Gujarat HC grants bail to the person responsible for passing illegal ITC of Rs. 21 crores

The applicant was arrested on 17.04.2022 and the bail applications filed before the Metropolitan Magistrate, Ahmedabad, and City Sessions Court at Ahmedabad were rejected. In the present case, it was alleged that the applicant and others indulged in activities of creating a fictitious entity to pass ineligible input tax credit and the search proceedings against HK Metal and Blue Star Trading Company were conducted at their registered places of business. According to the record, the applicant is the authorized representative of both the firms and managing its bank transactions. During the search proceedings, both the firms were not operative and not in existence at the business place, and one new firm M/s. Ashiya Enterprise was found.

The findings of the investigation emerged that these firms doing a wrongful activity of issuing fake invoices, to passing ineligible input tax credits 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 the unlawful input tax credit. In such circumstances, the applicant has violated the provisions of GST, GGST, and IGST and the rules made the observation made by the Apex Court. The applicant, presently in custody, had filed a regular bail application under Section 439 of the Cr.P.C.

The Court relied on the case of Sanjay Chandra Vs. CBI, reported in 2012, wherein, it was observed that “Constitutionally protected liberty must be respected unless the detention becomes necessary. The balanced approach is to grant bail subject to certain conditions rather than to keep the individual under detention for an indefinite period.” Considering the facts and circumstances of the case and role attributable applicant herein as well as his bonafide to deposit Rs.2 crore, the court decided that the case is made out for exercising discretion enlarging the applicant on bail and therefore, the applicant was released on bail, subject to deposition of Rs. 2 crores before the office of the Deputy Commissioner of State Tax, Surat within a period of 2 months from his release.