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2020 Supreme(Telangana) 782
IN THE HIGH COURT OF FOR THE STATE OF TELANGANA
KUNURU LAKSHMAN, J.
Neeraj Karande – Appellant
Versus
The Directorate General of GST Intelligence – Respondent
Criminal Petition No. 5967 of 2020
Decided On : 30-11-2020
Advocate Appeared:
For the Appellant : T. Bala Mohan Reddy.
For the Respondent: Anil Prasad Tiwari.
The seriousness of the allegations, pending investigation, and recent arrest of the petitioner influenced the court's decision to dismiss the bail application.
Headnote:
CGST Act - Bail Application - Section 132(1)(i) read with Section 132(1)(b)(c) - Summary of Acts and Sections: The court discussed the provisions of Section 132(1)(i) read with Section 132(1)(b)(c) of the Central Goods and Services Tax Act, 2017 (CGST Act) and highlighted the wrongful availment or utilization of input tax credit, issuance of GST invoices without actual supply of goods, and availing input tax credit on the basis of fake invoices. The court's decision was influenced by the serious allegations against the petitioner and the pending investigation into the modus operandi adopted by the petitioner.
Fact of the Case:
The petitioner, Neeraj Karande, is the sole accused in a case under Section 132(1)(i) read with Section 132(1)(b)(c) of the CGST Act for wrongfully availing or utilizing input tax credit and issuing GST invoices without actual supply of goods.
Finding of the Court:
The court found that the allegations against the petitioner were serious, the investigation was pending, and the petitioner was arrested recently, leading to the dismissal of the bail application.
Issues: The issues revolved around the petitioner's alleged wrongful availment of input tax credit, issuance of GST invoices without actual supply of goods, and the non-existence of the registered office and factory of the Company.
Ratio Decidendi: The court's decision was based on the seriousness of the allegations, the pending investigation, and the recent arrest of the petitioner.
Final Decision: The criminal petition for bail was dismissed by the court.
ORDER :
1. This is an application for regular bail. The petitioner viz. Neeraj Karande is sole accused in F. No. INV/DGGI/HZU/GST/Gr-H/42/2020-21 dated 02.11.2020. The offence alleged against the petitioner is under Section 132(1)(i) read with Section 132(1)(b)(c) of the Central Goods and Services Tax Act, 2017 (for short ‘CGST Act’).
2. Heard Sri. T. Bala Mohan Reddy, learned counsel for the petitioner, and Sri P. Dharmesh, learned standing counsel for the respondent. Perused the record.
3. The allegation against the petitioner is that he is managing director of M/s. GE Godavari Engineering Industries Limited (hereinafter referred to as ‘Company’). The petitioner has obtained registration under the provisions of the CGST Act vide GSTIN No. 36AACCG9862H3Z7. Being the managing director of the company, the petitioner has collected and issued invoice or bill without supply of goods in violation of the provisions of the CGST Act or the rules made thereunder leading to wrongful availment or utilization of input tax credit rendered by him. The modus operandi adopted by the petitioner is that he indulged in issuing GST invoices, e-way bills and passing on input tax credit to various customers without actual supply of goods. It is further alleged in the complaint that the petitioner, as per the business need of the Company, procured invoices without actual receipt of goods and supplied the said invoices and subsequently increased the Company's annual turnover to enhance his banking loan facilities. He has also issued GST invoices without supply of goods to various other parties and helped them to show them as their expenses in their accounts. It is further alleged against the petitioner that he has supplied invoices without supply of goods to some of his customers to avoid payment of the GST in cash. He has procured GST invoices without supply/receipt of materials from the firms mentioned in the statements given by him on 29.10.2020 and 02.11.2020 through M/s. Advance PowerInfra Tech Limited, M/s. Radhika Electrocast Private Limited, Bahrat Gupta, Pratik Chaturvedi, Janki Lal Sureka and Siddarth Sharma at his request to his Company located in Hyderabad. Thus, issuance of GST invoices, e-way bills without actual supply of material/services is in contravention of the provisions of Section 31 of the CGST Act. Further, availing input tax credit of GST on the basis of fake GST invoices issued without supply of material is in violation of Section 16 of the CGST Act.
4. Thus, the petitioner has wrongfully availed or utilized input tax credit and also availed input tax credit on the basis of the invoices/bills issued without supply of actual goods or services and the same an offence under Clause (b) and (c) of Sub-Section (1) of Section 132 of the CGST Act which is punishable under Section 132(1)(i) of the CGST Act.
5. It is also alleged that the GST amount involved for the operations carried out by the petitioner from 01.07.2017 to 31.08.2020 is Rs. 10.89 crores (Rs. 5.46 Crores inward irregular ITC credit plus 5.43 crores outward irregular ITC credit), which is much higher than Rs. 500.00 lakhs, is an offence punishable under Section 132(1)(i) of the CGST Act. The said fact of petitioner working is explained by him in his statements dated 29.10.2020 recorded under Section 70 of the CGST Act.
6. Learned counsel for the petitioner would submit that there is no loss to the Government exchequer. The GST is a beneficial legislation. Section 138 of the CGST Act deals with compounding of offences. The punishment is five (5) years. It is a cognizable offence and non-bailable. Therefore, the respondent authorities have to necessarily follow the procedure under Section 41-A of the Code of Criminal Procedure, 1973 (for short Cr.P.C.). In the present case, the respondent authorities have not followed the same.
7. The learned counsel for the petitioner would further submit that the respondent authorities have falsely implicated the petitioner in the present cr
