Gujarat High Court Grants Bail to Metal Industries Proprietor After 79 Days in Rs. 6.67 Crore GST Evasion Case
By: Admin
May 25, 2024
Categories: GST Law|News
4 Min Read
The Gujarat High Court has granted bail to the proprietor of Metal Industries, a business involved in manufacturing and trading brass products and metal scrap in Jamnagar, in a case of GST evasion amounting to Rs. 6.67 crores. The bail was granted after 79 days in custody.
Justice MR Mengdey, who presided over the case, stated, “Given the facts and circumstances of the case and considering the nature of the allegations made against the applicant in the FIR, without discussing the evidence in detail, prima facie, this Court believes it is appropriate to exercise discretion and grant the applicant regular bail.”
This decision followed an application filed under Section 439 of the Code of Criminal Procedure, 1973, seeking regular bail. The applicant’s advocate argued that the goods purchased from M/s. Om Bana Enterprise in Coimbatore, Tamil Nadu, were intercepted by the State Tax Officer in Jamnagar on April 8, 2022. The purchases were made through valid tax invoices, with payments processed via banking channels. All relevant documents proving the legitimacy of the transactions, including proof of delivery, were in the applicant’s possession. No outstanding recovery was pending against the applicant.
The counsel contended that the prosecution failed to provide any incriminating evidence linking the applicant to the alleged offence. The allegations in the Arrest Memo were considered general and vague, relying solely on presumptions and assumptions without concrete evidence. The memo lacked specific details regarding the offences allegedly committed by the applicant.
Furthermore, the advocate argued that merely claiming ineligible tax credit does not constitute an offence under Section 132(1)(c) of the Gujarat Goods and Services Tax Act, 2017, especially without allegations of receiving invoices without corresponding goods delivery. It was emphasized that the complainant only questioned the applicant’s purchases and not its sales, highlighting the legal principle that sales cannot occur without preceding purchases.
Conversely, the Assistant Public Prosecutor (APP) representing the respondent-State opposed granting regular bail, asserting that the applicant was arrested under Section 69 of the GST Act for allegedly committing an offence punishable under Section 132(1)(c) of the GST Act. The APP argued that the applicant had unlawfully claimed input tax credit amounting to Rs. 6.67 crores based on purchases from various registered entities, which, according to the revenue, were non-existent.
Additionally, the APP contended that the extent of tax evasion exceeded the thresholds necessitating the accused’s arrest as outlined in Section 132 of the GST Act. Thus, the APP urged the dismissal of the bail application.
After thoroughly examining the allegations, the applicant’s detention since the date of arrest, and pertinent legal precedents, notably the Sanjay Chandra v. Central Bureau of Investigation case, the High Court found it appropriate, prima facie, to exercise its discretion and grant bail to the applicant.
Consequently, the Court approved the bail application, stipulating the applicant’s release upon furnishing a personal bond of Rs. 10,000 along with one surety. Several conditions were imposed to ensure the applicant’s cooperation with the investigation and adherence to legal proceedings.
The Court concluded, “At the trial, the trial Court shall not be influenced by the observations of preliminary nature regarding the evidence at this stage made by this Court while enlarging the applicant on bail.”
Gujarat HC At Ahmedabad – Dipen Champaklal Shah v. State Of Gujarat [R/Criminal Misc. Application (For Regular Bail – Before Chargesheet) No. 7408 Of 2024]