The Allahabad High Court has rejected the anticipatory bail application of the accused involved in the Goods and Services Tax ( GST ) – Input Tax Credit ( ITC ) scam of Rs. Rs. 2645.2 Crore in PAN – India level. Considering the magnitude of offence, the court refused to grant bail.
The bench of Justice Samit Gopal observed that “Looking to the nature of the case, the gravity of offence, the fact that the present matter relates to an economic offence, the law laid down by the Apex Court in such matters, the magnitude of offence, the modus as adopted to swindle money from the Government exchequer and the fact that custodial interrogation may be required for further investigation in the matter which is a well organised crime to go to its root and thus this Court does not find it a fit case for grant of anticipatory bail.”
The case, which commenced with a First Information Report ( FIR ) filed on May 4, 2023, by the Editor of The Lallantop and India Today Hindi Magazine, outlines a complex web of deceit involving fraudulent GST registrations. The editor’s complaint detailed the unauthorised use of his personal information to obtain two GST registrations in Punjab and Maharashtra, respectively, without his consent.
The registrations, bearing numbers 03AUSPD7067N1Z3 and 27AUSPD7067N1ZT, were purportedly applied for using the eidto’s PAN number and business entity name. Despite his denial and lack of involvement, the registrations were authenticated for Aadhaar verification, indicating a sophisticated level of fraud.
Furthermore, investigations revealed additional attempts at registration in the Union Territory of Delhi, although these were thwarted by GST authorities. The acknowledgment number AA070323054161Q, associated with the registration application, further corroborates Dwivedi’s claims of unauthorised use of his identity.
The applicant submitted that the arrest of four individuals had recovered items, including cash amounting to Rs. 12,66,000, 40 laptops, 30 mobile phones, 50 Aadhar and PAN cards, 60 SIM cards, and three high-value cars. Despite this, his name surfaced in the second confessional statement, among 17 others, revealing his alleged involvement in the matter is not clear.
The applicant raised objections stating that his name was absent from the FIR, highlighting the vagueness surrounding his identity due to the lack of disclosed parentage or address. However, on July 20, 2023, the police disclosed the applicant’s father’s name, address, and accused status in CD No. 41. The applicant vehemently denied benefiting from the fraudulent registrations in any manner.
In contrast, the Additional Advocate General for the State argued that non-bailable warrants were issued against the applicant on August 10, 2023, following a raid on their residence where they were not found. The applicant is alleged to be absconding and uncooperative in the investigation.
The state submitted that “while placing paragraph 12 & 15 of the counter affidavit it is submitted that the investigation till date has shown that there is a gang in which several persons are involved in this nexus and have together claimed Input Tax Credit of Rs. 26,452,895,600/- (Rupees Two Thousand Six Hundred Forty Five Crore Twenty Eight Lakh Ninety Five Thousand and Six Hundred) which has caused a loss to the revenue to the said extent.”
Further noted that “the DGGI has written a letter to the S.I.T. / Investigating Officer mentioning that on date fraudulent Input Tax Credit in excess of Rs. 4000 crores has been detected, copy of the case diary has been placed before the Court which is annexed as Annexure-CA-6 to the counter affidavit.”
A Special Investigation Team ( S.I.T. ) has been formed to investigate this case due to its connection to widespread cheating and forgery across the nation. The registration of counterfeit GST firms has been orchestrated to fraudulently claim Input Tax Credit, resulting in significant financial losses to the State Exchequer, stated the respondent side.
As per the revenue side, the syndicate collaborated with various individuals overseeing distinct aspects of its operations. This case constitutes a PAN India scam, necessitating custodial interrogation for its progression. The issue at hand constitutes a significant economic offence.
Considering submissions, the severity of the offence, and the potential need for custodial interrogation to delve deeper into this criminal activity, the Court concluded that this case is not suitable for granting anticipatory bail. Thus, the anticipatory bail application was rejected.
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