Back
2022 Supreme(Del) 963
IN THE HIGH COURT OF DELHI AT NEW DELHI
Mukta Gupta, J.
Amit Gupta - Appellant
Versus
Directorate General Of Gst Intelligence Headquarters - Respondent
Criminal Writ Petition No. 1267 of 2021
Decided On : 29-04-2022
Rajesh Jain, Advocate, Viraj Tiwari, Advocate, Ramashish, Advocate, Harpreet Singh, Advocate
The judgment established that the reversal of Input Tax Credit for depositing part of the bail amount was permissible and did not constitute non-compliance with the bail conditions.
Headnote:
ITC - Bail Cancellation - Central Goods and Services Tax act, 2017 - Section 67/70 - Section 49(4), (5), (6) - Rule 86(2) - Rule 86a - Conditions for use of amount available in electronic credit ledger
Fact of the Case:
The petitioner challenged the cancellation of bail granted to him and the order to deposit a sum of Rs. 2.70 crores with the department. The petitioner deposited part of the amount through the reversal of Input Tax Credit (ITC) which was contested by the respondent.
Finding of the Court:
The court found that the petitioner's reversal of ITC for depositing part of the amount with the department as directed by the Trial Court was not illegal or unwarranted, and thus the bail cancellation was set aside.
Issues: The key issue was whether the petitioner could deposit part of the amount through the reversal of ITC as a condition for bail, and whether non-compliance with this condition warranted bail cancellation.
Ratio Decidendi: The court held that the petitioner's fulfillment of the condition of depositing the amount partly by cash ledger and partly by debit ledger of the ITC did not constitute a failure to fulfill the imposed conditions, and thus the bail cancellation was unwarranted.
Final Decision: The impugned order cancelling the bail was set aside, and the petition and application were disposed of.
JUDGMENT
Mukta Gupta, J. - W.P.(CRL) 1267/2021
CRL.M.a. 10704/2021 (for stay)
1. By this petition, petitioner challenges the order dated 9th July, 2021 passed by the learned CMM, Patiala House Courts whereby the bail granted to the petitioner vide order dated 23rd December, 2019 was cancelled by the learned CMM. Though in the prayer clause the petitioner has also sought quashing of the proceedings initiated by the respondent under Section 67/70 of Central Goods and Services Tax act, 2017 (in short 'CGST') as also the release of the records seized from the various premises of the petitioner, however, during the course of arguments the petitioner pressed prayers (a), (b) and (c) in the present petition, that is, setting aside of order dated 9th July, 2021 cancelling the bail of the petitioner and restoring the order dated 23rd December, 2019 granting regular bail to the petitioner.
2. Briefly the case of the prosecution against the petitioner is that the petitioner is one of the Directors/key persons in M/s Brilliant Metals Pvt. Ltd., M/s.Progressive alloys India Pvt. Ltd. and M/s JBN Impex Pvt. Ltd. and allegedly the mastermind behind devising a mechanism of availing Input Tax Credit (in short 'ITC') on the strength of bills of various suppliers which were non-existing and fictitious and thus availed fraudulent ITC worth Rs. 27.05 crores which he further passed on. Further the total ITC availed by the petitioner in the three companies mentioned above was totalling to Rs. 260 crores.
3. after the arrest, the petitioner was granted regular bail vide order dated 23rd December, 2019 on his furnishing a personal bond in the sum of Rs. 1 lakh with one surety of the like amount further subject to the following conditions:
1. He shall deposit the amount of Rs. 2,70,00,000/- with the complainant department latest by 06.01.2020.
2. he will join the investigation with the IO as and when required.
3. he shall not tamper with evidence or influence any witness in any manner whatsoever.
4. he shall appear before the court on each and every date of hearing.
5. he shall not leave the country without prior permission of the court.
4. In respect of condition No.1 of deposit of amount of Rs. 2.70 crores, the petitioner deposited Rs. 1.10 crores through cash ledger and Rs. 1.60 crores by way of debiting/reversals through electronic ITC ledger.
5. according to the respondent as also the impugned order since the ITC availed were through fraudulent means and thus the entire ITC claimed by the companies were under cloud, therefore, the petitioner could not have furnished Rs. 1.60 crores by reversal of the ITC as a condition of bail.
6. Learned Trial Court further held that the petitioner never took prior permission of the Court to deposit the amount of Rs. 1.60 crores through reversal of credit from electronic ledger and merely placed the compliance by way of challans before the Court on 21st January, 2020 whereafter the respondent filed an application dated 24th January, 2020 seeking cancellation of bail of the petitioner.
7. Even as per the case of the respondent the investigation carried out till now reveals availment of fraudulent ITC worth Rs. 27.05 crores and the total amount of ITCs availed by the petitioner is Rs. 260 crores. Thus it is not the case of respondent that ITCs worth approximately Rs. 232.95 crores are fraudulent. Thus the short issue in the present petition is whether in respect of the condition of deposit of amount of Rs. 2.70 crores which was a condition for grant of bail the petitioner could have deposited part amount through the ITCs.
8. Though not stated before the Trial Court or in reply before this Court, during the course of arguments learned counsel for respondent stated that besides Rs. 27.05 crores of ITC availed in the present case, the petitioner have been found to have availed fraudulent ITC worth Rs. 15 crores which are pending investigation by DGGI, Meerut. Thus even as per the case of the respondent till date beyond approx
