The judgment emphasizes the seriousness of economic offences and the need to curb fraudulent activities to protect the economy, highlighting the legal provisions under the OGST Act, 2017 and the due procedures followed in the arrest and investigation of the accused.

JUDGMENT :

1. The present petitioner, who is in custody, has filed the instant bail application under Section 439 of the Cr.P.C. in connection with Case No.2 of 2019 dated 18.01.2020 of the C.T. and GST Enforcement Unit Jajpur, Jajpur Road, corresponding to 2(C) CC Case No. 9 of 2020 for commission of offences punishable under Section 132(1)(b)(c) and (l) of OGST Act, 2017. Prior to instant application, the petitioner also approached the First Additional Sessions Judge, Rourkela vide Bail Application No. 70 of 2020 arising out of 2(C) cc Case No. 9 of 2020 which was rejected on 24.02.2020.

2. Shorn of unnecessary details, as per the underlying complaint and the prosecution report, a large number of fraudulent business transactions were made using several fictitious firms including M/s G.S Unitrade, M/s G.S. Steels and Alloys Co. M/s B.B Associates, M/s Om Shri Ganesh Traders. Sri Amit Beriwal/Petitioner herein, Sri Ronak Beriwal, Sri Subhash Chandra Swain and Sri Basanta Kumar are the proprietors of M/s GS Unitrade, M/s G.S. Steels & Alloys Co, M/s B.B. Associates and M/s Omm Shree Ganesh Traders respectively. The above persons, individually and in collusion with each other, are stated to have created several dummy and non-existent entities to avail bogus Input Tax Credit (ITC), for the purpose of defrauding the Revenue.

3. The typology and modus operandi of such fraudulent activities involved in the creation of these dummy and non-existent firms, it appears, have been a matter of grave concern for the authorities. They were predominantly engaged in passing bogus input tax credit, secured on the strength of fake and fabricated invoices, without supply of any physical goods to such other existing and non-existing firms, thereby enabling the recipients to avail and utilize the same while discharging tax liabilities. These fake and fraudulent transactions have, among others, caused huge loss to the State exchequer at least to the tune of Rs.122.67 crores.

4. After intensive analysis of data from GSTN/e-way bill portal and inputs from various sources, the Joint Commissioner of State Tax, CT & GST Enforcement Range, Sambalpur detected the fraud committed by the Accused. After being satisfied that M/s GS Unitrade is engaged in such fraudulent business activities, the Authority issued INS-01 for conducting inspection and search of his business premises and residence.

5. As seen from the records, during the search, several incriminating documents, containing business transactions of such business entities, were unearthed and seized with due acknowledgement. The Petitioner was subsequently summoned by the Authorities. The Petitioner was subjected to interrogation and, prima facie, it appears that the Petitioner, in his capacity as the proprietor of M/s G.S.Unitrade, has shown to have purchased goods from many bogus firms and has availed ITC on the strength of fake invoices, without actual transfer of goods; used to place purchase orders to the suppliers through Brokers/Dalal whose identities are yet to be ascertained; during the period 2017-18, 2018-19 and 2019-20 has availed ITC worth about Rs.12,62,91,751.00 on purchase of good and transferred/passed on ITC worth Rs.13,85,88,423.00 on sale of goods to the recipients. The manner in which the Accused, in collusion with other accused, have been operating would suggest that there are certain inherent flaws in the GST system, which is prone to such abuse. Furthermore, the fraudsters are taking advantage of the inadequacy of electronic trails of all transactions by employing ingenious methods.

6. The investigation conducted by officers of DGGI, Bhubaneswar, also revealed that the purported suppliers were also non-existent/non-functional and were being used as a tool to defraud the Revenue. The Investigation report submitted by the Officers of CT & GST Enforcement Unit, Bolangir, Cuttack-I, Cuttack-II, Balasore, Rourkela, Jharsuguda, Sambalpur, Angul and Baripada also confirm the said findings.

7.