GST Evasion: Orissa HC grants Bail to person alleged of Wrongfully availing and passing ITC in Name of Bogus Firms [Read Order]

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The Orissa High Court granted bail to a person alleged of Wrongfully availing and passing Input Tax Credit (ITC) in the name of Bogus Firms.

The Petitioner, Smruti Ranjan Sahoo who is in custody for the commission of offenses punishable under section 132 (1)(b)(c) and (1) of Odisha Goods and Services Tax Act, 2017, in filing this application under section 439 of the Cr.P.C. for his release on bail.

It has been alleged that the petitioner is the proprietor of M/s. S.R. Enterprises in collusion with others had been managing in showing the receipt of purchase invoices in the name of fake firms without physical receipt of goods and issuing sale invoices without onward physical movement of the goods and thereby has wrongfully availed and passed on bogus Input Tax Credit (ITC) on the strength of those fake invoices in defrauding the State exchequer. It is also said that there was supply of the goods purchased out of accounts from clandestine sources without obtaining invoices and without payment of tax besides creation and operation of dummy firms in the name and style of M/s Kuladia Traders and others in collusion with one Sri Sandip Mohanty and others to the tune of Rs.10.75 and Rs.6.25 crores and thus it is said that there has been the availment and passing of bogus ITC in the name of the said firms as alleged.

The Petitioner submitted that the Petitioner has made all genuine sale and purchase of goods using genuine GSTN and has paid the GST. It was thus submitted that the Petitioner is no way involved in commission of offences as alleged and he has been arrested in the case on frivolous grounds without determining the tax liability and by erroneous calculation of the ITC as alleged when it is said that accused Sandip Ku. Mohanty is the main accused and this Petitioner is said to have been in collusion with him. 

The single bench of Justice D. Dash noted that about five months have passed since the detention of the Petitioner in custody and thus those stages of the investigation here appear to be over when it can be said that the Petitioner being enlarged on bail may stand on the way of proper investigation in collecting all the materials triggering derailment of investigation process with the possibility of the Petitioner influencing the witnesses and absconding on which scores there too stand no material particulars.

The court directed that the Petitioner be released on bail on furnishing bail bond of Rs.35,00,000/- with two sureties for the like amount to the satisfaction of the court.

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