2020 (11) TMI 830 - HC - GST

Grant of Bail - input tax credit - fake firms - Offence under Section 132(1)(f) of the C.G.S.T. Act - HELD THAT - It is directed that accused petitioners shall be released on bail provided each of them furnish a personal bond in the sum of Rs. 5 00 000/- together with two sureties in the sum of Rs. 2 50 000/- each to the satisfaction of the learned trial court with the stipulation that they 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.

Summary

Issues:
Bail applications under Section 439 of Cr.P.C. for offence under Section 132(1)(b)(c)(f) of Central Goods and Services Tax Act, 2017.

Analysis:
The petitioners filed bail applications under Section 439 of Cr.P.C. contending that the case would not exceed Section 132(1)(f) of the CGST Act, with a maximum punishment of six months. They argued that no fake bills/invoices were created, and no input tax credit was availed or passed on. The main accused, who is absconding, is the brother of one petitioner, a pursuing C.A. The other petitioner, a businessman running a petrol pump, was linked to a fake firm through his mobile number, which he reported to the authorities. The total alleged input tax credit was around 6 crores, but there was no evidence of its utilization or production of fake bills/invoices by the petitioners.

The counsels for the petitioners argued that even if the petitioners were involved in creating fake firms, it would fall under Section 132(1)(f) with a maximum sentence of six months. They cited the case of Sanjay Chandra vs. CBI [2012(1) SCC 40] to support their contentions. On the other hand, the Union of India opposed the bail applications, stating that economic offences require a different approach due to deep-rooted conspiracies and significant public fund losses. They argued that economic offences affecting the economy should be viewed seriously, citing P.V. Ramana Reddy vs. UOI [SLP (Crl.) No.4430/2019].

After considering the arguments, the judge allowed the bail applications, directing the accused petitioners to be released on bail upon furnishing a personal bond and sureties. The petitioners were required to surrender their passports, not leave India without court permission, and appear before the trial court and any transferred court for hearings.