GST Evasion by availing Input Tax Credit worth Rs. 8.76 Crores from non-existent Firms: Allahabad HC grants Bail to accused [Read Order]

The Allahabad High Court had granted bail to the applicant Subodh Kumar Garg after being in jail since 16.3.2022 and having no criminal history, in consideration of the nature of the offence being compoundable. The appellant had allegedly availed Input Tax Credit from non-existent firms, in an attempt to evade GST liability amounting to almost Nine Crore Rupees.

According to the observations of the Single Bench of Justice Siddharth, “the applicant has been found to be dealing with 18 non existent firms and their details have been furnished in the complaint. Their registrations have already been cancelled”.

The applicant’s case is that at the time of business with the aforesaid firms they were duly registered and allegation that firms were fake is yet to be proved. It had not been explained how the applicant will tamper with the evidence or influence the witnesses, as per the observation of the bench.

The instant bail application has been filed on behalf of the applicant, Subodh Kumar Garg, with a prayer to release him on bail.

The firm of the applicant is engaged in the business of trading of iron and scrap and is duly registered with G.S.T. Department.

The counsel for the petitioner contended that, the grant of registration and cancellation is done by the department and not by the applicant and implication of the applicant only on ground that supplier firms of the applicant’s firm have subsequently got re-registered cannot be a ground for implicating the applicant.

It was observed that “Merely because of the seriousness and magnitude of economic effect the bail cannot be denied to the accused. Applicant is not stated to have any criminal antecedents. He is not shown to be a habitual offender” and held that the applicant be released on bail on his furnishing a personal bond, bank guarantee of Rs. 50 Lacs and two sureties each in the like amount to the satisfaction of the court concerned subject to following conditions. Further, before issuing the release order, the sureties are verified.

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