Bombay High Court denies bail to accused who claimed ITC without making payment to supplier

Facts of the Case

Complainant has sold cloves worth Rs. 7421619 on the Accused. He filed GST return Form. The complainant’s case is that though he had delivered the goods to Sarfaraz at the instance of the Applicant, he did not receive the payment. Therefore, he issued a notice to the Applicant and co-accused Sarfaraz. The applicant replied to the notice and denied receipt of goods.

Order of Court

Now the next question is whether goods delivered to Sarfaraz, were at the instance of Applicant ? To answer this point, let me read the letter dated 1st September, 2020 (which I have reproduced above). By this letter, GST Authority has certified that Applicant – M/s. Bansal Traders had availed Input Tax Credit of CGST of Rs.1,76,705/- and SGST of Rs.1,76,705/- against Invoice Nos. 106 and 107 dated 2nd March, 2020 and 5th March, 2020 respectively issued by M/s. Esjaypee Mercantile Global Pvt. Ltd., (Complainant). However, it is surprising that in the subsequent communication dated 13th August, 2021, the GST Authority opined that M/s. Bansal Traders has not availed ITC against these Invoices during the period March 2020 to October 2020 as was evident from GSTR-3B return filed by M/s. Bansal Traders and GSTR-9 Annual Return filed on 5th February, 2021. If at all, GSTR 3B and GSTR 9 was filed on 5th February, 2021 how and under which circumstances the CGST Authority had certified in their first letter addressed to Investigating Officer that M/s. Bansal Traders has availed Input Tax Credit of CGST and SGST against Invoice Nos. 106 and 107. Although the concerned Officer (GST) was requested to explain the anomaly, he could not explained it and satisfy the Court’s query. Thus, subsequent communication dated 13th August, 2021 addressed directly to Applicant is ignored.

For the reasons stated above, the evidence collected in the course of investigation, prima facie, shows Complainant delivered the goods to Sarfaraz at the instance of the Applicant and after delivery, he denied Complainant’s claim and refused to pay him. Facts of the case constitute offence of cheating and, therefore, application deserves no consideration.