GST Fraud: Meerut Court refuses to grant Bail to person accused of wrongfully availing ITC [Read Order]

The Meerut Court refused to grant bail to a person accused of wrongfully availing Input Tax Credit (ITC).

The bail applicant, Vinod Kumar has been alleged to have committed the offense under Section 132(1)(b) 132 (1)(c) read with Section 132 (1)(i) of the Central Goods and Services Tax Act at the Police Station of Directorate General of Goods and Service Tax Intelligence (DGGI).

The counsel for the applicant submitted that the entire case of respondent and investigating agency are based on the documents i.e GST/returns and no purpose would be served by keeping the applicant in jail.

The applicant further urged that the basic rule of the criminal justice system is “bail, no Jail”. The arresting of the applicant is a clear violation of Section 69(2) of the CGST Act thus the custody of the applicant without jurisdiction.

It was further argued that in the present matter the department has contravened the provisions of Section 69(2) of the CGST Act. The applicant is a bonafide businessman and followed a routine business practice.

During his statement recorded by the DGGI, GRU Ghaziabad the applicant admitted he has irregularly availed the input tax of Rs.1.30 Crore and assured the officers he will deposit the entire dues of GST but due to financial conditions, he is unable to pay the same.

The applicant also stated in his statement that for the purpose of purchase he is not in direct touch with the suppliers and does not even know the proprietors of the firms. The applicant about the total ITC of Rs. 8,52,43,881 availed by him, did not explain properly and reply satisfactorily. The applicant is sole proprietor of his firm and responsible for every act of his firm.

The court noted that prima facie, the accused has committed an economic offense and caused monetary loss to the State which is most harmful. The investigation is still underway therefore, the court dismissed the bail application.

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