Dated 12th February, 2021
The latest judgment by Orissa High Court wherein bail was granted to the petitioner in the case of fraudulent availment of input tax credit on the basis of bogus invoices subject to furnishing of bond.
Contrary view was given by the Punjab High Court, in a similar case,the Court hold that since serious allegations were made against the petitioner of availing input tax credit of 1.27crore on the basis of fake invoices i.e. availing input tax credit without actual movement of goods. Therefore it was held that there is no justified ground to grant concessional bail to the petitioner. Hence the bail was denied and the petition was disposed off.
Search and inspection was conducted on the premises of the petitioner by the State GST authorities and it was revealed that no business was actually being conducted at the declared place of business. Further multiple entities was found to be functioning from same premises and there were no transport documents or lorry receipts in order to substantiate the actual supply of goods neither there were warehouses to stock the purported goods and no equipment was present to measure or weigh the same.
It was believed that the petitioner in collusion with others had created 11 fictitious firms and conducted fictitious purchase and sales of goods and availed ITC on bogus invoices without physical receipts and supply of goods.
Petitioner has filed the instant bail application under Section 439 of the Code of Criminal Procedure for commission of offences punishable under Section 132(1)(b)(c) and (i) of OGST Act, 2017.
It was contended by petitioner that they are not involved in the commission of the offences alleged and that they have been arrested on frivolous grounds. The official has not ascertained the fact that who has created the company and at whose instance the fabricated documents was created and thereby, the question of involvement of the petitioner in the alleged crime is highly shrouded under mystery.
Further, the FIR story does not disclose that the petitioner has manipulated or has purchased the materials from any source and therefore the ingredients of the offences are not established and the question of input tax also does not arise. Therefore, the present application should be allowed.
The respondent 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 respondent 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 its abuse by employing such fraud and forgery.
It was further submitted that under the OGST Act, the acts of commission and omission, as enumerated thereunder, provides for both criminal prosecution under Section 132 of the Act as well as civil proceedings in terms of Section 73 and Section 74 of the Act.
It was held that the manner in which the petitioner have been operating clearly depict the inherent flaws in the GST system and the fraudsters were taking advantage of the inadequacy of electronic trails of all transactions by employing ingenious methods.
Further once the charge-sheet has been filed, the presence of the accused may not be required to take the prosecution to its logical conclusion. The object of the law is to act as a deterrent in blocking loopholes which concerns itself with the collection of revenue for the State.
It may be noted that the present proceedings are still under process and the parties may be subject to the rigours of law as prescribed under the Statute i.e. assessment, appeal and revision etc.
Hence until the time the accused person is found guilty it would difficult to pre-judge an application for bail and keeping an accused in custody, might not ultimately achieve the ends of justice.
When the Court has been granted discretion in the matter of granting bail and when there is no statute prescribing a special treatment in the case of a particular offence, the Court cannot classify the cases and say that in particular classes bail may be granted but not in others. Not only in the case of economic offences but also in the case of other offences the Court will have to consider the larger interest of the public or the State. It cannot be said that bail should invariably be refused in cases involving serious economic offences.
It is directed that the petitioner should be released on bail on furnishing a bail bond with one surety for the like amount to the satisfaction of the trial court with conditions as mentioned.
Further the assessment of the tax liability of the petitioner and his firm shall be carried out strictly in accordance with the applicable provisions of law, uninfluenced by the observations.
1Bikas @ Vikas Sarawgi Vs State Of Odisha (2020-TIOL-2264-HC-ORISSA-GST)
2Sanjay Dhingra Vs Director General Of Goods And Services Tax Intelligence
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