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IN THE HIGH COURT OF RAJASTHAN AT JAIPUR BENCH
Prakash Gupta, J.
Sanjeev Jain - Appellant
Versus
Union Of India - Respondent
Criminal Miscellaneous Bail Application No. 3608 of 2021, 3981 of 2021
Decided on : 31-05-2021
Tax Evasion - Bail Applications - Section 439 CrPC - Central Goods and Services Tax Act, 2017 - Section 132(1)(b)(c)(l) - Section 137 - Section 138 - Section 122 - [KEYWORD] - Tax Evasion - [Section 132(1)(b)(c)(l), Section 137, Section 138, Section 122] - The court discussed the provisions of Section 132(1)(b)(c)(l) of the Central Goods and Services Tax Act, 2017, which deals with punishment for tax evasion, as well as the compounding of offences under Section 138 and the penalty provisions under Section 122. The court also considered the liability of individuals in charge of a company under Section 137. These legal provisions influenced the court's decision in granting bail to the accused individuals.
Fact of the Case:
The accused individuals were alleged to have been involved in tax evasion through wrongful input tax credit and fake invoices. They were arrested and filed bail applications, which were initially dismissed.
Finding of the Court:
The court found that the accused individuals had already been in custody for a considerable period, the maximum punishment provided under the Act was five years, and the investigation was complete. Considering the age of one of the accused and the absence of criminal antecedents, the court granted bail to the accused individuals.
Issues: The issues involved the alleged tax evasion through wrongful input tax credit and fake invoices, the liability of individuals in charge of a company, and the applicability of bail provisions considering the circumstances of the case.
Ratio Decidendi: The court considered the length of custody, the maximum punishment under the Act, the completion of investigation, and the absence of criminal antecedents as key factors in granting bail to the accused individuals.
Final Decision: The bail applications were allowed, and the accused individuals were directed to be released on bail upon furnishing the specified personal bond and sureties.
JUDGMENT
Prakash Gupta, J. - These two bail applications have been filed by the petitioners under Section 439 CrPC.
2. Facts of the case are that a letter dated 27.11.2020 was received from the Assistant Commissioner, CGST Division-C, Bhiwadi to the effect that income tax credit (for short, 'ITC') on the invoices issued by M/s. Veto Merchandise had been wrongly availed. Alongwith the aforementioned letter, a letter written by the Deputy Commissioner, Circle-I, State Tax, Jaipur dated 3.3.2020 was also enclosed, wherein it was stated that upon verification of M/s. Veto Merchandise, Jaipur (GSTIN- 08AA0FV2648B1Z1), the said firm was found non-existent at its principal place of business and, therefore, the invoices issued by M/s. Veto Merchandise, Jaipur (GSTIN-08AA0FV2648B1Z1) to M/s. Swissline Intertrade Pvt. Ltd. F-438, Phase-1, Ind. Area, Bhiwadi (GSTIN-08AAJCS6595A1Z3) were also fake / bogus. The Dy. Commissioner, State Tax had also informed that no business activities were done at the business premises of M/s. Veto Merchandise and that the registration of the said firm had been cancelled and complete ITC had been blocked.
3. Returns and other relevant details of M/s. Swissline Intertrade Pvt. Ltd. F-438, Phase-1, Ind. Area, Bhiwadi (GSTIN-08AAJCS6595A1Z3) were checked on AIO and it was found that earlier M/s. Swissline Intertrade Pvt. Ltd. F-438, Phase-1, Ind. Area, Bhiwadi (GSTIN-08AAJCS6595A1Z3) was registered under Central Excise and later, it was registered under the GST regime. Since July, 2017 (after enactment of GST), M/s. Swissline had filed GSTR 3B returns upto February, 2020 and the total taxable supplies shown in GSTR 3B returns were Rs. 300.09 crores. M/s. Swissline Intertrade Pvt. Ltd. had paid tax amounting Rs. 48.87 crores through ITC and Rs. 2.20 lakhs only through cash. It had also paid cash Rs. 4.71 lakhs under RCM. The cash : ITC ratio of M/s. Swissline Intertrade Pvt. Ltd. is 0.04 : 99.96.
4. From registration details of M/s. Swissline Intertrade Pvt. Ltd. F-438, Phase-1, Ind. Area, Bhiwadi (GSTIN- 08AAJCS6595A1Z3), it was gathered that GST registration of the company was cancelled on 5.2.2020 and it had three Directors:
ii. Sh. Ramesh Kumar Jain, S/o Shri Bhimsem Jain, Resident of ZP-21, Maurya Enclave, Block-ZP, Maurya Enclave, Pitampura Delhi iii. Smt. Saroj Bala D/o Abhey Kumar Jain, Resident of DP-218, Maurya Enclave, Block-DP, Maurya Enclave, Pitampura, Delhi.
5. Similarly, Sanjeev Jain S/o Ramesh Jain was alleged to be Director of another firm called M/s. Mohit Metals Pvt. Ltd., G-1208 B & C, RIICO Industrial Area, Rampur Mundana, Bhiwadi, Alwar, Rajasthan (08AAECM0087C1ZR) and he also held 65% shares of the company. Petitioner Ramesh Jain was alleged to have availed of wrongful input tax credit to the tune of Rs. 47,91,05,784/- and passed on fake / bogus ITC to the tune of Rs. 48,40,60,293/- without any purchase or sale of goods. Likewise, petitioner Sanjeev Jain was alleged to have availed of wrongful input tax credit to the tune of Rs. 13,35,44,893/- and passed on fake / bogus ITC amounting to Rs. 12,64,19,263/- without any purchase or sale of goods.
6. Acting upon the aforementioned letters, a complaint was filed against them before ACJM (Economic Offence), Jaipur and they were arrested on 19.12.2020. The petitioners filed bail applications before the trial court, which came to be dismissed vide order dated 8.2.2021/20.2.2021. Hence, these bail applications.
7. Mr. Sameer Jain, learned counsel for the petitioners submits that as per Section 134 of the Central Goods and Services Tax Act, 2017 (for short, 'the Act of 2017'), the alleged offence is triable by a Judicial Magistrate, First Class. He further submits that as per arrest memo (Annexure-1), the petitioners have been arrested for the offence under clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) o
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