Case Law Details

Case Name : Bhagwan Sahay Gupta Vs Union Of India (Rajasthan High Court)
Appeal Number : S.B. Criminal Miscellaneous Bail Application No. 5882/2021
Date of Judgement/Order : 04/05/2021
Related Assessment Year :

Bhagwan Sahay Gupta Vs Union Of India (Rajasthan High Court)

GST: Arrest of Chartered Accountant on allegation of fake firms; Granted conditional bail by the High Court of Rajasthan

In Bhagwan Sahay Gupta Vs. Union of India, O/o Sr. Intelligence Officer, GST Intelligence Directorate, Jaipur Region Unit, Jaipur through an order dated: 04.05.2021, a bail application filed by a chartered accountant is allowed by the Hon’ble High Court of Rajastan, taking note of the fact that he has remained in custody for a long period and that petitioner is also having a child and also considering the contentions put forth by counsel for the petitioner, subject to certain conditions.

Facts of the case

Mr. Bhagwan Sahay Gupta, a chartered Accountant of Jaipur was arrested under the provisions of section 132 of the Central Goods & Services Tax Act, 2017 (CGST Act) by the the Jaipur branch of Directorate General of GST Intelligence (DGGI), on 23.01.2021 alleging that, he was instrumental in registration of 11 fake firms and these firms have availed input tax credit to the tune of ₹146 crores under the GST Acts. It is also contended that petitioner was aware as he was filing GST returns of non-existent firms. After having prolonged judicial custody in the Central Jail, Jaipur, he has filed a Criminal Miscellaneous Bail Application before the High Court of Rajasthan U/s. 439 of the Cr.P.C. His contention in the bail application is that, being a Chartered Accountant he had created the firms only on the basis of documents provided by the co-accused. Per contra, as per the complaint filed by the Department, petitioner instead of charging ₹1500.00 per GST return, charged around ₹3,500.00 per GST return. However, there is no allegation in the complaint that the petitioner has received any amount or any percentage with regard to the wrong input tax credit. It is also contended that with the complaint, statement of Vishnu Garg, the co-accused is also attached who has mentioned that petitioner has created the firms on the basis of documents provided by him. Further it is contended that petitioner is in custody from 23.01.2021. The maximum sentence provided for the offence with which petitioner is charged is six months. It is contended that as per the charge-sheet, petitioner has only received ₹75,000.00 for filing GST returns and ₹5,000.00 per firm for the registration. Offence is triable by First Class Magistrate.

Order of the Court

Taking note of the fact that the petitioner has remained in custody for a period of one year and five months and that petitioner is also having a child and also considering the contentions put forth by counsel for the petitioner, the bail application has been allowed. He shall be released subject to the conditions that;

a) He furnishes a personal bond in the sum of ₹1,00,000.00 (Rupees One Lac Only) together with two sureties in the sum of ₹ 50,000.00 (Rupees Fifty Thousand only) each to the satisfaction of the learned trial court and

b) He shall appear before that Court and any court to which the matter is transferred, on all subsequent dates of hearing and as and when called upon to do so.

(Notes: Facts check reveals that Mr. Bhagwan Sahay Gupta, the petitioner herein was actually arrested on 23.01.2021 along with four others including one Mr. Vishnu Garg (main accused), a resident of Vaishali Nagar, Jaipur, Proprietor of M/s. Vikas Trading Company, M/s. Shri Shyam Traders, M/s. Vinayak Associates, M/s. SP Enterprises and M/s. VK industries & Corporation. So much so the sentence in the above court order that “Taking note of the fact that Chartered Accountant has remained in custody for a period of one year and five months and..” may be wrong happened due to some typographical error.)

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FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT

1. Petitioner has filed this bail application under Section 439 of Cr.P.C.

2. Complaint No. CIS No. 463/2021 F. No. DGGI/INT/INTL104/2021-Gr. F-O/o ADG-DGGI-ZU-JAIPUR for offence under Section 132(1)(i) (iv) read with Sub-Section (5) of Central Goods & Service Tax Act, 2017.

3. It is contended by counsel for the petitioner that petitioner is a Chartered Accountant who created the firms on the basis of documents provided by the co-accused. His statement was recorded by the Authorities but was retracted, later as he was subjected to beating, for which a complaint was made by the Department. As per the complaint filed by the Department, petitioner instead of charging Rs.1500/- per GST return, charged around Rs.3,500/- per GST return. However, there is no allegation in the complaint that he has received any amount or any percentage with regard to the wrong input tax credit. It is also contended that with the complaint, statement of Vishnu Garg is attached who has mentioned that petitioner has created the firms on the basis of documents provided by Vishnu Garg.

4. It is further contended that petitioner is in custody from 23.01.2021. The maximum sentence provided for the offence with which petitioner is charged is six months. It is contended that as per the charge-sheet, petitioner has only received Rs.75,000/- for filing GST returns and Rs.5,000/- per firm for the registration. Offence is triable by First Class Magistrate.

5. Counsel for the Union of India has opposed the bail application. It is contended that petitioner was instrumental in registration of 11 fake firms and these firms have availed input tax credit to the tune of Rs.146 crores. It is also contended that petitioner was aware as he was filing GST returns of non-existent firms.

6. It is contended that petitioner is charged for offence for which sentence is provided as five years. In similar type of cases pertaining to Chartered Accountant, bail application was rejected by Co-ordinate Bench of this Court.

7. I have considered the contentions.

8. Taking note of the fact that Chartered Accountant has remained in custody for a period of one year and five months and that petitioner is also having a child and also considering the contentions put forth by counsel for the petitioner, I deem it proper to allow the bail application.

9. This bail application is accordingly allowed and it is directed that accused petitioner shall be released on bail provided he furnishes a personal bond in the sum of Rs.1,00,000/- (Rupees One Lac Only) together with two sureties in the sum of Rs.50,000/- (Rupees Fifty Thousand only) each to the satisfaction of the learned trial court with the stipulation that he shall appear before that Court and any court to which the matter is transferred, on all subsequent dates of hearing and as and when called upon to do so.

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Author/Blogger: Aji V. Dev, Advocate, High Court of Kerali V. v & Associates, Ernakulam, Kochi, available at [email protected]/[email protected]/9447788404

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I am Aji V. Dev, a practising lawyer in the High Court of Kerala, Ernakulam. I hail from Vallicodu- Kottayam a beautiful village near to Pathanamthitta in the Kerala state of India, where undulating hills decorated by tall trees and lush green vegetation descends to the paddy fields in a rhythmic wa View Full Profile

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