GST Evasion of more than Rs. 5 Crores: SC denies bail considering ongoing investigation & seriousness of offence

The Apex Court has denied bail to the person accused of GST Evasion by illegally availing the (ITC) Input Tax Credit of more than Rs. 5,00,00,000/- by purchasing the goods from several suspicious and fake suppliers whose registration had already been canceled. This order came in matter of Basudev Mittal vs Union of India wherein the Apex Court upheld the order of the High Court of Chhattisgarh, Bilaspur.

Observations by Chattisgarh High Court:

A bare perusal of case diary goes to show that initially on the basis of two Alert Letters C. No.IV(6)13/AE/RKL/2022/1056-A and F.No. DGGI/ BbZU/ INV/ 123/ GST/2019/2539 issued by Assistant Commissioner (AE), Rourkela and Additional Director, DGGI, Bhubaneswar respectively, regarding sharing of information in case of non-existent business entity, the business premises of the applicant from where the business activities were being performed, searched out and upon scrutiny of document it is found that the applicant has illegally availed Input Tax Credit of more than Rs. 5,00,00,000/- by purchasing the goods from several suspicious and fake suppliers whose registration had already been cancelled. During search, it also came to the forefront that more than 700 vehicles, against which invoices were submitted by the applicant wherein only vehicle numbers were mentioned, have not fount to be passed through the relevant toll gate.

High Court noted that, role of the applicant prima-facie appears to be serious in nature and as per the prosecution, further investigation is going on to find out more suspicious and fake suppliers with whom the applicant alleged to have made transactions in order to avail Input Tax Credit illegally. Further, the court said, looking at the nature and gravity of offence, the possibility of hampering with the evidence and interfering with the investigation by the applicant cannot be ruled out.

More probability of detecting more fake and suspicious firms

In the instant case, charge sheet has been filed against the applicant, however, further investigation is going on and as per respondent, there is much more probability of detecting more fake and suspicious firms. The economic offences having deep rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. Economic offence is always committed with calculated design profiting himself regardless of the consequence to the community.

The court quoted Hon’ble Supreme Court in the matter of Nimmagadda prasad v. Central Bureau of Investigation reported in (2013) 7 SCC 466 in the matter of Paritosh (supra), wherein Hon’ble Supreme Court observed in para 24 as under:-

“While granting bail, Court has to keep in mind the nature of accusations, nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations. It has also to be kept in mind that for the purpose of granting bail, the Legislature has used the words “reasonable grounds for believing” instead of “the evidence” which means the Court dealing with the grant of bail can only satisfy it as to whether there is a genuine case against the accused and that the prosecution will be able to produce prima facie evidence in support of the charge. It is not expected, at this stage, to have the evidence establishing the guilt of the accused beyond reasonable doubt.”

Considering the facts and circumstances of the case, the allegations made against the applicant, the evidence collected by the prosecution, seriousness of the offence and further considering the law laid down by Hon’ble Supreme Court in the matter of Nimmagadda (supra), The Court denied to release the applicant on bail.

Supreme Court Upheld High Courts decision

The Apex Court did not find any reason to interfere with the order impugned in this petition at this stage.

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