The Gujarat High Court has granted bail to an accused person for allegedly evading GST worth Rs. 21 Crores considering the fact that the investigation by the department is virtually over.
The department arrested the applicant based on the conclusion that Mr. Mohmed Hasan Aslam Kaliwala, along with others, were indulged into activities of creating fictitious entity to pass ineligible input tax credit using Two fake firms. The findings of the investigation emerged that these firms doing wrongful activity of issuing fake invoices, to pass ineligible input tax credit to beneficiaries without any actual movement of goods, whereby, the applicant caused revenue loss to the government exchequer to the tune of Rs.21.59 crores, as bypassing the illegal ITC, the beneficiary firms had claimed unlawful input tax credit.
The petitioner contended that both the firms had filed regular returns for its business transactions and till date, have not received any show cause notice, raising any dispute with respect to fake invoices etc. It was also contended that both the firms have filed their return in GSTR1 disclosing sale of goods and same was being reflected in GSTR2A and therefore, question does not arise, to avail wrongfully ITC.
After hearing arguments from both sides, Mr. Justice Ilesh J. Vora observed that “so far 2 firms are concerned, as referred above, investigation is virtually over. The applicant being an authorized attorney of 2 firms, initially he had evaded the investigation but later on after his arrest and during his remand period, he was interrogated extensively and necessary materials have been recovered. Department has also filed complaint against the applicant. The applicant herein to show his bonafide, willing to deposit Rs.2 crore, which is approximately 10% of the alleged amount. Considering the facts and circumstances of the present case, it is worthwhile to note the observation made by the Apex Court in the case of Sanjay Chandra Vs. CBI, reported in 2012 2 SCC 40, wherein, it was observed that “constitutionally protected liberty must be respected unless the detention becomes necessary. The balance approach is to grant bail subject to certain conditions rather than to keep the individual under detention for an indefinite period.”
Granting bail to the accused, the High Court held that “for the foregoing reasons, considering the facts and circumstances of the present case and role attributable to present applicant herein as well as his bonafide to deposit Rs.2 crore, this Court is of the considered view that case is made out for exercising discretion enlarging the applicant on bail and accordingly, I incline to release the applicant on bail, subject to deposition of Rs.2 crore before the office of the Deputy Commissioner of State Tax, Division 8, Enforcement, Surat within a period of 2 months from his release.”
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