Pune district court grants Bail to Tax consultant in GST ITC Scam

Murtuza Jabirbhai Tinwala Vs Director General of GST Intelligence (Pune District Court)

1] This is a first bail application U/sec.439 of Cr.P.C. for grant of bail to applicant Murtuza Jabirbhai Tinwala in Case No. DGGI/PZU/INT/GR­C/23/21­22 for the offences punishable under Sections 132(1)(a), 132)(1)(b), 132(1)(c) punishable under clause (I) or (ii) of Sub­sec 1 or sub­sec 2 of the Central Goods and Service Tax Act, 2017 registered with office of Directorate General of GST Intelligence (DGGI) Pune Zonal Unit.

2] It is submitted by the applicant that he came to be arrested on 05/03/2022 and since 06/03/2022 he is in judicial custody for the above said offences. It is submitted by the applicant that the allegations against him are that he is involved along with the co­accused Sameer Khan, Imran Bahalwan and Ketan Dugad for having availed and passed input tax credit of Rs.83.72 Crore approximately in a fraudulent manner for M/s. Taj Enterprise, M/s. Siddhi Vinayak Enterprise and M/s. Himalaya Traders. It is submitted that the applicant has nothing to do with the allegations against him and he has no nexus with the alleged offence. The applicant was an employee who worked as an Accountant for six months from 01/01/2021 to 30/06/2021 for Taj Enterprises, Himalaya Traders and Siddhivinayak Enterprise for which the applicant was paid Rs. 20,000/­ per month as salary. The investigation is practically over and no recovery or discovery is to be made from the present applicant. The three main accused have been already released on bail under Section 167(2) of Cr.P.C. by the Court of C.J.M. Pune. Statement of the applicant has been recorded by the investigating agency on 29/09/2021. The laptop which was used by the applicant has already been seized by the I.O. from the custody of the main accused. All the data in relation to the work done by the applicant has been recovered and seized by the investigating officer. The applicant has co­operated with the investigating agency by attending DGGI office and he has already supplied all relevant documents required for investigation. But he has been arrested on 05/03/2022 in violation of mandatory provision of Section 41 Cr.P.C. and in violation of the direction of the Judgment of Hon’ble Supreme Court in Arnesh Kumar Vs. State of Bihar and another, AIR 2014 (SC)2756. The applicant has no criminal antecedents. He is permanent resident of Bhavnagar Gujrat, having deep root in the society and hence there is no chance of his absconding away.

Hence, prayed for bail.

3] In response to notice the respondent/opponent Directorate General of GST Intelligence (DGGI), Pune Zonal Unit submitted say through Senior Intelligence Officer and thereby stated that M/s. Taj Enterprise (GSTIN 27AGAPV5911F1ZE) Pune, has been involved in generating fake invoices without any supply of goods. The said Unit has discharged its entire GST liability through ineligible input tax credit (ITC) and registration was taken using forged documents. It was also gathered that M/s. Taj Enterprise had received the entire ITC from another non­existent unit M/s. Siddhi Vinayak Enterprise (GSTIN 27BLWPG6315C1Z1) located in Mumbai which in turn received entire ITC from M/s. Himalaya Traders (GSTIN 24EXGPS9089Q1Z6) located in Gujrat.

4] It is also revealed that most of the entities in the chain are fake and found to be issuing GST invoices without any supply of goods / services. All the transactions are paper based and M/s. Taj Enterprise and others have availed and passed input tax credit of Rs. 83.67 Crore approximately in fraudulent manner and there is involvement of four main persons in availing and passing input tax credit and they are Sameer Khan, Imran Bahalwan, Ketan Dugad and the applicant­ Murtuza Tinwala. It is also disclosed from the statement of the applicant that Mr. Sameer Khan directed Mr. Imran Bahalwan who in turn further directed him to prepare invoices on the basis of whatsapp data sent to him. Invoices were prepared in the PDF file and further Mr. Murtuza Tinwala sent it to Mr. Sameer Khan and Mr. Imran Bahalwan. It is also submitted that the applicant has failed to produce any documents pertaining to his employment as an accountant for M/s. Taj Enterprise, M/s. Himalaya Traders and M/s. Siddhi Vinayak Enterprises. In fact the amount of Rs. 20,000/­ per month claimed by him to be his salary is nothing but pecuniary benefits he had received against his role in the issuance of fake invoices to pass the illegal Input Tax Credit to the end­users.

5] The applicant in spite of being a Tax consultant, he has deliberately indulged in the issuance of fake invoices to pass the illegal Input Tax Credit to the end­ users and thus defrauded the Govt.Exchequer from its huge legitimate GST revenue. The investigation is under progress. It is admitted that other three main accused have already been released on bail by the CJM Court after expiry of 60 days. The applicant has admitted in his statement that he was the one who was preparing fake invoices as per the instructions of Sameer Khan and Imran Bahalwan. The applicant was an active accomplice and as a consultant he advised Imran Bahalwan and Sameer Khan how to go ahead with fake business. Hence, the bail application may be rejected.

6] Heard respective Ld. Advocate for the applicant­ accused and Ld.Spl. Public Prosecutor appearing for the opponent. Perused documents placed on record by the applicant and the prosecution papers provided by the opponent.

7] The Ld. Counsel for the applicant has argued that even as per the case of the prosecution the present applicant is a tax consultant who has acted upon the instructions of the main accused and therefore he is not liable for the alleged offence. As per Section 48 (3) of the Central Goods and Services Tax Act 2017, the responsibility of correctness of any particulars furnished in the return or other details filed by the goods and services tax practitioners shall continue to rest with the registered person on whose behalf such return and details are furnished. Moreover, the three main accused have already been released on default bail. Considering that the applicant acted upon the instructions of the main accused, as a tax consultant he may be released on bail.

8] The learned counsel for the applicant has relied upon certain Judgments of Hon’ble Supreme Court and Hon’ble Bombay High Court in order to claim the release of the applicant on bail.

1] The State of Rajasthan, Jaipur Vs. Balchand, AIR 1977 Supreme Court 2447 : (1978) 1 SCR 535

2] Gudikanti Narasimhulu and others Vs. Public Prosecutor, High Court of Andhra Pradesh, AIR 1978 Supreme Court 429 : 1978 SCC(CRI) 115

3] Sanjay Chandra Vs. Central Bureau of Investigation AIR 2012 Supreme Court 830 : AIR SCW 6838

4] Amit Anand Pai Raikar @ Amit Pai Vs. The State of Goa & Anr. 2016 ALL MR (Cri) 268,

5] Daulat Samirmal Mehta Vs. Union of India AIRONLINE 2012 BOM 516

6] Arnesh Kumar Vs. State of Bihar, AIR 2014 SC 2756

7] Gurcharan Singh and others Vs. State (Delhi Administration), AIR 1978 Supreme Court 179

8] Chidambaram Vs. Directorate of Enforcement AIR 2020 Supreme Court 1699

9] As against this argument the learned APP has submitted that the applicant conspired together with the main accused in raising fake invoices without supply of goods and therefore his role cannot be treated as minor one. Investigation is still going on and he may influence witnesses whose statements are yet to be recorded. The applicant is likely to abscond and likely to repeat similar offences if released on bail.

10] The learned Special P.P. has relied upon the following citations –

1] Sanjay Dhingra Vs. Director General of Goods and Services Tax Intelligence, Criminal Misc. M­50256 of 2019 decided on 23/01/2020 by Punjab and Hariyana High Court

2] Jagdish Kanani Vs. Commissioner, CGST & Central Excise, Indore, M.Cr.C. No. 3472/2019, decided on 26/02/2019, Madhya Pradesh High Court

3] Enforcement Officer, Ted, Bombay Vs. Bher Chand Tikaji Bora and another, (1999) 5 SCC 720, decided on 9^thApril, 1999 by Hon’ble Supreme Court

4] P.V. Ramana Reddy Vs. Union of India, W.P. No.4764 of 2019, decided on 18^th April 2019 by Hon’ble Telangana High Court.

5] Amit Beriwal Vs. State of Odisha, BLAPL no. 2217 of 2020 decided on 27/07/2020 by Hon’ble High Court of Orissa.

11] I have gone through the citations relied upon by the rival parties and I am guided by the same in deciding this application.

12] From the say of the prosecution and more particularly from the prosecution papers placed on record, it is evident that the three main accused Sameer Khan, Imran Bahalwan and Ketan Dugad were responsible for availing and passing on input tax credit by raising fake invoices and the applicant acted upon the instructions of the main accused with whom he was working as a tax consultant. It appears that the applicant received remuneration of Rs.20,000/­ per month for doing his job. It does not appear that the applicant is beneficiary of the transactions involved. The three main accused are already released on default bail.

13] Moreover, it is seen that the accused is in custody since his arrest on 05/03/2022. The evidence is in the form of documentary nature which has already been collected during investigation and earlier inquiry. It does not appear that there is anything to be recovered from the present applicant. It seems that investigation can be carried out without further detention of the applicant. Under such circumstances, the further detention of the applicant­accused is not warranted although the investigation is shown to be still in progress, especially when till this date there are no formal accusations against the applicant in the form of FIR or complaint.

14] The evidence in this case is mostly of documentary nature and also consists of digital record and it is in the custody of GST department and therefore, there does not appear any chances of tampering with the prosecution evidence, if the accused is released on bail. The applicant is shown to be resident of Bhavnagar, Gujrat, having roots in the society and thus, there does not appear any likelihood of his absconding away. The accused has no criminal antecedents. Moreover, the maximum punishment prescribed for the offence is imprisonment upto 5 years. Hence, considering the same, I find that applicant ­accused can be released on bail subject to certain conditions. Hence, the following order:-

ORDER

[1] Application is allowed.

[2] The applicant ­accused Murtuza Jabirbhai Tinwala shall be released on bail on his furnishing PR bond of Rs.2,00,000/­ with furnishing one or more solvent sureties in the like amount, in Case No. DGGI/PZU/INT/GR­C/23/21­22 for the offences punishable under Sections 132(1)(a), 132)(1)(b), 132(1)(c) punishable under clause (I) or (ii) of Sub­sec 1 or sub­sec 2 of the Central Goods and Service Tax Act, 2017 registered with office of Directorate General of GST Intelligence (DGGI) Pune Zonal Unit.

[3] The applicant­ accused shall not influence the witnesses and shall not tamper with the prosecution evidence in any manner.

[4] The applicant­ accused shall not leave India, without prior permission of the Court.

[5] Applicant­ accused to deposit the passport if any, with the Investigating officer, within eight days of his release from jail.

[6] Applicant ­accused shall also furnish his current residential address along with address proof at the time of furnishing bail.

[7] Applicant­ accused to make himself available to Investigating officer as and when required by him.

[8] Bail before Ld. CJM, Pune.