Bhupendra Majethia Vs Superintendent (Bombay High Court)
Summary: The Bombay High Court dismissed the anticipatory bail application filed by Bhupendra Majethia in connection with an investigation under Section 132 of the Central Goods and Services Tax Act, 2017, concerning alleged fraudulent availment of Input Tax Credit (ITC) of approximately ₹13 crore. Acting on intelligence that the applicant was obtaining ITC through fake invoices without corresponding movement of goods, the CGST authorities initiated an investigation under Section 67(2). Of the applicant’s 111 suppliers, the premises of 12 were verified and reportedly found to be non-existent. The Department alleged that the applicant failed to comply with summons and, in a statement recorded under Section 70, admitted receiving invoices from three suppliers without actual supply of goods or making payments. These suppliers were also reportedly found to be non-existent.
The applicant denied wrongdoing and alleged that his statement had been obtained through coercion. He claimed that officers had compelled him to deposit ₹15 lakh on 4 February 2021 and prepare post-dated cheques amounting to ₹2.41 crore. He further alleged that an officer had demanded a bribe, leading to a complaint before the Anti-Corruption Bureau. According to the applicant, the transactions were genuine, supported by invoices, banking records and books of account. He argued that the CGST Act prescribed a statutory mechanism for issuing show-cause notices and adjudicating tax liability, which should precede coercive action. He also relied on judicial precedents supporting anticipatory bail in GST matters.
The Department opposed bail, maintaining that substantial evidence demonstrated fraudulent ITC availment and that custodial interrogation was necessary while the investigation remained underway. The Court examined the documents, the applicant’s recorded statement and the findings concerning the 12 non-existent suppliers. It held that sufficient material existed to justify the authorities’ reason to believe that the applicant was involved in the alleged offence. Finding the cited precedents distinguishable on the facts, the Court concluded that no grounds for anticipatory bail had been established and rejected the application.
Cases Discussed
- Prasad Purshottam Mantri Vs. Union of India, (2019) 29 G.S.T.L. 647 (Bombay) — Relied upon by the applicant in support of anticipatory bail; held inapplicable to the facts of the present case.
- Hanumanthappa Pathrera Lakshmana Vs. State, Senior Intelligence Officer, D.G. of GST Intelligence, Bengaluru, (2020) 38 G.S.T.L. 447 (Karnataka) — Relied upon by the applicant regarding anticipatory bail under GST law; held inapplicable to the present facts.
FULL TEXT OF THE BOMBAY HIGH COURT JUDGMENT/ORDER
1. The applicant is apprehending arrest in File No. V/CGST/MS/AE/Gr-01/Shreeji Jewellers/1011/2020-21 for offence under Section 132 of Central Goods and Services Tax Act, 2017 (`The Act’ for short).
2. Brief facts of the case are as under :-
(i) The intelligence gathered indicate that the applicant is engaged in availing of fraudulent input tax credit under fake invoice without movement of goods. Investigation was conducted u/s.67(2) of CGST Act. The respondents started scrutiny of the suppliers of applicant from 111 suppliers. Verification of premises of 12 suppliers was conducted and it was found that they were non existent;
(ii) Total Input Tax Credit (ITC) availed from these suppliers was Rs.13 crores approximately;
(iii) The applicant had not complied the summons. Statement of applicant was recorded u/s.70 of CGST Act. He admitted that he took invoices from three suppliers without supply of goods and did not make payments to those suppliers. The statement is corroborated by the fact that three suppliers were found non existent;
(iv) Non existent 12 suppliers proved beyond doubt that the applicant is engaged in availing fraudulent ITC.
3. The applicant preferred application for anticipatory bail before Sessions Court. The said application was rejected on 16th September 2021.
4. Learned advocate for applicant submitted that applicant has been falsely implicated. The statement of applicant was recorded under coercion. The applicant was forced to make deposit of Rs.15 lakh on 4th February 2021. He was forced to prepare post date cheques of Rs.2.41 crores. The officer of first respondent had demanded bribe. The ACB complaint was filed with Anti Corruption Bureau. The CGST Act is special Act containing mechanism for demand of tax not paid or credit of refund erroneously taken. The payment of tax paid invoices are made through proper banking channel. All the transactions are accounted in books of accounts. The show cause notice was required to be initiated by the respondent no.1 which is not done. The CGST Act being taxing statute, provides for all eventualities including recovery of tax. The applicant would prove in adjudication proceedings that transactions were genuine and goods were duly received. The provisions of Section 132 of the Act indicate that each transaction offending any of the provisions would be an offence under CGST Act. Investigation is being conducted with pre-meditated mind set of incriminating the applicant. Learned counsel for applicant relied upon decision in the case of Prasad Purshottam Mantri Vs. Union of India (2019{29}G.S.T.L.647 {Bom}) and Hanumanthappa Pathrera Lakshmana Vs. State, Senior Intelligence Officer, D.G. of GST Intelligence, Bengaluru (2020{38}G.S.T.L.447 {Kar}).
5. Learned counsel for respondents submitted that there is sufficient material against applicant. The transactions were fraudulent. Investigation is in progress. The claim of the applicant is false. The suppliers were not existent. Section 132 of the Act deals with punishment for certain offences. The statement of applicant was recorded u/s.70 of the Act wherein he confessed that he took invoices. The investigation is in progress and custodial interrogation of the applicant is necessary.
6. I have perused the documents. There is sufficient evidence against applicant. He is engaged in availing fraudulent tax credit. The statement of applicant was recorded u/s.70 of the Act. There are 12 non existent suppliers. The respondents have power to arrest. What is required is reason to believe about involvement of the suspect. There is sufficient evidence on record to satisfy the reason to believe. The decisions relied upon by advocate for applicant are not applicable to the facts of this case.
7. Considering the factual aspects of the matter, no case is made out for granting relief to the applicant.
ORDER
(i) Anticipatory Bail Application no.2270 of 2021 is rejected.
