Sri Avinash Aradhya Vs Commissioner of Central Tax (Karnataka Higth Court)
Conclusion: High Court in the case of assessee had held that by taking into consideration the gravity of the offence and punishment which was liable to be involved where assessee was indulged in issuing fake invoices without actual supply of goods with an intention to fraudulently avail the input tax credit, accused assessee’s were given anticipatory bail for the offence punishable under Section 137 of GST Act, 2017 subject to certain conditions.
Held: Companies of assessee group along with other companies were indulging in continuous issuance of fake invoices without actual supply of goods with an intention to enable them fraudulently avail the input tax credit. This act was an offence and it was criminal in nature. On the basis of the same, complaint was registered. High Court held that by taking into consideration the gravity of the offence and punishment which was liable to be involved , accused – assessees were ordered to be released on bail, it would meet the ends of justice. Also, the accused assessees wre ordered to be enlarged on anticipatory bail in the event of their arrest for the offence punishable under Section 137 of GST Act, 2017 subject to the following conditions:
1. Each of the assessees shall execute a personal bond for a sum of Rs.5,00,000/- (Rupeec- Five Lakh Only) with two sureties for the likesum to the satisfaction of the apprehending authority / authorized officer
2. They shall surrender before the Investigating Officer within 15 days from today.
3. They shall not tamper with the prosecution evidence or any documents whichever is required for the purpose of investigation.
4. They shall co-operate during the course of investigation and they shall not leave the country without prior permission of Special Court for Economical Offences.
5. They shall not indulge in similar type of criminal activities covered under the said Act.
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
These two petitions have been filed by petitioners – accused under Section 438 of Cr.P.0 to release them on anticipatory bail in the event of their arrest in O.R.No.40/2018-19 by the re spondent for the offence punishable under Section 137 of Goods and Services Tax Act, 2017 (Hereinafter it has been used as `GST Act’ for short).
2 I have heard learned senior counsel Sri C.V. Nagesh for petitioners and learned standing counsel Sri Jeevan J. Neeralgi for respondent and perused the record.
3, Before going to consider the submission made by the learned counsel appearing for the parties, I feel it just and proper to mention in brief the gist of the complaint. Companies of Aradhya group along with M/s. Spiegel Enterprises Pvt. Ltd., M/s Bhavasteel Metalalloys Pvt. Ltd., M/s Infocert Enterprises, Mk, Bhavani Steel Corporation, M/s Vijayalaksbmi Industries were indulging in continuous issuance of fake invoices without actual supply of goods with an intention to enable them fraudulently avail the input tax credit.
4. It is further case of the prosecution that invoices are issued and circul ated among the companies M/s Spiegel Enterprises Pvt. Ltd., M/s Bhavasteel Metalalloys Pvt. L td., M/s Infocert Enterprises, M/s Bhavani Steel Corporation, M/s Vijayalakshmi Industries till they reach back to the originating companies i.e., M/s Aradhya Groups without actual movement of goods, thereby transferring the irregular input credit to the originating companies for payment of GST and sales tax. It is further alleged that the act is an offence and it is criminal in nature. On the basis of the same, complaint was registered.
5. It is submitted by the learned senior counsel that as per the GST Act, maximum punishment which is liable to be imposed even if an offence has been made out and convicted is five years and even as per Section 138 of the GST Act, the said offence is compoundable before the Commissioner en payment. He further submitted that even there is no irregularity no loss of revenue has been caused to the State or Central Government. He further submitted that they have paid the GST by creating i nvoice. It is further submitted that the accused have not availed any loan or not raised any amount from the bank, even in the input tax, the credit has also been given and that has not been deducted or claimed from the State or Central Government. It is submitted that they are ready to co-operate with the investigation. He further submitted that in the preamble it is made clear that it is intended to levy and collect tax. It has not been defected by the accused. The Learned counsel further submitted that they are apprehending their arrest and even the objection which has been filed by the respondent to the present petition itself clearly goes to show that there is a apprehension of arrest. He further submitted that they are not defaulter to the bank or to the State. it is further submitted that the only allegations which has been alleged as against the petitioners – accused is that they have given only inflated transaction, therefore, he submitted that input tax credit and the sale is not an offence under the said Act. He further submitted that liberty of the person is also involved in this case. They are ready to abide by the terms and conditions to be imposed by this Court and ready to offer surety. On these grounds, both petitioners pray to allow the petition and to release them on bail.
6. Per contra, learned standing counsel on behalf of the respondent vehemently argued and submitted, if the entire case is looked into without there being any movement of goods, the petitioners have claimed input tax credit and thereby without payment of any tax by them, they claimed input tax credit. in that event the economy of the country is going to be affected. He further submitted that though it is the contention of the petitioner – accused that the input tax credit has been paid, but actually, no tax has been paid to anybody. It is only a paper transaction and it is going to affect the trade transfer of the nation and in the State. He further submitted that it is a sc am and if it is allowed to be continued then it will be having its own cumulative effect on the economy as a whole. He further submitted at still investigation is in progress and if the petitioners accused are released on bail, it is going to affect the entire investigation and they may tamper with the prosecution case. On these grounds, he prays to dismiss the petition.
7. I have carefully and cautiously gone through the contents of the complaint and other materials, which has been produced in this behalf.
8. Though several contentions have been raised with reference to the initiation of the action under the GST Act, since the scope of these petitions is limited only to consider the bail application, in that light, the other points which have been raised have not been dealt with in these petitions.
9. Before going to consider the submission made by the learned counsels appearing for the parties, I feel it just and proper to extract Sections 132, 137 and 138 of the GST Act which reads as under:
