Case Law Details

Case Name : CGST Vs Amit Kumar Jain (Patiala House Court, New Delhi)
Appeal Number : Bail Application No. 2029/2020
Date of Judgement/Order : 15/10/2020
Related Assessment Year :
Courts : District Court (6)

CGST Vs Amit Kumar Jain (Patiala House Court, New Delhi)

In the instant case the petition has filed petition for seeking bail against order for tax evasion by creating fake and non-existent firms.

High Court states that, the applicant/accused is apparently the key member of a syndicate involved in duty evasion by generating goods-less invoices leading to revenue loss to the tune of Rs.567 Crores to the Government. The applicant/accused is alleged to be involved in tax evasion to the tune of Rs. 6.65 crores. He categorically alleged that applicant/accused used to give him goods-less GST invoices which in turn were subsequently provided to the clients. He has also stated that all the fake and non existing firms were operated by applicant/accused and his associates. He has further stated that accused Amit Jain alongwith his associates used to send ledgers of the fake firms to the clients. He further submitted that the goods were never transported on these invoices and only bills were issued upon which they used to get commission. It is evident that the applicant/accused was involved in generation of goods less fake invoices for the purpose of duty evasion. HC concur with the Ld. defence counsel to the extent that, at this stage, there is nothing on record to suggest that the applicant/accused was involved in any supply of goods or services without issuing invoices or availing any tax input credits or collection of any amount as tax, in contravention of Sub Clause 1 of Section 132 of the CGST Act. Therefore, considering the material available on record, it cannot be contended by the Ld. defence counsel that applicant was not involved in supplying or making available fake/forged goods less invoices. Consequently, HC cannot but disagree with Ld. defence counsel that no non-bailable offence is attracted in this case as admittedly offence u/s 132(1)(b) of CGST Act is attracted in the present case, which admittedly is non bailable in nature. Considering the seriousness of allegations and crucial stage of investigation, HC is of the opinion that applicant/accused is not entitled for grant of bail.

FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT

1. Present is an application moved on behalf of applicant/accused for grant of bail. It is submitted that applicant/accused is in j.c since 26.08.2020. It is forcefully argued that applicant/accused has been falsely implicated in the present case and he is totally innocent. It is pointed out that as per the Panchnama prepared on 26.08.2020, the documents seized from the premises of the applicant pertains only to M/s Satyam Paper Company, M/s Sidharth Paper Co., VJ Paper Traders and Satyam Paper Company. It is submitted by Ld. counsel for applicant/accused that applicant/accused has no right, title, ownership or interest in the said firms. It is further pointed out that apart from the above said firms, the documents pertaining to the company of applicant M/s Sanyam Kraft Papers Pvt. Ltd Company were also seized but the said company is undergoing closure procedure and is not conducting any business since 2016. It is submitted that it is evident from the Panchnama dated 26.08.2020 that apart from the abovesaid firms, no other document or bill etc pertaining to any other firm was seized from the premises of applicant/accused. It is further submitted that the applicant/accused was summoned to tender his statement on 26.08.2020 in relation to the investigation qua M/s Dev Sales Corporation & Ors under the CGST Act 2017. It is forcefully argued that the applicant/accused has absolutely no connection with M/s Dev Sales corporation or any other above mentioned firm. It is pointed out that no bill or document relating to M/s Dev Sales Corporation & Ors or any other firm is alleged to have been recovered from the applicant/accused. It is submitted that applicant neither owned nor managed any business of any kind on account of his health conditions as he underwent a major heart bypass surgery a few years back. It is further submitted that applicant is also not doing any business, therefore, he is not having any GST registration individually or in the name of any company or firm owned by him. It is submitted that since the applicant is not engaged in any kind of business nor he owns any firm or company, there is no question of his availing any tax input credit. It is submitted that applicant/accused is totally an innocent man who has been falsely implicated in the instant case. It is further submitted that the applicant accused is not guilty of any non bailable offence. It is further argued that the worst case against the applicant accused is that he might be indicted for commission of the offence under Section 132 (1) (f) (j) or (k), which admittedly are bailable in nature. It is forcefully prayed that the applicant/accused is entitled for bail.

2. Sh. Harpreet Singh, Ld. Standing Counsel for the department, on the contrary, forcefully argued that the complainant department is investigating a case of issuing invoices without supply of accompanying goods ( i.e. only paper invoices are being sold by M/s Dev Sales Corporation & Ors and several other fake and fictitious firms which are engaged only in issuance of fake paper invoices) for the purpose of duty evasion. It is submitted that during the course of investigation, it was revealed that applicant/accused Amit Jain is the master mind, who is operating various fake and non-existent firms i.e. M/s Dev Sales Corporation, M/s K. M. Enterprises, M/s Fusion Impex, etc. It is submitted that from the statement of one Manish Jain and voluntary statement of accused Amit Jain recorded u/s 70 and Section 174 of CGST Act, it is evident that applicant/accused Amit Kumar Jain may not be owning any firm but he provided goods less invoices of fake non-existing firms to the beneficiary firms on commission basis, so that they can avail tax input credits on the basis of fake and forged invoices. It is submitted that in his statement recorded on 26.08.2020, the applicant/accused has voluntarily admitted his liability and the applicant/accused is involved in the commission of offence u/s 132 (1)(b) and ( c) of Central Goods and Services Tax, 2017(CGST Act). It is forcefully submitted that the allegations against the accused are serious in nature and he does not deserve to be released on bail as he is likely to influence the proprietors of the firms who have availed the tax input credits. Ld. Standing Counsel has accordingly prayed for dismissal of bail application.

3. I have heard and considered the rival submissions made by Sh. Sanjeet Singh, Ld. counsel for applicant/accused and Sh. Harpreet Singh, Ld. Standing Counsel for the department and also gone through the material available on record.

4. It has been observed by the Hon’ble Apex Court in State of Gujarat v. Mohan Lal Jitamalji Porwal & Ors (1987) 2 SCC 364 as under:

“..The entire Community is aggrieved if the economic offenders who ruin the economy of the State are not brought to books. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the Community can be manifested only at the cost of forfeiting the trust and faith of the Community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye unmindful of the damage done to the National Economy and National Interest…”

5. In the matter of S. Jangan Mohan Reddy v. CBI (2013) 7 SCC 439, Hon’ble Apex Court has observed that:

“..15) Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.

16) While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations…”

Therefore, the economic offences are required to be treated as a separate class and bail cannot be granted as a matter of routine.

6. In the case at hand, the applicant/accused is apparently the key member of a syndicate involved in duty evasion by generating goods-less invoices leading to revenue loss to the tune of Rs.567 Crores to the Government. The applicant/accused is alleged to be involved in tax evasion to the tune of Rs. 6.65 crores. Ld. Standing Counsel took me through the statement of one Manish Jain who levelled specific allegations against the applicant/accused Amit Jain. He has categorically stated that he used to work for applicant/accused Amit Jain and his associates. It is further submitted that he worked as per the guidance/directions of the applicant/accused and his associates. He categorically alleged that applicant/accused used to give him goods-less GST invoices which in turn were subsequently provided to the clients. He has also stated that all the fake and non existing firms were operated by applicant/accused and his associates. He has further stated that accused Amit Jain alongwith his associates used to send ledgers of the fake firms to the clients. He further submitted that the goods were never transported on these invoices and only bills were issued upon which they used to get commission. The allegations of Manish Jain are further corroborated by the voluntary statement of applicant/accused Amit Jain recorded on 26.08.2020.

7. I am consciously restraining myself from discussing in detail the statement of Manish Jain and applicant/accused so as not to unnecessarily prejudice the further course of investigation. However, it is evident that the applicant/accused was involved in generation of goods less fake invoices for the purpose of duty evasion. I concur with the Ld. defence counsel to the extent that, at this stage, there is nothing on record to suggest that the applicant/accused was involved in any supply of goods or services without issuing invoices or availing any tax input credits or collection of any amount as tax, in contravention of Sub Clause 1 of Section 132 of the CGST Act. However, the applicant/accused cannot escape his liability u/s 132(1)(b) of the Act which reads as under :

“…Section 132- Punishment for offences

Section 132 (1): whoever commits any of the following offences (b) issues any invoice 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 utilisation of input tax credit or refund of tax;

8. Evidently, in contra distinction with the word make, signs, seal, execute or authors, the legislature has opted to use word ‘issues’. As per com, the meaning of word ‘issues’ is : the act of supplying or making available things for people to buy ,or use. Therefore, considering the material available on record, it cannot be contended by the Ld. defence counsel that applicant was not involved in supplying or making available fake/forged goods less invoices. Consequently, I cannot but disagree with Ld. defence counsel that no non-bailable offence is attracted in this case as admittedly offence u/s 132(1)(b) of CGST Act is attracted in the present case, which admittedly is non bailable in nature. Considering the seriousness of allegations and crucial stage of investigation, I am of the opinion that applicant/accused is not entitled for grant of bail. Instant application is bereft of any merits and the same is accordingly dismissed.

9. Before parting, it would be pertinent to mention that while disposing of the bail application of the applicant/accused, Ld. CMM vide order dated 09.09.2020 has observed that in the present case, commission of cognizable offences punishable under the provisions of Indian Penal Code are also attracted in the present case and he has accordingly brought this fact to the notice of the Principal Additional Director General, DGGI, Delhi zonal unit. Pursuant to the query of this court it has been informed by the worthy Commissioner CGST that the instant case has been sent for consideration of Regional Economic Intelligence Councils(REIC) to effectively deal with the economic offenders and to ensure the recovery of Governments revenue.

13. It is further expected from the complainant department that they shall render appropriate assistance to concerned investigating agency so as to ensure that the culprits are brought to book.

14. Application is accordingly disposed off.

15. Copy of the order be given dasti.

16. Instant order be uploaded on the court website.

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