While denying a bail application from application allegedly obtained fraudulent input tax credit worth approximately Rs.5 Crore, the Chhattisgarh High Court has observed that the economic offences cause a serious threat to the financial health of the country and the same shall be treated as grave offences.
Justice Rajani Dubey was considering a petition filed by the applicant, Basudev Mittal who is in the custody for last 4 months.
A search conducted on the premises of the applicant it was revealed that the applicant’s firm purchased iron scrap from M/s Kalodia Traders and M/s S.R. Enterprises and eight others firms whose GST registration have already been cancelled and flatulently availed Input Tax Credit to the tune of more than Rs.5 Crore and thereby committed the offence. Based on this, offence has been registered and the applicant has been taken into custody on 30.03.2022.
The applicant approached the Court contending that he has not committed any offence as alleged by the prosecution. He further submittted that on 31.02.2022, the applicant has paid Rs.76,00,000/- under protest and subject to final assessment, as such, the amount being less than Rs.5,00,00,000/-, the alleged offence, in view of Section 132(4)(5) of the G.S.T Act, falls within the category of bailable offence.
The Court found that the applicant has illegally availed Input Tax Credit of more than Rs.5,00,00,000/- by purchasing the goods from several suspicious and fake suppliers whose registration had already been cancelled.
“During search, it also came to the forefront that more than 700 vehicles, against which invoices were submitted by the applicant wherein only vehicle numbers were mentioned, have not fount to be passed through the relevant toll gate. From the documents adduced, role of the applicant prima-facie appears to be serious in nature and as per the prosecution, further investigation is going on to find out more suspicious and fake suppliers with whom the applicant alleged to have made transactions in order to avail Input Tax Credit illegally. Further, looking to the nature and gravity of offence, the possibility of hampering with the evidence and interfering with the investigation by the applicant cannot be ruled out,” the Court observed.
Denying the bail, the Court added that “In the instant case, charge sheet has been filed against the applicant, however, further investigation is going on and as per respondent, there is much more probability of detecting more fake and suspicious firms. The economic offences having deep rooted conspiracies and involving huge loss of public funds need to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. Economic offence is always committed with calculated design profiting himself regardless of the consequence to the community.”
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