TaxTMI 
TaxTMI 
2020 (10) TMI 570
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....gistered person', within the meaning of Section 2(94) of the CGST Act is engaged in the business of trading. Applicant no.1 is husband of applicant no.2. Respondent no.1 is officer for the purposes of the said Act. Applicant no.1 would claim that applicant no.2 (his wife) being dormant partner, does not participate in the business of the firm at all. (B). It appears, Form -GSTR-3B, a summary return of inward and outward supplies, filed by the applicants' firm revealed that the said firm had availed, Input Tax Credit (ITC) of Rs. 53.50 crores during the period July, 2017 to September, 2019 on invoices valued at Rs. 352.92 crores. (C) It is the respondent's case that, GSTR-3B returns were filed belatedly, in as much as, GSTR-3B for the months, July, 2017 to January, 2018 were filed in October, 2018; GSTR -3B for the months March, 2018 to October, 2018 were filed in April, 2019; GSTR- 3B for the months November, 2018 to July, 2019 were filed in November, 2019; and GSTR-3B for the months of August, 2019 to November, 2019 were filed in December, 2019. (D). Upon noticing the gross irregularities committed by M/s. Sheela Sales Corporation ("firm" for short), Off....
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....period July, 2017 to September, 2019 without any actual receipt of goods but also passed on the same to six firms out of which five firms are closely held entities of their firm. (G). During the course of investigation, seven summonses were issued to applicant no.1 and four to applicant no.2; however, applicant no.1 responded only to two summonses dated 25th November, 2019 and 17th January, 2020. Applicant no.2 did not respond to the summons, at all. (H). Shri. Avadh Bihari Baig who is Director of M/s. Sheela Sales Pvt. Ltd. was also summoned for recording the statement; however, he also did not honour the summons dated 20th January, 2020. (I). It is respondents' case that, applicant no.1 in his statement dated 9th December, 2019 and 20th January, 2020 admitted that none of his firms had received goods from M/s. Bajrang Traders on which invoices they have availed ITC of Rs. 53.63 crores; and that none of his firms has made payment to M/s. Jai Bajrang Traders. 5. In essence, therefore the main allegation of the respondents is that, applicants are guilty of circular trading by claiming Input Tax Credit on the materials never purchased and passing on such....
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....urchased the material had from time to time received OTP in respect of the transactions made and it is only through OTP, the transactions were done. 8. Before dealing with the contentions raised by the applicants, it may be stated that, M/s. Jai Bajrang Traders, have filed FIR against the applicants with police at Gyanpur, Uttar Pradesh on 29th January, 2020 alleging therein that the present applicants have taken charge of their firm and forged the invoices in their favour. Though, the applicants have admitted the fact of registration of FIR, a copy of the FIR has not been produced, but it is contended in the written submission that, the police after investigation, found the allegation made by M/s. Jai Bajrang Traders were false on the face of it. However, no such report, exonerating the applicants has been filed. In the circumstances, the fact remains that, FIR has been lodged against the applicants by M/s. Jai Bajrang Traders from whom goods worth Rs. 350.92 crores were allegedly purchased by the present applicants' firm. It is one circumstance against the applicants, which requires investigation. 9. After perusing the note sheets in the file and the statement of applicant ....
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.... 20,08,773 6. ---do---- Chandan Enterprises 56,85,44,903 10,22,55,534 TOTAL 236,645,15,975 42.50,26,853 (10). Thus from the facts emerging on perusal of file notings and statements of applicant no.1 recorded in response to summons issued under Section 70 of the CGST Act, prima-facie suggest, applicants' complicity/involvement in availing fake input tax credit without movement of goods on forged invoices Rs. 63.50 crores in breach of provisions of Section 16 of CGST Act, which is cognizable offence under Section under Section 132(1)(b)(c) read with Section 132(5) of the CGST Act. 11. It may be stated that as per the provisions of Rule 138 of CGST Act, 2017 (E-Way Rules) generation of E-way bill is mandatory in case of inter-state supply of goods from 1st April, 2018. Besides, as per the provisions of sub-rule(4) of Rule 138 of Central Goods and Services Act, 2017 a unique E-way bill number (EBN) generated on the common portal is also made available to the supplier, recipient and the transporter of goods. However, applicants have failed to produce EBN particulars, transporter's details, proof of receipt of goods....
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....GST Act empowers Commissioner to order and authorize to arrest a person if he has "reason to believe" that person has committed any offence specified in Clause (a) or Clause (b) or Clause (c) or Clause (d) of sub-section (1) of section 132 which is punishable under Clause (i) or (ii) of sub-section (1) or sub-section (2) of the said Section. Herein, facts emerged from file notings do suggest that Commissioner has had, reason to believe, the applicant's complicity in committing the offence under Clause (b) and (c) of sub-section (1) of Section 132 of the CGST Act. I have culled out the facts emerging from the notings hereinabove. 16. Mr. Saraogi's next contention is, that a person facing similar charges has been protected by the Division Bench of this Court in the case of Sapna Jain V/s. Union of India in Writ Petition No. 1996 of 2019 and other connected petitions, vide order dated 8th July, 2019 and therefore the applicants also be protected. . I have perused the order dated 8th July, 2019. It appears, in Sapna Jain's (supra) case on 11th April, 2019 Division Bench of this Court had issued notices to the respondents and directed not to take coercive action against the petiti....
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.... ready and willing to submit the same to the Officer of respondent no.1. Another contention raised for the first time is that, applicants had purchased material only after receiving the required OTP of transaction. . These two submissions are prima-facie afterthought, in as much as, respondents had been afforded sufficient opportunities by issuing seven summons to applicant no.1 and four to applicant no.2; however, they did not produce any document to substantiate, that at the time of claiming Input Tax Credit, they were in possession of invoice and/or there was movement of goods from the supplier to the applicant's firm or to their assignees. Infact, applicant no.1 in his statements dated 9th December, 2019 and 20th January, 2019 recorded in response to summons has admitted, thus : "M/s. Sheela Sales Corporation does not receive material from M/s. Jai Bajrang Traders, a supplier located in UP. Neither any e-way bill is generated by M/s. Jai Bajrang Traders in the name of M/s. Sheela Sales Corporation. M/s. Jai Bajrang Traders only issued invoice in the name of M/s. Sheela Sales Corporation." This admission/statement has not been retracted by the applicant till date.....
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.... 94 5 89 11.11.2017 UP42BT7266 16.02.2018 98 III. Bank account statements of M/s. Chandan Enterprises M/s. Sheela Sales Pvt. Ltd. And M/s. Sheela Sales Corporation - a perusal of the same reveals that no payment has been made to M/s. Jay Bajrang Traders. IV. GSTR-2A- which have been generated after initiation of investigation as the GSTR-1 were filed in November, 2019 and thereafter. V. Form 3GB for F.Y. 2017-18 and 2019- 20 which has been prepared on 24.12.2019 and 30.10.2019 respectively i.e. after initiation of investigation. Further, the Chartered Accountant has observed that 'the books of accounts have not been produced for verification. Audit has been carried out on the basis of information and documents before us." Thus, the authenticity of the said Form 3GB is itself in doubt as the same has been prepared without production of books of account. Copies of Form 3GB is annexed herewith." 18. Thus taking into consideration, the facts of the case, though the officers under the CGST Act, cannot seek custody of the arrested persons for completing the investigation, respondent's contention that applicant's detention in custody is nec....