Heard Mr. Rahul Kashik, learned Advocate holding brief of Mr. Kaustubh Srivastava, learned counsel for the applicant and Mr. Kuldeep Singh Chauhan, learned counsel for the opposite party and perused the material available on record.
By way of this application, the applicant has prayed for to enlarge him on bail in Misc. Case no. 101 of 2019, P.S. Sahibabad, District- Meerut, under Sections 132(1)(B) and 132(1)(i) Central Goods and Services Act, 2017 (hereinafter referred to as "the CGST Act" ).
Complainant in the present case on investigation found huge evasion of GST against the applicant and during the course of investigation, it was found that the applicant is responsible for the creation and management of 47 fake firms which were involved in passing of fake ITC to various firms to the tune of around 159 crore, hence, the Principal Commissioner, CGST and Central Excise Commissionerate, Ghaziabad authorized the complainant to arrest the applicant under Section 69 of Central Goods and Excise Act for committing offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub section (1) of Section 132 of the Act which is punishable under clause (i) or (ii) of sub-section (1) or sub-section (2) of the said section whereupon the applicant was arrested and one Sh/Ms. Raghunandan was informed about his arrest.
After the arrest of the applicant, investigating officer has recorded the statement of the applicant under section 70 of CGST Act 2017 on 25.5.2019, 26.5.2019 & 31.5.2019. On 25.5.2019, acting on 'Authorization to Search' issued by competent authority of Director General of GST Intelligence (hereinafter referred to as "DGGI") searches were conducted on some addresses based on the intelligence that these premises are being used by the persons involved in issuance of fake invoices without supply of goods whereby passing the input credit illegally. During search, it was found that there was no business activity in the premises but incriminating evidences including registration certificates, KYC documents of different firms, one desktop having tally data of several firms were recovered and resumed from the premises of the applicant.
It is contended by learned counsel for the applicant that applicant is a semi-literate and has no concern with the alleged offence. It is further contended that applicant was arrested by the officer of DGGI on the basis of the confessional statement of the applicant but it is settled law that confessional statements of accused persons in police custody are inadmissible in evidence and cannot be read against them. It is also contended that before proceeding under Section 132 of the CGST Act, 2017 at least the show cause notice and the adjudication order needs to be passed and the power to punish under Section 132 of the Act would stand triggered only once it is established that an assessee has committed an offence and that would be only after once the demand has been determined from the assessee under Section 73 or 74 of the CGST Act, 2017. In support of his submission, he has relied upon the judgement of the Delhi High Court in the case as (2016) 96 VST 37 (Delhi) Trip (India) Pvt. Ltd. vs. Union of India and others. Several other submissions in order to demonstrate the falsity of the allegations made against the applicant have also been placed forth before the Court. The circumstances which, according to the counsel, led to the false implication of the accused have also been touched upon at length.
Lastly, it has been assured on behalf of the applicant that he is ready to cooperate with the process of law and shall faithfully make himself available before the court whenever required. The applicant is languishing in jail since 14.1.2021. He undertakes that he will not misuse the liberty, if granted, therefore, he may be released on bail.
On the other hand, learned A.G.A. as well as learned counsel for the informant have contended that applicant has committed offence under clause (b) of sub-section (1) of Section 132 of the CGST Act, 2017. Statement of applicant -Vishan Gupta was recorded on 25.5.2019, under section 70 of the CGST Act, 2017 wherein, on being asked, he categorically admitted that he created the 47 non-existent firms, the detail of which appearing in the evidences resumed from his premises. He also tendered that after getting the GST registrations he used to issue bills (tax invoices) to his different customers in the need of the bills (without any goods) enabling them to avail input tax credit mentioned on such tax invoices. To comouflage their fake transactions, he also issued fake bills or invoices between the fake firms created by him in a circular manner without any concomitant movements of goods or services thereby wrongfully availing and utilizing the fake input tax credit of the GST mentioned therein.
It is further contended that scrutiny of the retrieved data from the tally software, ledgers, mobile date was conducted by DGGI. On scrutiny, it was observed that the input tax credit of Rs. 159.29 crores had been passed on through these 47 firms leading to wrongful availment or utilization of input tax credit. Applicant also tendered that whatever invoices had been issued were for the purpose of passing of fake GST credit to the persons who purchase those bills and that he was unable to deposit the GST as he had worked on commission basis and no real business was ever done by him.
it is further submitted that all the fake firms were verified physically as well as under the summons mode which led to the conclusion that these firms were non-existent/incorrect address was mentioned. The Bank account details in respect of 47 firms, created by applicant- Vishan Gupta were retrieved from the GSTN database and the inquiry was caused from the respective banks in as much as they were written to furnish account statement and the KYC documents. The accused vide letter dated 11.6.2019 submitted that certain documents which on scrutiny revealed that there were 31 more firms which were admittedly created and controlled by the accused. This further proves that applicant had been in the habit of creating fake firms to defraud government exchequer and could be termed as the master mind in the total affair of creating and managing of the 78 firms (31+47) for issuance of fake bills without supply of any goods.
It is further submitted by learned AGA and learned counsel for the informant that on perusal of the statements of the accused applicant, it is very much clear that there is specific allegation on the accused applicant that he is mastermind in the total affair of creating and managing of the 78 firms (31+47) for issuance of fake bills without supply of any goods. It is next submitted that there is ample material collected during the investigation that applicant is involved in the management of fake firms, therefore, it would not be proper to release him on bail.
For deciding the application for bail, the Court generally desists from considering the merits of the matter in detail. However, as learned counsel for the applicant has raised various issues, the same are being dealt with only for the purpose of deciding the bail application.
Applicant was called in the office of DGG Ghaziabd and he was served upon the summons and his statement was recorded on the same day and the investigation report put up before the competent authority. He has submitted that in the instant case, G.S.T. evasion of more than Rs. 159 crores is involved. It is a cognizable and non-bailable offence as per Section 132 (1) (i) of the C.G.S.T. Act, 2017 r/w Section 132 (5) of the C.G.S.T. Act. It is also relevant to mention that Section 69 of CGST Act empowers the Commissioner to authorize any Officer of central tax to arrest a person, if the Commissioner has reasons to believe that a person has committed any offence specified in Clause (a) or (b) or (c) or (d) of sub-section (1) of Section 132. During search of the premises, number of incriminating documents were recovered which proved his involvement in G.S.T. evasion of more than 159 crores. The applicant is the mastermind of the entire fraud. The goods were sold on paper only without any actual production or supply. It is a financial fraud of more than 159 crores and if he is allowed to move around, he will manipulate the entire evidence.
Thus, regard being had to the facts and submissions, taking into consideration the gravity of the accusation, without expressing any opinion on the merits of the case, this Court finds that it is not a fit case for bail.
The bail application is, accordingly, rejected.
Order Date :- 27.8.2021 SY