Case Law Details
Basudev Mittal Vs Union of India (Chhattisgarh High Court)
It is alleged that the applicant has illegally availed Input Tax Credit of more than Rs.5,00,00,000/- by purchasing the goods from several suspicious and fake suppliers whose registration had already been cancelled. During search, it also came to the forefront that more than 700 vehicles, against which invoices were submitted by the applicant wherein only vehicle numbers were mentioned, have not found to be passed through the relevant toll gate. From the documents adduced, role of the applicant prima-facie appears to be serious in nature and as per the prosecution, further investigation is going on to find out more suspicious and fake suppliers with whom the applicant alleged to have made transactions in order to avail Input Tax Credit illegally. Further, looking to the nature and gravity of offence, the possibility of hampering with the evidence and interfering with the investigation by the applicant cannot be ruled out.
In the instant case, charge sheet has been filed against the applicant, however, further investigation is going on and as per respondent, there is much more probability of detecting more fake and suspicious firms. The economic offences having deep rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. Economic offence is always committed with calculated design profiting himself regardless of the consequence to the community.
Considering the facts and circumstances of the case, the allegations made against the applicant, the evidence collected by the prosecution, seriousness of the offence and further considering the law laid down by Hon’ble Supreme Court in the matter of Nimmagadda , HC not inclined to release the applicant on bail.
FULL TEXT OF THE JUDGMENT/ORDER OF CHHATTISGARH HIGH COURT
1. The applicant has preferred this First bail application under Section 439 of the Code of Criminal Procedure for grant of regular bail as he is arrested in connection with Crime No.178/GST/2021-22, registered in the office of Principal Commissioner, Central Excise and Central G.S.T., Raipur, District Raipur (C.G.) for the offence punishable under Section 132(1)(C) of Goods and Service Tax Act, 2017 (for short ‘the G.S.T. Act’).
2. The prosecution case, in brief, is that on the basis of Alert Letters, on 28.03.2022, in order to recover documents secreted at his premises to unearth the evasion of the GST amount, conducted search at the residential premises of the applicant, who is proprietor of M/s Shree Sainath Enterprises, Raipur. During search and scrutiny of documents & data analysis, it was revealed that the applicant’s firm purchased iron scrap from M/s Kalodia Traders and M/s S.R. Enterprises and eight others firms whose GST registration have already been cancelled and flatulently availed Input Tax Credit to the tune of more than Rs.5 Crore and thereby committed the offence. Based on this, offence has been registered and the applicant has been taken into custody on 30.03.2022.
3. Mr. Rajeev Shrivastava, learned Sr. Advocate appearing for the applicant submits that the applicant is innocent and has been arrested in a total false case of G.S.T. evasion. The applicant has not committed any offence as alleged by the prosecution. He further submits that on 31.02.2022, the applicant has paid Rs.76,00,000/- under protest and subject to final assessment, as such, the amount being less than Rs.5,00,00,000/-, the alleged offence, in view of Section 132(4)(5) of the G.S.T Act, falls within the category of bailable offence. Learned counsel also submits that there is no credible and clinching evidence on record which would show that the present applicant, with an intention or knowledge, purchased goods from those firms whose registration have already been cancelled by the respondent. The G.S.T. portal itself shows that the alleged transactions have been taken place when the firms’ registration was not cancelled or withdrawn and the applicant with bonafide intention trade in F.O.R. method, received tax input credit with the firms and transferred to the purchaser of applicant’s as per rule. Furthermore, the so called forged firms have paid the G.S.T., therefore, applicant was able to receive input tax credit. Learned counsel also submits that the charge-sheet has been filed and there is no evidence on record to demonstrate that applicant has prepared forged and fictitious firms to avail benefit of input tax credit illegally. It is next submitted that the respondent conducted search at the residential premises of the applicant without any prior inquiry, assessment and demand notice & ignoring the documents produced by the applicant, the offence has been registered. It is further submitted that nothing suspicious has been seized from the possession of the applicant, which would show that the applicant created or managed forged and non-existed firms and fraudulently availed input tax credit. Further submission of learned senior counsel is that the alleged offence is compoundable and triable by Magistrate and maximum punishment is five years imprisonment. The applicant has neither committed nor participated in such act. The applicant is senior citizen aged about 60 years, permanent resident of Raipur and he is in jail since 30.03.2022, as such, there is no chance of his absconding and he is ready to furnish adequate surety and shall abide by all such conditions as may be imposed upon him by this Court, therefore, he may be granted privilege of regular bail. To buttress his submission, he placed reliance on the decisions of Hon’ble Apex Court in the matter of Union of India v. Make My Trip (India) (P) Ltd. reported in (2019) 11 SCC 765, Radheshyam Kejriwal v. State of W.B. reported in (2011) 3 SCC 581 and Dataram Singh v. State of Uttar Pradesh and Another reported in (2018) 3 SCC 22, order dated 21.06.2022 passed by co-ordinate Bench of this Court in MCRC No.900/2022 (Subhash Chouhan V. Union of India Through Superintendent (Preventive), Central and Central Excise GST) and order dated 21.12.2021 passed in the matter of Rohan Tanna V. Union of India & Abhishek Pandey V. Government of India Through Senior Intelligent Officer, Director General fo GST Intelligent, order of High Court of Madras in the matter of Jayachandran Alloy (P) v. Superintendent of GST and Central Excise and Others reported in 2019 SCC OnLine Mad 31224, judgment of High Court of Delhi at New Delhi in the matter of Make My Trip (India) Pvt. Ltd. v. Union of India reported in 2016 SCC OnLine Del 4951, order of High Court of Bombay in the matter of Meghraj Moolchand Burad v. Directorate General of GST (Intelligence) and Another reported in 2018 SCC Online Bom 20135.
4. On the other hand, Mr. Manish Sharma, learned counsel appearing for respondent opposing the bail application submits that the applicant has been found to be habitually involved in procuring fake invoices from fake and fictitious firms, availing ineligible Input Tax Credit on the basis of such invoices and thereafter, passing on such ineligible and illegal Input Tax Credit to other unscrupulous suppliers, mostly within the State of Chhattisgarh, thereby seriously denting the Government Exchequer. He further submits that on the basis of two Alert Circulars in connection with fictitious supplier M/s S.R. Enterprises and Koladia Traders having GSTIN No. 21BMEPS3765D1Z7 & 21KHVPS8753N1Z1 respectively, issued by the DGGI, Bhubhneshwar and the Anti-evasion, CGST, Rourkela, were received by the respondent office for investigation in connection with passing on of wrong and irregular ITC by some Orissa based fake firms, in which they had identified two such fake firms, who had been found to have passed on wrong and irregular ITC to the applicant, a search was conducted at the residential premises of the applicant and some incriminating material/documents were recovered relating to purchases from several suspicious suppliers whose registration had already been cancelled. Learned counsel also submits that on being scrutinized the documents, it has been found that the applicant and suppliers who were prima-facie perceived as suspicious during the initial investigation that the applicant was routinely engaged in availment and passing on ITC on the basis of fake invoices issued by many more suspicious firms in addition to the two fictitious firms already identified as per the above Alert Circulars. It has also been found that during verification of toll data, more than 700 vehicles mentioned in invoices issued by such suspicious suppliers to the applicant were not found to have passed through respective toll plaza. Various vehicles mentioned in invoices issued by various fictitious suppliers to the applicant were found to be two wheeler/car etc. Learned counsel also submits that the data analysis and scrutiny of records confirmed that the total ITC amounting to Rs.5,68,95,176/-had been fraudulently availed and subsequently passed on by the firm M/s Shri Sainath Enterprises, owned by the applicant. Learned counsel for respondent also submits the under Section 167 (2) of Cr.P.C., the respondent has to file charge-sheet within 60 days but the investigation is going on and further investigation are underway in order to unearth more such persons/firms to whom the fruits of such crime have been passed on and to also to unearth all such persons/firm who have been involved with the applicant. Learned counsel lastly submits that in view of ongoing further investigation and all possibility and likelihood of hampering and interfering with the investigation by the applicant and create obstruction on the further investigation carried out by the department, the bail application deserves to be rejected. In support of his submission, he placed reliance on the decisions of Hon’ble Supreme Court in the matter of P.V. Ramana Reddy v. Union of India [Special Leave to Appeal (Crl.) No.4430/2019], Union of India v. Sapna Jain & Ors [Special Leave to Appeal (Crl.) No.4322-4324/2019], & Sandeep Goel v. Union of India [Special Leave to Appeal (Crl.) No.1803/2020], order of this High Court dated 18.01.2022 passed in MCRC No.6764/2021 [Paritosh Kumar Singh & Others v. Senior Intell. Officer], order dated 24.06.2019 passed in MCRC No.3769/2019 [Pankaj Agrawal v. Union of India], order of High Court of Madras dated 30.04.2021 passed in CRL.O.P. No.7672/2021, orders of High Court of Orissa, Cuttack dated 27.07.2020 passed in BLAPL No.2217/2020 & order passed in the matter of Ajaj Ahamad v. State of Odisha (CGST) reported in 2021 (53) G.S.T.L. 390 (Ori.), order of High Court of Allahabad in the matter of Chhaya Devi v. Union of India reported in 2021(52)G.S.T.L. 390 (All.), order of High Court of Telangana at Hyderabad in the matter of Neeraj Karande v. Directorate General of GST Intelligence, Hyderabad reported in 2021 (50) G.S.T.L. 472 (Telangana) & in the matter of P.V. Ramana Reddy v. Union of India reported in 2019 SCC OnLine TS 2516, judgment of High Court of Calcutta in the matter of Arvind Kumar Munka v. Union of India reported in 2020 SCC OnLine Cal 531 and order of High Court of Punjab & Haryana at Chandigarh dated 23.01.2020 passed in Criminal Misc.-M-50256/2019 (Sanjay Dhingra v. Director General of Goods and Services Tax Intelligence).
5. I have heard learned counsel for the parties, perused the case diary.
6. A bare perusal of case diary goes to show that initially on the basis of two Alert Letters C. No.IV(6)13/AE/RKL/2022/1056-A and F.No.DGGI/BbZU/INV/123/GST/2019/2539 issued by Assistant Commissioner (AE), Rourkela and Additional Director, DGGI, Bhubaneswar respectively, regarding sharing of information in case of non-existent business entity, the business premises of the applicant from where the business activities were being performed, searched out and upon scrutiny of document it is found that the applicant has illegally availed Input Tax Credit of more than Rs.5,00,00,000/- by purchasing the goods from several suspicious and fake suppliers whose registration had already been cancelled. During search, it also came to the forefront that more than 700 vehicles, against which invoices were submitted by the applicant wherein only vehicle numbers were mentioned, have not fount to be passed through the relevant toll gate. From the documents adduced, role of the applicant prima-facie appears to be serious in nature and as per the prosecution, further investigation is going on to find out more suspicious and fake suppliers with whom the applicant alleged to have made transactions in order to avail Input Tax Credit illegally. Further, looking to the nature and gravity of offence, the possibility of hampering with the evidence and interfering with the investigation by the applicant cannot be ruled out.
7. In the instant case, charge sheet has been filed against the applicant, however, further investigation is going on and as per respondent, there is much more probability of detecting more fake and suspicious firms. The economic offences having deep rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. Economic offence is always committed with calculated design profiting himself regardless of the consequence to the community.
8. The Co-ordinate Bench of this Court, relied upon the decision of Hon’ble Supreme Court in the matter of Nimmagadda prasad v. Central Bureau of Investigation reported in (2013) 7 SCC 466 in the matter of Paritosh (supra), wherein Hon’ble Supreme Court observed in para 24 as under :-
“While granting bail, Court has to keep in mind the nature of accusations, nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations. It has also to be kept in mind that for the purpose of granting bail, the Legislature has used the words “reasonable grounds for believing” instead of “the evidence” which means the Court dealing with the grant of bail can only satisfy it as to whether there is a genuine case against the accused and that the prosecution will be able to produce prima facie evidence in support of the charge. It is not expected, at this stage, to have the evidence establishing the guilt of the accused beyond reasonable doubt.”
9. Considering the facts and circumstances of the case, the allegations made against the applicant, the evidence collected by the prosecution, seriousness of the offence and further considering the law laid down by Hon’ble Supreme Court in the matter of Nimmagadda (supra), I am not inclined to release the applicant on bail.
10. Accordingly, the bail application is rejected.
