authorities. Whereas the mens rea for the use of such fake invoices appears to be frau....