A Single Bench of the Allahabad High Court granted bail to the applicant, accused of availment of excess input tax credit ( ITC ).
The prosecution story as set up in the FIR filed by the Incharge Inspector, Special Task Force ( S.T.F. ) is that the applicant has availed the input tax credit of more than Rs. 4,28,37,362/- for the period of 2017-18 to 2022-23 without actual movement of goods on the basis of forged and fictitious documents of supplies were procured from various non-existing firms.
Further after implementation of e-way bill system on the portal from the year 2018-19 till the month of May, 2023, e-way bills worth Rs. 17,33,83,966 have been cancelled by the applicant’s firm without any valid reasons or reasonable explanation. It has been further averred that on verification of all those selling firms, either the firms were found non-existing or have not doing any business.
Anoop Trivedi, Senior Counsel for the applicant submitted that the applicant is innocent and has been falsely implicated in the present crime and further submitted that the applicant is a proprietor of a registered firm which has been duly registered under the GST Act and registration is still valid and same has not been cancelled so far. He further submitted that all purchases have been made from registered parties, after checking their credentials from the GST portal. All the aforesaid firms were found duly registered under the G.S.T. Act and there was no red-flag against the them as such in the normal course of business, the purchases were made on genuine tax invoices.
It was further contended that adjudication proceeding is still pending and no authority as contemplated under the GST Act has passed any quantification order for quantifying the excess claim of input tax credit or any order has been passed reversing the claim of input tax credit.
Manish Goel, Additional Advocate General vehemently opposed the prayer of bail and submitted that present case is a glaring example of economic offense and 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 fake transaction which has been shown by the applicant.
A Single Bench of Justice Piyush Agrawal observed that “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.”
“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” the Bench noted.
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