Back
IN THE HIGH COURT OF DELHI
Mukta Gupta, J.
Amit Gupta - Appellant
Versus
Directorate General of GST Intelligence Headquarters - Respondent
W.P.(Crl.) 1267 of 2021
Decided On : 29-04-2022
The court established that compliance with bail conditions through valid Input Tax Credit usage can be acceptable if not found fraudulent. Non-compliance cannot be solely based on the method of deposit.
Headnote:(A) Central Goods and Services Tax Act, 2017 - Sections 49 and 86 - Bail cancellation - Petitioner challenged the cancellation of bail on the grounds of non-compliance with bail conditions regarding deposit - It was found that part compliance was achieved through the valid use of Input Tax Credit (ITC) ledger, which was not fraudulent based on current investigation. (Paras 2, 7, 14)
(B) Bail Conditions - Non-compliance leading to cancellation of bail - The court clarified that partial compliance through approved ITC ledger does not automatically constitute failure of bail conditions if the total amount required was deposited satisfactorily. (Paras 15)
Facts of the case:
The petitioner, a director of multiple companies, was accused of fraudulent ITC totaling Rs.27.05 crores. Bail granted was revoked citing improper deposit methods. The petitioner asserted that part deposit via ITC was permissible under law.
Findings of Court:
The total amount of Rs.2.70 crores was adequately satisfied by available ITC and cash deposits.
Issues: The central issue was whether the petitioner fulfilled bail conditions regarding deposit methods.
Ratio Decidendi: The court ruled that if the ITC was not deemed fraudulent, its application towards bail conditions is lawful and does not negate compliance.
Result: The cancellation of bail was set aside, and the previous bail order was restored.
JUDGMENT
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 approximately R
