Ajjimullah Naim Choudhary Vs State of Maharashtra (Bombay High Court)
SEO Title: Fake GST ITC of ₹23 Crore: Bombay HC Rejects Anticipatory Bail
Summary: The Bombay High Court dismissed an anticipatory bail application filed by Ajjimullah Naim Choudhary and another in connection with summons issued under Section 70 of the Central Goods and Services Tax Act, 2017. The applicants, proprietors of Maharashtra Steel Traders and Hira Steel, apprehended arrest during an investigation into alleged fraudulent availment of Input Tax Credit (ITC) through invoices issued by non-existing firms. The Department alleged that Hira Steel had availed fake ITC of ₹15,86,82,750 and Maharashtra Steel Traders had availed ₹7,17,94,443, aggregating to ₹23,04,77,193. The applicants submitted that their relative, Attaullah Chaudhary, handled business affairs without their knowledge and assured cooperation with the investigation. However, the Department reported that they had initially appeared without producing supporting documents and subsequently failed to attend despite summons. Investigation materials indicated that major suppliers had not supplied goods, several supplier registrations were suspended or cancelled, and Anu Enterprises was found non-existent. The authorities also identified inconsistencies between physical stock and records, while supporting evidence of delivery was absent despite transactions involving crores of rupees. The Court found prima facie indications of bogus firms being used to claim fraudulent ITC and considered custodial interrogation necessary to uncover the activities. The prosecution referred to five earlier Bombay High Court orders declining pre-arrest protection in similar matters. Considering the alleged modus operandi and fraudulent intention, Justice Vinay Joshi held that no case for anticipatory bail had been established and rejected the application.
Cases Discussed
- Ronak Soni V/s. The State of Maharashtra & another — ABA/2537/2021, Bombay High Court, decided on 27 October 2021. Cited by the prosecution as an earlier order declining pre-arrest protection in a similar case.
- Dev Adania V/s. State of Maharashtra & another — ABA/2030/2021, Bombay High Court, decided on 23 September 2021. Cited by the prosecution concerning refusal of pre-arrest protection.
- Naitik Paresh Mawani V/s. The Superintendent, O/o. Commissioner of CGST and C.Ex. Mumbai and another — ABA/2267/2021, Bombay High Court, decided on 23 September 2021. Cited by the prosecution in support of opposing anticipatory bail.
- Bhupendra Majethia s/o Hargovind Majethia V/s. The Superintendent (A.E.), Investigation-A, CGST Mumbai South Commissionerate & another — ABA/2270/2021, Bombay High Court, decided on 23 September 2021. Cited by the prosecution as a comparable pre-arrest protection matter.
- Amit Kumar Shukla V/s. Union of India & others — WP(ST)/9335/2021, Bombay High Court, decided on 6 May 2021. Cited by the prosecution in support of refusal of pre-arrest protection.
FULL TEXT OF THE BOMBAY HIGH COURT JUDGMENT/ORDER
1. The applicants are apprehending arrest in connection with Summons No. CBIC-DIN-20220266VI000000F28B dated 28th February, 2022 and another Summons No. CBIC-DIN-20220366VI0000515936 dated 15th March, 2022. Both summonses were issued in terms of Section 70 of the Central Goods and Services Tax (for short “C.G.S.T.”) Act, 2017. Since trial Court declined to exercise jurisdiction under Section 438 of Cr.P.C, the applicants are before this Court.
2. Applicant No. 1 Ajjimullah Choudhary is a proprietor of M/s Maharashtra Steel Traders Prop., whilst Applicant No. 2 Hafjullaj Choudhary is a proprietor of M/s. Hira Steel Prop.
3. It was the case of Revenue Department that the applicants had fraudulently availed Input Tax Credit (for short “ITC) on the invoices of non-existing companies. The applicants were called by Investigating Agency for said purpose. Initially the applicants attended the office, however, did not produce any document for verification. Later on, they failed to appear though summoned. It is the respondent’s case that the applicants have availed fake ITC of huge amount in the name of M/s Hira Steel Prop., to the tune of Rs.15,86,82,750/-, whilst in the name of M/s Maharashtra Steel Traders Prop. to the tune of Rs.7,17,94,443/- was availed.
4. The applicants’ learned Counsel would submit that the applicants’ kin Ataullah Chaudhary was looking after the affairs’ of which they were unaware. The applicants have already attended the office of Revenue Department. They assured to co-operate with the investigation, therefore, sought protection. The department has fled reply in resistance in detail and produced investigation papers. Perusal of paper indicates that investigation is going on regarding the fake companies, on the basis of which ITC was availed. During the verifcation it was found that the major suppliers have not supplied goods but they were either suspended or it was cancelled. The investigation paper reveals that the genuineness of supplier namely M/s Anu enterprises was verified. It was transpired that said enterprise was non-existence and no goods were supplied. To that effect, statement of one Aakash was recorded, which speaks about the fraudulent activities. Prima facie it reveals that bogus forms are created to avail fake ITC. The investigation paper indicates that on verification it was found that the goods in stock were not consistent with the documents. The transaction was of crore rupees, however, there is no supporting material about the delivery of goods. It is prima facie evident that the applicants are engaged in availing fraudulent ITC. The matter requires thorough custodial interrogation to unfold the fraudulent activities.
5. The learned APP would submit that in similar type of cases this Court has declined to grant pre-arrest protection. In support of said contention, he relied on the orders passed by this Court in the cases of Ronak Soni V/s. The State of Maharashtra & another1 decided on 27th October 2021, Dev Adania V/s. State of Maharashtra & another2 decided on 23rd September 2021, Naitik Paresh Mawani V/s. The Superintendent, O/o. Commissioner of CGST and C.Ex. Mumbai and another3 decided on 23rd September 2021, Bhupendra Majethia s/o Hargovind Majethia V/s. The Superintendent (A.E.), Investigation-A, CGST Mumbai South Commissionerate & another4 decided on 23rd September 2021 and Amit Kumar Shukla V/s. Union of India & others5 decided on 06th May 2021.
6. Considering the modus of the applicants and fraudulent intention in gaining ITC, custodial interrogation is very much necessary. In view of that, no case is made out for grant of relief as prayed. In view of that, application stands rejected.
Notes:-
1 ABA /2537/2021.
2 ABA/2030/2021.
3 ABA/2267/2021.
4 ABA/2270/2021.
5 WP(ST)/9335/2021.
