2023 (7) TMI 291 - HC - GST

Seeking grant of Anticipatory Bail - export of goods to Dubai but no one came to collect goods at Dubai - opening bogus firms to claim GST refunds - HELD THAT - Looking at the material collected against the present applicant so far and coupled with the fact the applicant did not appear before the GST Investigation Wing despite service of three summons under Section 70 of the Central Goods and Service Tax Act 2017. Meharban Singh is still in custody. The statement of Meharban Singh Shubham Singhal Chetan Narwani Kapil Manglani Akash Singh Kushwaha and Rakesh Prajapti reveals that the applicant is the main accused in these GST refunds by forming fake firms . GST-RI and GST-3B sales and purchase of as many as 25 bogus firms are liable to be investigated hence looking to the gravity of the offence and huge amount of refund of GST through bogus firms no case is made out for grant of anticipatory bail. Hon ble Apex Court in the case of Y.S. JAGAN MOHAN REDDY VERSUS CENTRAL BUREAU OF INVESTIGATION 2013 (5) TMI 896 - SUPREME COURT held that 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. Application dismissed.

Summary

Issues involved:
The judgment involves issues related to arrest under section 132 of the Central Goods and Service Tax Act, 2017, compliance with guidelines for arrest, cooperation with investigation, issuance of summons under Section 70 of the CGST Act, establishment of fake firms for GST refunds, gravity of economic offences, and grant of anticipatory bail.

Arrest and Investigation:
The applicant, a proprietor of two firms, was apprehensive of arrest in a case involving GST refund fraud. He was added as an accused in an FIR, arrested, and later released on bail due to a compromise. The non-applicant sought his formal arrest for interrogation, but the applicant moved the High Court instead of appearing before the GST Investigation Wing.

Compliance with Guidelines:
The applicant argued that the non-applicant was attempting to arrest him without following the guidelines issued by the Revenue Department, GST Investigation Wing. He expressed readiness to cooperate with the investigation and emphasized that his arrest was not mandatory under section 132 of the CGST Act.

Establishment of Fake Firms for GST Refunds:
The non-applicant alleged that the applicant was involved in forming fake firms to claim GST refunds amounting to a substantial sum. Evidence suggested that the applicant orchestrated the creation of multiple bogus firms for fraudulent GST refund purposes, implicating several individuals in the scheme.

Gravity of Economic Offences and Anticipatory Bail:
Considering the gravity of the offence involving substantial GST refunds through fake firms, the court dismissed the anticipatory bail application. Citing the seriousness of economic offences and the need for a different approach in bail matters, the court emphasized the importance of preventing threats to the financial health of the country.

Conclusion:
In light of the evidence gathered, the non-appearance of the applicant before the GST Investigation Wing, and the gravity of the offence involving fake firms for GST refunds, the court dismissed the anticipatory bail application, highlighting the severity of economic offences and the need to safeguard public funds and the economy.