Gyaan Chandra Jaiswal @ Gyan Chandra Jaiswal Vs Union of India (Jharkhand High Court)
Conclusion: While the prosecution alleged a massive ITC fraud involving multiple shell companies, the lack of documentary proof ultimately led the court to favour the bail.
Held: In the instant case, upon scrutiny of GSTR-2A of M/s Jai Bhole Enterprises, it appeared that M/s Jai Bhole Enterprises had availed input tax credit from various entities. Accordingly, the office initiated investigation against the above firms and during the investigation all the above said firms found to be fake. As per the statement of Shri Rahul Prajapati, it appeared that M/s Jai Bhole Enterprises was operated by Shri Gyaan Chandra Jaiswal (Director of M/s Maa Sharda Endeavor Pvt. Ltd. and M/s Makers Casting Private Limited and key person of M/s Kedarnath Trexim Pvt. Ltd.), all these three firms had availed inadmissible ITC from M/s Jai Bhole Enterprises. From the very statement of Gyan Chandra Jaiswal, who gave evasive reply, showed that M/s Jai Bhole Enterprises was operated by Gyan Chandra Jaiswal and his staff/ son as per his direction with sole intention to avail fake ITC from it. Since Gyaan Chandra Jaiswal was the mastermind, who created M/s Jai Bhole Enterprises, through which, he availed bogus ITC of Rs.22.31 crore and further passed on the said credit of ITC to his directorship firms amounted to Rs.33.35 crore. Thus, total involvement of fake GST ITC was Rs.55.66 crore. As such, the accused had committed the offence under Section 132(1)(b) and 132(1)(c) of the CGST Act, 2017. The Court of learned Additional Chief Judicial Magistrate, Jamshedpur in Complaint Case registered this complaint against Gyaan Chandra Jaiswal and the date was fixed. The accused Gyaan Chandra Jaiswal was taken into judicial custody and remanded to the Central Jail, Jamshedpur. Assessee had submitted that the allegations made in the complaint was that during investigation carried out in respect of various firms revealed that the below-mentioned firms were fraudulently availed Input Tax Credit and further passed on to the various firms to the end-availers. Hence, it could be easily made out that the beneficiary if at all was the end-availers and not the intermediary. As such, in absence of the named companies in the complaint, having been made a party to the present case, the entire proceeding is vitiated in view of the restriction imposed under Section 137 of the CGST. It was held that the allegations made against assessee were based on the statement of witnesses. In regard to creating the fake firms, availing and utilizing the ITC to the tune of Rs.54.33 crore, no documentary evidence had been adduced on behalf of the prosecution in support of the allegations made in the complaint and prosecution report as well against assessee. Although details summaries of GSTR-3B of fake firms was mentioned; yet any document relied upon had not been made annexure in proof of same. Accordingly, the bail application of assessee was hereby allowed.
