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Case Law Details

Case Name : Rajendra Mansingbhai Rathod Vs The State of Gujarat (Court of 5th Additional Sessions Judge at : Bhavnagar)
Appeal Number : Criminal Misc. Application No.1263 of 2021
Date of Judgement/Order : 30/11/2021
Related Assessment Year :
Courts : District Court

Rajendra Mansingbhai Rathod Vs The State of Gujarat (Court of 5th Additional Sessions Judge at : Bhavnagar)

1. The present bail application has been preferred by the applicant – accused to release him on regular bail under Section 439 of the Code of Criminal Procedure 1973. Accused came to be arrested for the alleged commission of offence punishable u/ss.132(1)(b) and 132(1)(c) of the Central Goods & Services Tax Act, 2017 (“CGST” for short) as well as Gujarat Goods and Service Tax ACT, 2017 (“SGST” for short) in connection with State GST Case pertaining to File No.DGGI/AZU/Gr-D/12(4)369/2021-.22 registered with office of Directorate General of Goods & Service Tax Intelligence, Zonal Unit, Ahmedabad. The applicant-accused came to be arrested on 27.10.2021 and since then he is in judicial custody and therefore, seeks enlargement on bail under the provisions of Section 439 of Cr.P.C.

2. Learned Advocate for the applicant-accused Mr.Varis V Isani appeared before this Court and has submitted that the present applicant is a director and authorized person in the company namely M/s. Air Wind Green Energy Limited, a public limited company and holding. GST Registration 24AANCA9739J2Z3 w.e.f. 13.09.2017, which was engaged’ in trading business of ferrous scrap, iron and steel scrap and the company is registered with SEBI, ROC having registration and books of accounts are audited under the various act and company is into the trading business and purchasing goods from the various registered suppliers and sales to various registered suppliers. He further submitted that the allegations are such that the applicants claimed to purchase the material work of Rs.33.56 crores having claimed of Input Credit of Rs.6.04 crores, which in fact, has not purchased but fake bills have been obtained without supply and receipt of the goods so as to wrongfully claimed input tax credit. He further submitted chat the Purchaser have received the goods and after the goods have received, the purchaser is required to make the payment of value of the goods along with the tax and thereafter, the purchaser has to verify the supply in the electronic credit ledger maintained by the supplier, which is being reflected in the applicant’s company’s electronic credit ledger and thus, the supplier and purchaser have to file necessary returns and prescribed and, therefore, the supplier and purchaser have to file returns in the Form of GSTR-1 and GSTR-313. He further submitted that the search and investigation was carried out on 26.10.2021 by DGGI, AZti, Ahmedabad regarding fraudulent transfer of input tax credit and evasion of huge amount of GST by procuring invoices without any supply of goods. That the authority has alleged that transactions of sales and purchases of goods are without actual receipt and supply of goods resulting in the evasion of GST to the tune of Rs.6.04 crores. He further submitted that the applicant has not played any role in the present offence and has been falsely implicated by the department. He further submitted that this is not a case of applicant being bogus dealer, doing activity of passing fake invoices and fraudulent ITC. He further submitted that the applicant is not having any criminal history and the case is based on documentary evidence and the necessary materials and other documents have already been seized by the department. He further submitted that the applicant was summon on 27,10.2021 and he was arrested on 27.10.2021 at Bhavnagar and since then the applicant is in judicial custody. He further submitted that the present applicant is innocent and has not committed any of the alleged offence and no prima facie case is made out. That the applicant is falsely implicated in the aforesaid offence and submitted that the allegations in the arrest memo and production report are absolutely general and vague in nature. He further submitted that the applicant has neither issued any invoices or bill without supply of goods or services or both in violation of the provisions of this Act or the Rules made thereunder leading to wrongful availment or utilization of ITC or refund of tax nor avail ITC using such invoice or bill referred to in clause nor has availed ITC using bogus or fake invoice or bill or has fraudulently avail ITC without any invoice. That no incriminating material was found during the course of search at the business premises of the applicant. That the case is based on documents and no custodial interrogation is required and thus, the applicant can be enlarged on bail. It is clear case of tax dispute and not the economic offence. It is further submitted that in case an assessment is framed, the applicant can obtained the stay of entire amount by paying 10% of the disputed tax amount as per section 107(6) (7) \(8) of the CGST Act. Trial of the case may take long time and if i.f.the applicant will remain in jail for long time then in absence of breadwinner, his family will have to face starvation. The applicant it permanent resident of Bhavnagar and if released on bail, will not likely to abscond or to tamper evidence of the prosecution by inducement or threat to witnesses and shall fully co-operate with the investigation. The applicant is ready and willing to furnish bail bond of the amount as deem fit to the Hon’ble Court and admit to comply the conditions that may be imposed. Therefore, this Court has vast powers to release on bail. Hence, it is prayed to grant the present application.

GST Evasion Bail granted to person accused of wrongfully claiming ITC

3. Learned Special Public Prosecutor Mr.M.R.Joshi appeared before this Court and has objected this application and submitted that the applicant has committed serious economic offence. He has contented that the present applicant by following particular modus operandi availed and utilized huge amount of irregular/inadmissible ITC fraudulently on the basis of fake invoices and subsequently indulged in passing on the fraudulently availed ITC to its various buyers without the actual supply of corresponding oggds mentioned in the respective invoices. He has contended that the investigation is still going on and during the investigation, it is found that the applicant in connivance with other has caused great loss to the State Exchequer. Therefore, in view of the modus operandi being adopted in this case and the involvement of the other persons, who are yet to be interrogated and it is quite possible that the applicant will affect the ongoing investigation in as much as he might get himself or his associates involved in tampering, destroying or disappearing the evidence and/or affecting the persons paying vital role in the chain of this modus operandi. He further submitted that if the applicant is :enlarged on bail, he may jump the bail and may hamper the ivestigation in the case – which involves huge amount of the Government revenue of more than Rs.6.04 crore. Hence, he has prayed to reject this application.

4. Bail to be granted or not be granted requires to be decided on celebrated principles enunciated by the Honble Apex Court and the Hoble Gujarat High Court. This Court, at this stage should not go on scrutinizing the evidences before it. The Hon’ble Apex Court has held that the Court must bear in mind the While deciding the bail application, the merits and demerits of the case should not be discussed in detail, but some important factors are required to be taken into consideration i.e. prima-facie case against the accused, nature and gravity of offence, punishment prescribed for the offence, danger of the accused absconding or fleeing away, if released on bail, character, behavior, means, position and standing of the accused, likelihood of the offence being repeated, reasonable apprehension of the witnesses being tampered with, larger interest of the society and State, etc.

5. I have heard both the sides. I have also gone through the affidavit-in-reply by Senior Intelligence Officer of Directorate General of Goods and Services Tax Intelligence, Ahmedabad Zonal Unit, Ahmedabad produced on record. I have also read the papers and I have also considered all the documents produced on record.

6. Considering the above, I would like to refer judgments and ,relevant paragraphs thereof, upon which the learned advocate for the  applicant has placed reliance.

7. Shri Avainash Aradhya, Shri Mallokaradhya I.P. vs.The Commissioner of Central Tax Bangalore East Commissionerate  reported in 2019 (3) TMI 373

Honble Karanataka High Court vide para 11, held as under :-

11. A close glancing of the above proposition of law with present Act, the punishment imposed is five years, in that light, the alleged offences are non-cognizable offences. By keeping the above proposition of law and on plain reading of all these sections together, one thing in the case is clear that the said offences are compoundable by the Commissioner on payment on payment and maximum punishment of five years with fine and they are not punishable with death or imprisonment of life.

When the maximum punishment which can be imposed is only upto five years with fine, will throw light on the seriousness of the offence. Though it is argued during the course of the argument made by the learned standing counsel for the respondent that he activities involved by the petitioners would have a cumulative effect and if the accused — petitioners are allowed to act in the manner in which they are doing, ultimately economy of the country is going to be affected. In this context no material is produced to show the magnitude of the loss of revenue going to be caused and the manner in which it will affect the economy of the country. But anyhow that is a matter which has to be considered and appreciated only when the entire investigation is completed and full charge sheet is filed.

8. I would also like to refer to the judgment of the Hon’ble Supreme Court in case of Sanjay Chandra vs. Central Bureau of Investigation reported in AIR 2012 Sc 830, wherein at para 14, 16 it is held that:-

Para 14. “In bail applications, generally, it has been laid down from the earliest times that the object of bail is to secure the  appearance of the accused person at his trial by reasonable amount of bail. The object of bail is neither punitive nor preventative. Deprivation of liberty must be considered a Punishment, unless it can be required to ensure that an accused person will stand his trial when called upon. The courts owe more than verbal respect to the principle that punishment begins after conviction and that every man is deemed to be innocent until duly tried and duly found guilty. From the earliest times, it was appreciated that detention in custody pending completion of trial could be a cause of great hardship. From time to time, necessity demands that some un-convicted persons should be held in custody pending trial to secure their attendance at the trial but in such cases, ‘necessity’ is the operative test. In this country,it would be quite contrary to the concept of personal liberty enshrined in the Constitution that any person should be punished in respect of any matter, upon which, he has not been convicted or that in any circumstances, he should be deprived of his liberty upon only the belief that he will tamper with the witnesses if left at liberty, save in the most extraordinary circumstances. Apart from the question of prevention being the object of a refusal of bail, one must not lose sight of tie fact that any imprisonment before conviction has ‘a substantial punitive content and it would be improper for any -,Court to refuse bail as a mark of disapproval of former conduct Whether the accused has been convicted for it or not or to refuse bail to an unconvicted person for the purpose of giving him a taste of imprisonment as a lesson.”

Para 16. “This Court, time and again, has stared that bail is the rule and  committal  to jail an exception. It is also observed that refusal of bail is a restriction on the personal liberty of the individual  of the guaranteed under Article 21 of the Constitution.

9. Considering the above proposition of law and facts of the present case  after perusing the police papers, it seems that the applicant has  alleged to have played role in offence. Looking to the fact of the case, evidence on record,it appears that the applicant has fraudulently availed Input Tax Credit (ITC) amounting to Rs,6.04 crores by using modus operandi of issuing fake invoices and passed on fraudulent ITC to their buyers situated at various places without supply of corresponding goods mentioned in the said invoices. Further huge and voluminous documents related to the transactions of sales and purchases were seized. The punishment prescribed for the alleged commission of offence is with imprisonment for a term which may extend to five years and with fine. Thus, the charge upon the applicant are not of the nature so as to inflict punishment of Death penalty. The whole case is based on the documentary evidence and the Investigating Agency has already seized the related documents referred to hereinabove. The present applicant is permanent resident of  and have deep root in the Society and therefore, the chances of fleeing away from justice is remote. The applicant is in Judicial custody since 27.10.2021. The offence is triable by learned Magistrial Court. Denial of bail to the applicant, would amount to pre-trial conviction. It is not that the applicant would flee from the trial. The apprehension of repetition of offence can be taken care by some stringent conditions. There is no justifiable ground to keep the present applicant in the judicial custody till the completion of investigation /trial.

10. In view of above facts and proposition of law in the opinion of this Court, looking to the nature of offence, this is a fit case to exercise the discretionary powers cf the Court in favour of the applicant by Putting some stringent conditions. The discretion vested in this Court can be exercised in favour of applicant-accused. Therefore, without further discussion, I pass the following order:-

-: ORDER :-

(1) This application is hereby allowed.

(2) The applicant Rajendra Mansingbhai Rathod, arrested by by Intelligent Officer, DGGI, Zonal Unit Ahmedabad in connection with File bearing No.DGGI/AZU/Gr.D/12(4)369/2021-22, is hereby released on bail on his furnishing a personal bond for the sum of Rs.15,000/- (Rupees Fifteen Thousand Only) with one surety of the like amount to the satisfaction of the Trial Court, subject to the conditions that the applicant shall

(a) furnish the address of his residence to the Investigating Officer and also to the Court at the time of execution of the bond and shall not change his residence without prior permission of the Court;

(b) surrender  his passport, if any, to the Lower Court, within a week.

(c) applicant shall make himself available before the Investigating agency for interrogation whenever and wherever called for.

(d) The applicant shall not leave the local limits of Gujarat without prior permission of this Court.

(e) shall not contact or threatened the witnesses in any manner.

(f) Bail Bond shall be furnished according to the satisfaction of the Lower Court having jurisdiction to try the case.

The concerned Lower Court and Police Station be informed accordingly.

Pronounced in Open Court today i.e. on this 30.11.2021.

Download Judgment/Order

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