TaxTMI 
TaxTMI 
2022 (3) TMI 396
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...., (hereinafter referred to as 'DGGI' for short), which works under Central Board of Indirect Tax and Customs (CBIC) under the Ministry of Finance, Government of India, had got intelligence that certain firms were operating only on paper and passing on inadmissible Input Tax Credit (hereinafter referred to as 'ITC' for short) by issuing invoices only, without any actual supply of goods mentioned therein. An inquiry was conducted against one such firm M/s. Ronak Traders, which confirmed that the unit was non-existing and no eligible ITC was available with the firm, as its GSTR-2A was nil and M/s. Ronak Traders passed on fraudulent ITC of Rs. 10.36 crore to S.K. Traders by showing entire supply to them in their GST returns. M/s. S.K. Traders was also found to be nonexisting, which in turn, has passed on ITC of Rs. 10.29 crore to the two firms M/s. Alina Traders having legal name as Mohsin Salimbhai Qureshi having GSTIN 24AAIPQ1079MIZB and M/s. Glaxy Traders having legal name as Mohsin Salimbhai Qureshi having GSTIN 24AAIPQ1079M2ZA, both companies having business at Ahmedabad. The said two firms are proprietorship firms of Shri Mohsin Salimbhai Qureshi, the present applicant, who was f....
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....applicant has preferred Criminal Misc. Application No.8614 of 2021, which also came to be rejected vide order dated 07.12.2021 by the Additional Sessions Judge, Ahmedabad. Hence, the present application. 3. Mr. Nirupam Nanavaty, learned senior advocate with Mr. Rahul R.Dholakia, learned advocate for the applicant stated that, the applicant had appeared before the complainant on 31.08.2021 and was interrogated and thereby arrested on 01.09.2021 without any basis or evidence. Mr. Nanavaty submitted that the applicant is holding GST registration for M/s Alina Traders w.e.f. 01.07.2017 and for M/s. Galaxy Traders w.e.f. 09.11.2018 and the applicant is engaged in the business of ferrous scrap, iron and steel scrap in both the firms and that the applicant was holding registration certificate under the erstwhile VAT law w.e.f. 13.12.2016 at the very same premises and was migrated from VAT to GST regime under section 139 of the CGST Act, which reveals that the applicant is tax paying citizen and not conducting business only on paper. 3.1 Mr. Nanavaty, senior advocate, stated that during the procedure of desealing the premises of the applicant, search operations were carried out on 23....
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....tatement of the applicant was also recorded by the authority; therefore, there is no question of tampering with evidence or winning over witnesses in this case and thus urged that no useful purpose would be served by keeping the applicant in jail and therefore, urged to release the applicant on bail. He submits that there are no antecedents against the present applicant and as the offences are triable by the court of Judicial Magistrate, wherein the maximum punishment is upto 5 years and fine only. 3.4 Relying on the case of Arnesh Kumar Vs. State of Bihar & Anr., reported in 2014 (8) SCC 273, senior Advocate Mr. Nanavaty stated that, in the said case the Hon'ble Supreme Court held that in the cases where offence is punishable with imprisonment for a term which may be less than seven years or which may extend to seven years; whether with or without fine, the arrest of the accused may only be made where there is a necessity for arrest. He also relied on the case of Sanjay Chandra Vs. Central Bureau of Investigation [2012 (1) scc 40], Shri P.Chidambaram Vs. Central Bureau of Investigation [in Criminal Appeal No.1603 of 2019] and Gurucharan Singh & Ors. Vs. State (Delhi Administrat....
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....his inability to come at the premises for the reason that his son was hospitalized, therefore, the premise was sealed under panchnama dated 12.02.2021. 4.3 Mr. Sharma stated that an e-mail dated 16.02.2021 was issued to the applicant asking him to approach the DGGI office for desealing of the premises and for completion of proceedings but no response received from him, yet e-mail dated 18.02.2021 was issued in this regard. He stated that vide letter dated 23.02.2021 the applicant has requested to open the seal and deputed Shri Irfanbhai as his authorised person and another search was conducted on 23-24.02.2021 under panchnama and the premise was found to be a shop where iron scrap weighing to 11,145 kgs. were lying and as Mr. Irfanbhai could not produce any stock register/records regarding said stock, mandatory under section 35 of CGST Act, 2017, the said goods were seized under the provision of section 67 of CGST Act, 2017. 4.4 Mr. Sharma further submitted that another attempt was made to find the principal place of business of M/s. Ronak Traders, however the same could not be located and hence, it was concluded that the unit was not in existence and the same exists only on ....
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.... of his employees/accountants etc. and gave only their names and therefore it was clear that the applicant, proprietor of M/s. Alina Traders and M/s. Galaxy Traders, had availed ITC of Rs. 10.29 crores from a non-existent firm being M/s. S.K. Traders, without receipt of goods, and has availed and utilized ITC in contravention of Section 16 of CGST Act, 2017 and hence he was arrested on 01.09.2021. 4.8 Mr. Sharma states that after arrest of the applicant, on 01.09.2021 further investigation in the matter was carried out and it was found that one more supplier of M/s. Alina Traders being A.One Traders, is existing only on papers and there was no ITC in GSTR-2A returns of the said company; however all the payment of GST had been shown to be made through ITC only. He submits that total fraudulent ITC were availed and utilized by the firms of the applicant increased from Rs. 10.29 crores to Rs. 13.97 crores, which establishes the fact that the applicant was involved in the offence to defraud the government exchequer by availing and utilizing the fraudulent ITC. Further huge sum of money have been transferred to various firms with whom no business activity was noticed. 4.9 Mr. Shar....
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....ash from them after giving commission @ Rs. 100/- per lakh. He has tried to mislead the investigation by putting the onus on one Shri Ayazbhai. 4.12 Mr. Sharma stated that the case law relied on by the applicant in case of Arnesh Kumar Vs. State of Bihar (supra) is not applicable in the present case as the case law is of pre-GST era and have totally different circumstances to this case and stated that furtehr int hes aid case the Hon'ble Supreme Court has observed that, if there are reasons to believe that the accused will further commit the offence, tamper the evidence, prevent any person from making and inducement etc., the person may be arrested and in the present case, it is on record that the accused had never cooperated with the investigation, submitted wrong facts, therefore, there are chance that he will try to hamper the investigation and will try to induce the witnesses, therefore, urged that the present application may be rejected. 4.13 Advocate Mr. Sharma states that as per observation of the Hon'ble Supreme Court in case of Nimmagadda Prasad Vs. C.B.I, Hyderabad, economic offences constitute a class apart and need to be visited with a different approach in the ma....
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.... recorded while visiting him in the judicial custody. The details of manipulations by the present applicant is stated to have been found during the investigation. The shell companies details have been recorded. The facts of the money transferred through Shroff firms and the same being tuned back to him, has been found during the investigation and the chargesheet in the form of complaint dated 29.11.2021 shows the applicant as the mastermind operating fake firms to defraud the government exchequer. The facts of the complaint would require to be proved by the Directorate General of GST Intelligence, which is filed under section 132(1)(b) and 132(1)(c) read with section 132(1)(i), 132(5) of Central Goods And Services Act, 2017 and section 132(1)(b) and 132(1)(c) read with section 132(1)(i), 132(5) of Gujarat GST Act, 2017 and section 120B of the IPC. The Additional Chief Metropolitan Magistrate, Ahmedabad had ordered to register the complaint and had issued summons to the accused under section 204(a) of the Cr.P.C. making it returnable on 03.11.2021. The applicant is still in jail. Pre-charge evidence would be recorded. The trial will take its own time to conclude. 5.2 The Hon'ble ....