Allahabad HC Grants Bail To A Person Who Allegedly Availed Excess Input Tax Credit Under GST Act

The Court allowed the bail application considering the course of investigation adopted by the Department will take considerable time and if denied bail, the judicial custody of the applicant can be prolonged beyond the statutory period of punishment which is five years.

A bench of Justice Piyush Agrawal, observed, “Taking into consideration the provisions of law and the fact that the Commissioner is empowered to recover the due amount and propose for abating the proceedings and as the trial will take its own time to conclude, this Court finds this to be a fit case where discretion could be exercised in favour of the applicant.

25. Hon’ble the Supreme Court in the case of Sanjay Chandra Vs. C.B.I. (2012) 1 SCC 40 has held that seriousness of the offenses alone is not conclusive of the applicant’s entitlement to bail.”

Senior Advocate Anoop Trivedi and Advocate Ankit Shukla appeared on behalf of the Applicant and Additional Advocate General Manish Goel and Advocate Nitesh Kumar Srivastava appeared on behalf of the Respondent.

The Bail Application was filed by the Applicant in the FIR filed by the Incharge Inspector, Special Task Force (S.T.F.) under Sections 419, 420, 467, 468, 471 and 120-B of the Indian Penal Code.

The Counsel for the Respondent rebutted the Application and submitted that the present case is a glaring example of economic offence and that criminal proceedings can be initiated against the applicant. He further submitted that there was no actual movement of goods from one place to another. The present case of excess claim of input tax credit is based on the fake transaction which has been shown by the applicant. He further submitted that the applicant used to show purchases/supplies from bogus firm and instead of actual supplies only forged tax invoices have been exchanged.

The Court further held, “After hearing the rival submissions, this Court finds that there is no dispute that prima facie, applicant is involved in availing excess input tax credit as well as cancellation of e-way bill of the huge value by the proprietorship of his firm without any reasonable reason. The department has already issued notice under Section 70 and 74 of the GST Act against the firm of the applicant. Further the record reveals that till date no adjudication order has been passed by the competent authority quantifying the excess availing the input tax credit. The record further reveals that neither any order has been passed by the competent authority cancelling the registration of selling dealer in question nor the registration of the applicant’s firm has been cancelled.”

The Court relied on Section 69 read with Section 132 of the Act provides for punishment of wrong availment of input tax credit with imprisonment for a term which may extend to five years and a fine. It further said that every second or thereof all the offences committed by the registered person shall be punishable. Furthermore, Section 138 of the GST Act provides the compounding of all the offences committed by the registered person being caused after payment of tax and interest to the amount of such wrong availment of an input tax credit.

Accordingly, the Bail Application was allowed.

Cause Title: Qamar Ahmed Kazmi v. State of U.P. (Neutral Citation: 2024:AHC:37207)

Appearances:

Applicant: Senior Advocate Anoop Trivedi and Advocate Ankit Shukla

Respondent: Additional Advocate General Manish Goel and Advocate Nitesh Kumar Srivastava