Denial of bail to assessee as bogus ITC claimed without supply of any physical goods

Rajeev Mishra Vs State of Odisha And Another (Orissa High Court)

Conclusion: Considering the nature and gravity of the accusation, the nature of supporting evidence, availability of prima facie case against assessee, coupled with the fact that a huge amount of public money had been misappropriated by availing and passing of bogus ITC, assessee was denied of release on bail.

Held:  Assessee and other accused were predominantly engaged in pedalling of bogus input tax credit secured on the strength of fake and fabricated invoices without supply of any physical goods to other such existing and non-existing firms, thereby enabling the recipients to avail and utilize the same while discharging tax liabilities. These fake and fraudulent transactions had, amongst others, caused huge loss to the State exchequer to the tune of about Rs. 42.36 crores. On the basis of the aforesaid information, a case was registered under section 69 r/w Sec. 132(1)(b), 132 (1)(c) and 132(1)(i) of the CGST Act, 2017 and investigation was commenced. Authority contended that considering that the same was an economic offence and affects the very fabric of the society, assessee should not be enlarged on bail so as to ensure a proper investigation. It was held that as the law stand, in such type of offences, while granting bail, the Court has to keep in mind, inter alia, the larger interest of the public and State. The exchange of incriminating documents relating to the non-existent firms between Smruti Ranjan Mohanty and assessee, the contrasting statement rendered by assessee and the deposition given by Smruti Ranjan Mohanty prima facie led this Court to form an opinion that assessee was hand in gloves with the other accused in creation and operation of the non-existent business entities for availing and passing of bogus ITC thereby defrauding the state exchequer. Considering the nature and gravity of the accusation, the nature of supporting evidence, availability of prima facie case against assessee, coupled with the fact that a huge amount of public money had been misappropriated and also the fact that further investigation of the case was under progress and taking into account the apprehension of assessee in tampering with the evidence, in the larger interest of society, assessee was not to be released on bail.

FULL TEXT OF THE JUDGMENT/ORDER of ORISSA HIGH COURT

1. The petitioner, presently in custody, has filed the instant bail application under Section 439 of the Code of Criminal Procedure, 1973 corresponding to 2(c) CC Case No.03 of 2020 pending in the Court of the learned Judicial Magistrate First Class (Rural), Cuttack. The petitioner herein is the accused in connection with alleged commission of offences punishable under Section 69 read with Sections 132(1)(b), 132 (1)(c) and 132(1)(i) of the Odisha Goods and Services Tax Act, 2017. Prior to the instant application, the petitioner had previously approached the court below vide Bail Application No.1093 of 2020 arising out of 2(c)CC Case No.03 of 2020 which was rejected on 25.01.2021.

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