In a ruling granting bail to an accused person involved in a GST scam of around 7 crores, the Chhattisgarh High Court has held that the accused shall be released on bail since the offence of wrongful availment of input tax credit under section 138 of CGST Act, 2017 is a bailable, non-cognizable and compoundable offence.
The applicant, Subhash Chauhan is the Proprietor of M/s Minal Traders, Bhilai and is doing the business of Iron Trading. The applicant was arrested by the officers of the CGST on 27.10.2021 and after investigation, a complaint has been filed against the applicant on 24.12.2021 alleging that the applicant carried out purchases from different entities and wrongly availed Input Tax credit of Rs.6,95,32,472/- by procuring invoices from fake and fictitious firm and also supplied goods without payment of tax and without issuing invoices to the tune of Rs.27,70,559/-. Thus, the total Input Tax Credit availed and non-payment of tax is Rs.7,23,03,031/-.
The counsel appeared for the applicant, Smt. Fouzia Mirza, Sr. Advocate with Shri Ali Afzal Mirza, Advocates, contended that the applicant has been in jail for last 9 months and the investigation is yet to be concluded by the GST department. In the light of these facts, the counsel argued that bail shall be granted to the applicant.
Considering the submissions of the parties, Justice Deepak Kumar Tiwari observed that “particularly considering the fact that the allegation against the present applicant is of wrongfully utilizing Input Tax Credit of Rs.6,95,32,472/- and supplied taxable goods without payment of taxes and without issuing invoices to the tune of Rs.27,70,559/-, totalling Rs.7,23,03,031/-, and that offence under the Act are bailable and non-cognizable except for the offence under Section 132 (5) of the Act, further considering that the applicant can be punished with maximum sentence of 5 years with fine, he is in jail since 27.10.2021, further considering that Proprietor of the firm namely, Rohan Tanna and Abhishek Pandey have already been enlarged on bail by the co-ordinate Bench and also considering that the applicant in the bail application raised a ground that the offence is compoundable in nature and, therefore, this Court after considering all the aspects of the matter, particularly the period of detention and the amount involved finds appropriate that if the applicant deposits Rs.70 lakhs under protest or admission of the disputed amount, which would be adjusted in accordance with law, the applicant can be enlarged on bail.”
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