2022 (2) TMI 135 - HC - VAT and Sales Tax

Seeking grant of anticipatory bail - fake firms were created for claiming bogus Input Tax Credit - utilization of C forms cancelled by the Excise and Taxation Department - HELD THAT - In the present case the allegations are of creating bogus firms for using or facilitating bogus ITC public money is involved and State exchequer is affected. The contention of learned counsel for the petitioner that he was an Advocate who had assisted in compliance of procedure for registration of the concern in view of the pleadings in the reply prima facie falls on the face of it. It would not be appropriate to make any further comments on the issue at this stage. For managing the affairs as alleged in present case it is a well prepared and planned net which is laid down. Each and every person has a specific role to be played and in such a case one loose end left ensures that the entire net disappears. If the petitioner is clothed with protection of pre-arrest bail the deeper probe required to unearth the scam would be defeated. The custody of petitioner is necessary as he is the only person who can disclose the persons involved and unearth the modus operandi. No case is made out for grant of anticipatory bail - Petition dismissed.

Summary

Issues:
1. Rejection of prayer for anticipatory bail in FIR involving Sections 420, 467, 468, and 471 IPC.
2. Allegations of creating bogus firms for claiming bogus Input Tax Credit.
3. Role of the petitioner as a taxation lawyer in assisting in the registration of the concern.
4. Dispute over the ownership and usage of the shop where the firms were registered.
5. Allegations of forgery in documents and misuse of personal information for registration.
6. Failure of the petitioner to join the investigation despite ad interim anticipatory bail.
7. Consideration of economic offences and public interest in the grant of bail.
8. Importance of custody for further probe and uncovering the scam.

Analysis:
1. The petitioner sought anticipatory bail in a case involving Sections 420, 467, 468, and 471 IPC, related to the creation of bogus firms for claiming bogus Input Tax Credit. The FIR was based on a complaint from an Excise and Taxation Officer, revealing suspicious activities by certain firms.
2. The petitioner, a taxation lawyer, claimed to have assisted in the registration process of one of the firms under scrutiny. However, discrepancies arose regarding the ownership and usage of the registered premises, raising doubts about the authenticity of the registration process.
3. The State argued against granting bail, citing instances of forgery in documents, misuse of personal information, and the petitioner's failure to cooperate with the investigation despite previous bail. The State emphasized the need for custody to uncover the full extent of the alleged scam.
4. The court considered the seriousness of economic offences and their impact on public funds, highlighting the need for a different approach to bail in such cases. The court noted the complexity of the alleged scam and the petitioner's crucial role in managing IDs and documents for registration purposes.
5. Ultimately, the court dismissed the petition for anticipatory bail, emphasizing the necessity of custody for a deeper probe into the scam and the petitioner's role in disclosing other involved parties and the modus operandi. The court clarified that the decision did not reflect an opinion on the case's merits.