TaxTMI 
TaxTMI 
2022 (1) TMI 973
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....enkata Ramana, learned Senior Counsel appearing on behalf of Sri V.Venkata Nagaraju, learned counsel for the petitioner/A10. 4. Brief facts of the case are that pursuant to the complaint dated 07.9.2021 addressed by the Chairman, Andhra Pradesh State Skill Development Corporation, Andhra Pradesh (for short APSSDC) to the Additional Director General of Police, Crime Investigation Department, Andhra Pradesh at Mangalagiri, the present crime was registered by the respondent police on 09.12.2021. In the said written complaint, it was alleged that the Government of Andhra Pradesh has issued orders vide G.O.Ms.No.47 (HE) (EC.A2) Department dated 13.12.2014 incorporating the APSSDC. The object of the project is to impart hi-end technology to the trainers. SIEMENS offers training program in collaboration with various State Governments. In the negotiations, the State Government has agreed to establish SIEMENS centers of excellence, technical skill development institutions and skill development centers. Six such clusters have been formed at the inception at cost of Rs. 546,84,18,908/- with SIEMENS and Design Tech providing a grant-in-aid of Rs. 491,84,18,908/- i.e. 90% and a Government shar....
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....eputed a team to visit SIEMENS centers of excellence already established in Gujarat and to submit a report. SIEMENS offers training program in collaboration with various State Governments. The State Government has agreed to establish SIEMENS centers of excellence, technical skill development institutions and skill development centers in different clusters. Each cluster compromises of one center of excellence. Five technical skill development institutions of one center of excellence, five technical skill development institutions and skill development centers. Six such clusters have been formed at the inception at cost of Rs. 546,84,18,908/- 90% and a government share thereof is 10% Rs. 55crores. A MOA has been entered into between APSSDC on one hand and SIEMENS on the other. SIEMENS is a combination of M/s. SIEMENS Industry Software (India) private limited and M/s. Design Tech Systems Private Limited. The MOA is in furtherance of G.O.Ms.No.4, dated 30.6.2017 of skill development enterprises and innovation (Skills) Department. A tax investigation by the Additional Director General, GST, Intelligence, Pune in respect of the claims of CENVAT credited by M/s. Design Tech Systems Pri....
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....it, Pune observed that no services were delivered by Skillar to DesignTech in their invoices depicting training software development including various sub-modules and royalty and subscription thereof. The Managing Director of DesignTech admitted before Asst. Director General that he does not have any evidence to show that services have been received from these companies. After financial irregularities have come to surface, directions have been given to APSSDC to conduct a forensic audit and to furnish a copy of the report for taking further action. Accordingly, a work order has been assigned to M/s. Sharath and Associates, Chartered Accountants Forensic Audit firm. The audit firm conducted an enquiry and submitted a report. The forensic audit is concerned with pointing out the flaws in policies, flaws in systems. Flaws in utilization of funds and analysis of various spending practices and to find out irregularities, misstatements, governance procedure, internal policies evaluation for the financial years 2014-15 to 2018-19. Various irregularities have been noticed by the team of auditors and the report thereof is selfexplanatory. M/s. SIEMENS and Designtech have to oversee the ....
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....d 03.12.2021 shows that the petitioner is suffering with the following ailments. i. Primary hypertension. ii. Breathlessness iii. Diabetes Type II iv. Weight gain v. Urine frequency and urinary voiding vi. Liver enlargement vii. Gall-bladder adequately distended viii. B12 deficiency ix. Swelling of body x. Uric acid. 10. Learned Senior counsel further submitted that even as per the complaint dated 07.9.2021 have only allegations based on the report submitted by the Additional DGGI, Pune and even according to the said report of DGGI, Pune has only with the service provider and service receiver has taken contradictory stands. They have established a shell company and they were issuing invoices without providing any services. Though the allegations in the DGGI report is related to the financial irregularities but there is no mention about the siphoning of the funds. Even according to the complaint, M/s. Siemens and Designtech have to oversee the functions of the clusters and their maintenance. Instead of doing so both of them swindled crores of rupees in a dubious manner. There are no allegations against the petitioner comp....
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....e strand and no case is established against the petitioner. He further submitted that the petitioner was arrested on 10.12.2021 and remanded and subsequently, the respondents have filed an application for police custody of the petitioner through Crl.M.P.No.282/2021 on the file of the Special Judge for SPE & ACB Cases-cum-Additional Metropolitan Sessions Judge, Vijayawada. But the said application was considered on merits and dismissed on 22.12.2021 with the following reasons: Admittedly, the petitioner/CID conducted searches and seized CPU, laptop, cell phones and some documents. Admittedly, the respondent/A10 is neither a director no promoter of the company and he is only an employee. Admittedly the GST official summoned respondent/A10 several times for enquiry before him he has produced all the available documents with him. The main accused/A1 was ready released on bail as per the bail orders of the Hon'ble High Court. When, the petitioner/CID conducted searches and seized some material before the arrest of the respondent/A10, what else information/material is to be collected from the respondent/A10. Even otherwise, considering the nature of the offence, everything is evidenced....
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....implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision. In another judgment of the Hon'ble Supreme Court in between Arnab Manoranjan Goswami vs. State of Maharashtra and others (2021) 2 Supreme Court Cases 427 wherein it is recited that: While considering an application for the grant of bail under Article 226 in a suitable case, the High Court must consider the settled factors which emerge from the precedents of this Court. These factors can be summarized as follows: (i) The nature of the alleged offence, the nature of the accusation and the severity of the punishment in the case of a conviction; (ii) Whether there exists a reasonable apprehension of the accused tampering with the witnesses or being a threat to the complainant or the witnesses; (iii) The possibility of securing the presence of the accused at the trial or the likelihood of the accused fleeing from justice; (iv) The antecedents of and circumstances which are peculiar to the accused; (v) Whether prima facie the ingredients of the offence are made out, on the basis of the allegations as they stand, in the F....
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....erate principles which must govern countless other faces whose voices should not go unheard. In view of the observations in the above said judgments, it is clear that the petitioner's involvement in the above said complaint, F.I.R/remand report are not specific. Hence learned senior counsel requested to consider the bail application on the above stated grounds and also on the medical reasons and he also submitted that he would obey the conditions imposed by this Court and also cooperate with the investigation. Crl.P.No.7339 of 2021 13. This petition is filed under Section 437 and 439 of Code of Criminal Procedure, 1973 (for short "Cr.P.C") seeking regular bail to the petitioner/A6 in connection with Crime No.29/2021 on the file of Crime Investigation Department (CID), Economic Offence Wing-II, CID, Andhra Pradesh, at Mangalagiri, Guntur District, wherein the petitioner is alleged to have committed the offences punishable under Sections 166, 167, 418, 420, 465, 468, 471, 409, 201, 109 r/w 120-B IPC and sections 13(1)(c) of Prevention of Corruption Act, 1988. 14. Learned Senior Counsel Sri B.Adinarayana, appearing on behalf of the learned counsel for the petitioner/A6 submitted t....
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....ed by raising fake invoices through the various shell companies. Their investigation further concluded that the diverted amount again was routed back to DesignTech through bank accounts of different companies. The Directors of shell companies paid back the consideration amount to DesignTech after deducting their commission for issue of fake invoices. Further, it is established that much before entering into the agreement, MD, SISW in connivance with MD, DesignTech and others hatched a conspiracy to incorporate and to create a company exclusively to manage and to supply the material to Siemens Project of APSSDC. Pursuant of their conspiracy they incorporated and created a company by name PVSP IT Skills and DesignTech and sub-contracted significant part of the Siemens Project work aggregating to around Rs. 241crores to the said company. Later, the amount was diverted from PVSP IT skills to a shell company called Allied Computers International (Asia) Ltd., and other associated shell companies by raising fake invoices. 5. The Siemens initiated an internal investigation based on notices received from DGGST Intelligence Unit, Pune, who investigated and concluded that the APSSDC funds w....
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....e remaining team members of Siemens Project had knowledge about creation of Skillars exclusively for Siemens project. Further, Mr. Bose did not share the above actions with other employees of SISW except his close associates/team members. 15. Further, all the negotiations, scope, management and discussions related to TalentEdge (supplier of manpower) and KnowledgePodium (supplier of course material) were performed by Suman Bose and his SISW team, i.e. GVS.Bhaskar Prasad, Bhavna Gupta, Naga Venkata Pratap Bontha, Ashish Sharma and later handed over to Skillar for raising the purchase orders. 16. Further, Mr. Soumyadri Shekhar Bose @ Suman Bose played active role in managing and controlling KnowledgePodium and he was the key person to discuss the strategy and its implementation. 17. There is a strong evidence to establish that Mr. Soumyadri Shekhar Bose @ Suman Bose played active role for creation of PVSP IT skills exclusively for Siemens project with an intention to divert and misuse APSSDC funds in connivance with MD, DesignTech and APSSDC officials. 18. Mr. Soumyadri Shekhar Bose @ Suman Bose brought the partners viz., DesignTech, PVSP, TalentEdge and KnowledgePodium toget....
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.... of Goods and Services Tax Intelligence is that M/s. Designtech systems are mainly engaged in three lines of business 1. Distribution of PLM software of Siemens, 2. Product design and engineering services for automotive OEMS and auto component suppliers and 3. CAD CAM CAE and IT training. M/s Design Tech Systems limited is largely paying service tax under the category of information technology service. A show cause notice has been issued under the provisions of Section 73(1) of the Act to designtech and PVSP/Skillar within five years of the date of filing of their ST-3 returns. Accordingly, the present show cause notice, issued to Designtech and PVSP/Skillar is well within the prescribed period under the provisions of Section 73(1) of the Act read with chapter V of The Taxation and Other Laws (Relaxation of certain provisions) Ordinance, 2020 dated 31.03.2020 wherein the last date has been initially extended up to 30.6.2020 and further extended up to 30.9.2020. Even in the show cause notice liability has been fixed against the PVSP/Skillar only. 16. Further learned senior counsel has submitted that the documents which were related by the Managing Director, APSSDC is mainly on inci....
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....nior counsel has relied on the allegations made in the remand report. As per the allegations made in the remand report that the petitioner being a managing director of SISW he entered into an agreement with APSSDC for establishing six clusters comprising one COE and 5 TSDI are falsely projected as worth Rs. 3356 crores (Siemens and Designtech should contribute 90%-AO State Government should contribute 10% of the project). Second ground is that he corresponded with the Government of Andhra Pradesh and got released Rs. 371 crores towards Government share in advance without executing any work by technology partners. And further the Siemens has initiated an internal investigation based on notices received from DGGST Intelligence Unit, Pune, who investigated and concluded that the APSSDC funds were diverted by Design Tech by giving a sub-contract to PVSP IT Skillars from where the amount was diverted to various shell companies by raising fake invoices without providing any services or supplying any goods. With a preconceived mind, he affixed signature as Suman Bose on APSSDC Siemens Tripartite agreement, which is quite different from the signature affixed as Soumayadri Sekhar Bose on ag....
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....discloses that the petitioner has to pay 55 crores only as their share of 10%. In the complaint he has specifically stated that as per MoA, DesignTech has to provide training software development including various sub-modules designed for high end software for advance manufacturing CAD/CAM. The MoA does not contemplate sub-contract. But contra, Siemens and Designtech has subcontracted a large part of its work to M/s. Skillar enterprises private limited, New Delhi. As a matter of fact, skillar was established after designtech had entered into a contract with APSSDC. Even in the said complaint they have admitted that the skillar has provided training software development including various sub-modules designed for high and software for advance manufacturing CAD/CAM. They have also admitted that the Skillar has directly supplied the same to the skill development centers in Andhra Pradesh. So in view of the above said complaint, there are no allegations that the petitioner has not acted as per the MoU. In fact as per the MoU, the petitioner and the Skillar has supplied both hardware and software and they have established six clusters as per the MoU and they have also imparted training b....
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....the same, the said application was dismissed. 25. Finally learned senior counsel has relied on the medical reports annexed along with the bail application. Further submitted that the petitioner is 65 years old and he has medical ailments even according to the report annexed along with the petitioner, the petitioner is suffering from change of voice, breathlessness, bilateral abductor palsy and swelling due to infection or inflammation. In view of the same, the petitioner would cooperate with the investigating agency and prayed to consider the bail application. 26. Learned Additional Advocate General appeared on behalf of the respondents/State. After notice Sri M.Dhanunjayudu, IO, DSP, EOW-II, CID, Head Quarters, Mangalagiri, Andhra Pradesh had filed counter affidavit on behalf of the respondents. The averments in the counter is that the Government has issued an order vide G.O.Ms.No.4 dated 30.6.2015, wherein the Government accorded permission to APSSDC to enter into MoU with Siemens Industry Software India Pvt. Limited (in short SISW) an entity of Siemens and DesignTech, Pune for setting up of skill development centers named as clusters. Each cluster comprising one center of exce....
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..../Skillar in turn issued purchase orders to A27 allied computers international (Asia) Ltd. which was declared as a shell company by Central Government Agencies. A27 was a defunct company and was being used only to issue bogus invoices without the supply of any material or providing any services only to accommodate entries. Similarly, the A5 also issued purchase orders to other shell companies namely M/s. Patrick Info Services Pvt. Ltd., IT Smith Solutions Pvt., Ltd., Inweb Services Pvt. Ltd. The said shell companies issued fake invoices and routed back the amount to PVSP/Skillar (A5) and A4 through associated shell companies by layering the funds after deducting commission for raising bogus invoices. 28. The officials of Directorate General, GST Intelligence Unit, PUne, registered a case under the provisions of GST Act and Finance Act and conducted a detailed investigation in the year 2018. According to the said investigation it is established that the APSSDC funds, which were released to DesignTech(A4) and it was transferred to others through Hawala transactions with the help of shell companies by raising fake invoices for layering the funds. 29. After commencement of GST investi....
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.... of the petitioner that A5 was only a project management company and it was operated as per the directions of A4 and SISW. 31. As contended by the petitioner that he was only appointed as financial adviser and later as chief operating officer of the A-5/Skillar Enterprises is false. The petitioner in connivance with other accused incorporated the company exclusively to divert the APSSDC funds by raising fake/bogus invoices through various associated shell companies. 32. Considering the above said aspects FIR was registered after considering the findings of the DGGST investigation, SIEMENS Internal investigation, and Forensic audit report. In all the reports it is conclusively established that the petitioner in connivance with the other accused played an active role in getting fake invoices and in routing the diverted amount back to the DesignTech and others assigned by it. Finally considering all the aforesaid facts and circumstances and huge magnitude of the fraud running into several crores of rupees, the IO is still in the process of securing various incriminating documents/records from various Central and State Government Agencies including Income Tax Authorities, GST officia....