Court denied Bail to Accused in GST Scam for availing Fraudulent ITC

A search was conducted of the premises of the applicant by the officers of DGGI, and various incriminating documents such as stamps of various suspected fake firms i.e. M/s Pawan Indo trade Pvt Ltd etc. were recovered which on the investigation were found to be fake and non-existing. It is further submitted that during the investigation, it was revealed that M/s Laxmi Trading Company, prima facie, has availed fraudulent ITC for a sum of Rs.22.62 crores and passed on fraudulent ITC of Rs. 26.31 crores. It was submitted that during verification of inward suppliers, it has been revealed that M/s Laxmi Trading has availed fraudulent ITC from non-existent or non­traceable firms to the tune of more than Rs.10 crores.

The Courts held that the courts of this country cannot afford to take a lenient view against such mischief. Economic offenses cannot be treated as an ordinary crimes and deserve to be dealt with sternly. As the applicant/accused is a key member of a crime syndicate involved in a multi crores GST fraud. As per Section 132 of the CGST Act, not only the person who issued goodless invoices but even the person who causes the issuance of such invoices is also liable to be prosecuted.

The applicant/accused was instrumental in the issuance of goods-less invoices and availing fraudulent Input Tax Credit for M/s Laxmi Trading Company. Therefore, the contention that the role of the applicant/accused deserves to be assessed in isolation as he has no connection with M/s Laxmi Trading Company was discarded. The court found no merits in the contention that the total liability of the applicant/accused is less than Rs.5 crores as M/s Laxmi Trading Company, prima facie, has availed fraudulent ITC from the fake/non-existent/non­traceable firms to the tune of Rs. 22.62 crores and has further passed on ITC to the tune of Rs.26.31 crores. Also, M/s Laxmi Trading Company has availed fraudulent ITC from non-existent/non­traceable firms to the tune of more than Rs.10 crores.

With respect to the contention that the department did not deal evenly with the investigating agency as compared with principal offenders. two wrongs can never make a right. The failure of the investigating agency to deal with M/s Imperial Merchants Pvt. Ltd sternly would not absolve the applicant/accused of his individual liability. Thus, the contention of the applicant that the applicant/accused also deserves bail as others have not been arrested is meritless and is to be discarded. Thus, considering the nature of the offense, seriousness of allegations, and the crucial juncture of the investigation, the court did not find any merits in the application at hand and the same was dismissed.