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Jignesh Sumantilal Mehta Versus State of Gujarat

2017 (11) TMI 745 - GUJARAT HIGH COURT

Bail application - input tax credit - petitioner is alleged to have floated 40 shell companies with a view to gain illegal input tax credit under the provisions of Gujarat Value Added Tax Act - The modus operandi alleged against the petitioner is to get registered the TIN number of certain entities on monthly remuneration to be paid to them - whistle blowing mechanism - Held that: - it is difficult to conclude at this stage that the petitioner accused had used the said material and there exists .....

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affidavit. If that was so, nothing could have prevented it from coming out with incriminating material. There is also no material placed on record to substantiate the allegation about bogus billing. Not a single bogus bill is placed on record. It is not even pointed out as to how the goods or services were delivered by bogus billing. If the shell companies were said to be benefited by bogus billing, obviously, there would be exchange of bogus bill, challans or other similar documents. No such f .....

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d seeking bail under Section 439 of the Code of Criminal Procedure, 1973 in respect of the offences punishable under Sections 406, 409, 420, 466, 467, 468, 471, 474, 120B of the Indian Penal Code and Sections 85(1) (B) (c ) (E) (F) and Section 85 (2) (J), 85(4) of the Gujarat Value Added Tax Act, 2003 for which FIR came to be registered at C.R. No .I - 7 of 2016 with CID Crime Police Station, Ahmedabad. 2. The facts of the case would show that the petitioner is alleged to have floated 40 shell c .....

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ication by the officials of the VAT department. It is contended that the investigator has substantially relied upon certain affidavits/ statements of the coaccused. It is contended that such affidavits are procured from the co-accused by the respondents as consideration for bailing them. It is submitted that in the said affidavits, the said accused have owned responsibility of opening the accounts of various firms. 3.1. Learned Senior Advocate Mr. Naik for the petitioner has drawn attention of t .....

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was assisting various firms in filing the returns. It is contended that the claims of input tax credit by the dealers were sanctioned by the department on due verification and the petitioner has not made any claim in his individual capacity and no refund amount has been pocketed by the petitioner. It is submitted that the allegations regarding entrustment or domain over the property or dishonest misappropriation are totally lacking in the case of the petitioner. It is submitted that there is a d .....

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an and Suresh Kambla and the petitioner is nowhere involved in such registration and is sought to be implicated only on the basis of the affidavits of the co-accused. 3.3. It is also pointed out from the charge sheet papers itself that in as many as 5 shell companies allegedly floated by the petitioner, no transaction are carried out between 2010- 2015. 3.4. It is contended that other firms being Shah & Co., Shri Vinayak Impex, Mahavir Corporation, E M E Red Impresser, Mahavaishavi Udyog Sta .....

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e affidavit in the year 2016. It is contended that the petitioner as a Sales Tax Practitioner might have played a part in registering and assisting his clients and that otherwise, the petitioners has no connection with the said firms. The said firms as indicated in the petition are as under (page 26) : FIRM CHARGE SHEET PAGE OPERATED BY/ MANAGED BY Shantilal Shah and Company 8037 8049 Mukesh Mehta K.K. Industries 8963 to 8975 8953 to 8957 Mukesh Mehta Ronak Traders 7957 to 7967 Suresh Kamble Mah .....

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page 27) : FIRM CHARGE SHEET PAGE OPERATED BY/ MANAGED BY R.P.Mavar and Company 4637 to 4639 Pg. 4639 IMP have started paying Tax Rakesh P. Mavar Pg 4933 Brikesh Engineering and Weilding works Paid Tax Eklakh Ansari Pg 9355 SPG Petro Chem Paid Tax Navin Sushil Kumar Chaudh Pg. 7531 Pawar Trading and Company That owner of this Company had passed away on 18.05.2014 and father of firm owner does not know anything about this Company. Ratun M. Pawar Pg. 7737 3.7 It is submitted that if at all on the .....

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of the officers of the VAT department are however arraigned as accused. 3.10. It is pointed out by the petitioner that the affidavit-in-reply has been controverted by the petitioner more particularly, on the fact that Mehta Wire Rope and Pawar Trading and Company- are not named as shell companies, in any of the four FIRs filed against the petitioner. 4. Per contra, learned PP Mr. Amin has apposed this application. Strong reliance has been placed upon the affidavits of the investigator. In the af .....

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to the owner of the firm namely Upendrabhai for permission to use his name and other credentials to enable the petitioner to float the shell company. That the said firm had carried out bogus transaction. Similarly, the statement of Mr. Sameer Shaikh (Prop. of Sagar Enterprise), Bharat Jain (Vinit Enterprise), Ajay Modasiya (J.D. Sales Corpn.) and Balkrishna Appu (Sun Innovation) are relied upon to point out that unlawful input tax credit was sought to be obtained, so as to pass it to other deale .....

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stle blower are sought to be repelled with the submission that even before his acting as a whistle blower, the investigation had started since February, 2014 for bogus billing transactions in the firm of K. Babulal and Co, and that thereafter, an application for lodgment of the FIR was given in March, 2014. On 15.04.2014, the Joint Commissioner Division-II, Ahmedabad proposed for cancellation of enrollment of the petitioner as commercial tax practitioner of the petitioner to Commissioner of Comm .....

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by cash transaction. It is contended that during the raid carried out by the commercial tax, various materials were recovered. It is contended that rent agreement was entered with Mukesh Mehta and Geetaben Mangalbhai Patel. It is submitted that the said house is used by Jignesh Mehta as well as Mukesh Mehta and that during the search, passports, original mark sheets etc., belonging to Jignesh Mehta were found from the said house. It is pointed out that many blank birth certificates allegedly iss .....

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he petitioner. The said documents are annexed as R9 with the affidavit. 5.3. It is alleged that as per the documents recovered from the laptop the accused generated 'C' forms from the Commercial Tax Department's website by uploading fraudulent returns. 5.4. Reliance is placed upon the statements of one Abhishek Patel and Pravin Solanki, who are stated to be employees of the petitioner; to support the fact that huge incriminating material was transferred, at the instance of the petiti .....

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eliance in support of the said contention is placed upon certain bank statements which is at Annexure R13. 5.7. It is also submitted that Mr. Anand Kishore , an employee of the petitioner supports the fact that he used to operate the bank account of the petitioner for depositing and withdrawing the money in respect of these firms. Reliance is placed upon his affidavit which is annexed at Annexure R14. 5.8. It is submitted that the house which was used by Jignesh Mehta - the petitioner at Loha Bh .....

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he rate of 0.10 to 1.25 percentage on the fictitious transactions of the sales and purchases. For that purpose reliance is placed upon the above referred bank account. The details emerging in the bank account in that regard is elaborately pointed out in the affidavit. 5.10. It is submitted that in the HDFC Bank the petitioner and his associates deposited ₹ 19,14,000 out of which 15,00,000/- were given to the petitioner and ₹ 28,30,000/- were given to one Asifkhan Anwarkhan Pathan, - .....

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said fictitious firm namely M/s. Jaivardhan Traders on 24.11.2014 in the petitioner's account in HDFC Bank. The said amount was immediately transferred to the petitioner. Similarly various other details in other bank accounts of the petitioner and alleged dubious firm or the companies have been pointed out by the investigator. 6. In the light of above facts and submission, the case is required to be appreciated. 6.1. A person can be arrested and detained under Section 41 of the Code of Crim .....

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l placed on record, heavy reliance is placed by the investigator on the affidavits of the coaccused, certain witnesses and certain recoveries. It would therefore be relevant to refer to the material allegedly recovered by the investigator against the petitioner. It is found from the record, more particularly the panchnama that the house where from the recovery of incriminating material was found was rented out to co-accused Mukesh Mehta . It is alleged that the said house was also used by the pe .....

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equired to be noticed is that substantially, in most of the documents recovered the persons other than the petitioner are been named. In such a factual scenario, it is difficult to conclude at this stage that the petitioner accused had used the said material and there exists doubt as to whether the said material was being used by Mukesh Mehta to whom the premises were rented out by Geetaben, the owner of the premises. Therefore such recoveries prima facie do not constitute a credible information .....

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unted money in the bank at the costs of being caught by Income Tax Department. 9. Except for reiterating or emphasizing that the dubious transactions have been carried out in the shell companies, no cogent material justifying the said fact is produced on record. If the object of the petitioner was to gain unlawful input tax credit or making the same available to his clients, then it would have been easily reflected in the account of the dubious firms or companies which according to the departmen .....

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icion against the petitioner. 10. The respondent claims to have knowledge of dubious transaction as is evident from its affidavit. If that was so, nothing could have prevented it from coming out with incriminating material. There is also no material placed on record to substantiate the allegation about bogus billing. Not a single bogus bill is placed on record. It is not even pointed out as to how the goods or services were delivered by bogus billing. If the shell companies were said to be benef .....

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emises as above, as also on the basis of the statements/affidavits of the co-accused and witnesses etc., inference about the involvement of the petitioner in the offence is sought to be drawn, rather than pointing out cogent material against him. It is also not shown which company was benefited by false claim of tax credits between 2010 and 2015 13. It is submitted that except for the offence under Section 467 of the IPC, other offences are punishable with maximum punishment of 7 years and so fa .....

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tate of Maharashtra & Ors., reported in 2011(3) SCC 694 as also in absence of any apprehension against the petitioner tampering with the evidence or threating the witnesses or fleeing from trial, the case for admitting the petitioner to bail is made out. 15. Hence, this application is allowed and applicant is ordered to be released on bail in connection with C.R. No. I-7 of 2016 registered with CID Crime Police Station on executing a bond of ₹ 1,00,000/- (Rupees One Lakh only) with one .....

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