The severity of economic offences, the nature of evidence, and the larger interests of the public are crucial factors in determining bail under Section 132 of the Central Goods and Services Tax Act, 2017.

JUDGMENT

Avneesh Jhingan, J. - The matter is taken up for hearing through video conference due to COVID-19 situation.

2. The petitioner is before this Court under Section 439 of Cr.P.C. for grant of bail, having been arrested under Section 132 of the Central Goods and Services Tax Act, 2017 [for brevity 'the Act'].

3. In the petition, only State of Punjab was arrayed as the respondent, however on 18th January, 2021, Mr. Sourabh Goel, Advocate appeared and submitted that Union of India is a necessary party. He sought time to file a reply, same was filed and taken on record on 22nd January, 2021.

4. The facts emanating are that Business Intelligence and Fraud Analytics ['BIFA'] was used for taking data from GSTIN. The Goods and Services Tax Department had information that three firms by the name of M/s La Mode Fashions, M/s Decent Fashions and M/s Murari Enterprises [hereinafter referred to as 'firms'] were engaged in availing and passing bogus Input Tax Credits ['ITC']. The firms had issued bills worth Rs. 158 crores involving Rs. 13.39 crores of tax. Firms had availed fake ITC of Rs. 21.60 crores and claimed refund of Rs. 5.02 crores.

5. The mechanism adopted by these firms was of procuring bills from Delhi based firms who had no purchases and further billing was done to export units for utilizing the ITC. These Firms had common partners i.e. Rakesh Kumar, Ms. Shreya Aggarwal and Mr. Ajay Gupta, all residents of Noida. A Chartered Accountant Ankur Garg and Vikas Gupta, GST Practitioner (not having requisite qualification) were arrested. They were also instrumental in getting the firms registered under the GST. As per their statements, Dharminder Arora @ Raja Bhaiya use to give them directions and they used to meet him at Hotel Park Plaza, Ludhiana. From the evidence collected from the Hotel, it was revealed that petitioner (Rakesh Arora) was actually Dharminder Arora @ Raja Bhaiya. During investigation, Vikas Gupta, Chartered Accountant, Gurmeet Singh @ Neela and Sukhwinder Sindhi @ Happy, partners of M/s Mahavir Property Advisors, Ludhiana confirmed from the documents collected by the department, that Rakesh Arora was Dharminder Arora @ Raja Bhaiya. On 5th December, 2020, raid was conducted at the residence and business premises of petitioner at Noida. His mobile phone and various documents were seized. The petitioner initially denied that he knew Ankur Garg and Vikas Gupta. Further, there was denial of any relationship with firms. However, in his mobile, an e-mail I.D. i.e. bhagwati_rk@yahoo.co.in was found logged in. From this I.D. lease deed of M/s La Mode Fashions was sent to an e-mail I.D. i.e. t.tarun2003@gmail.com, which was the alternative e-mail I.D. provided in the GSTIN portal of the above said firms. As the investigation proceeded, one Tarun came into picture who was running a Cyber Cafe and had confessed of creating fake identities for partners of the firms such as Aadhaar Card, PAN, Bank accounts etc. He provided two of his employees for being partner in firms. Identity of one employee was changed from Rajesh to Ajay Gupta. In his statement, he stated that petitioner was making monthly payments to him and his employees for their assistance being lend to the petitioner. The case set up is that the petitioner was actively involved in creating three bogus firms and for availing fraudulent ITC. The statement of various persons including Ms. Shreya Aggarwal (partner) and land lady of premises taken on rent for firms, were recorded. All of these pointed towards the fact that petitioner was Dharminder Arora @ Raja Bhaiya who either himself or through someone had contacted them in furtherance of creation or registration of the firms.

6. Mr. Ashok Aggarwal, learned senior counsel appearing for the petitioner contended that petitioner is in custody since 5 th December, 2020 and till date no complaint is filed. The matter is of Magistrate trial and is punishable maximum for five years. The plea is that there is nothing to sugges