GST Evasion: Patiala House Court refuses to grant bail to accused for passing ITC without any actual payment of GST [Read Order]

The Patiala House Court refused to grant bail to the accused for passing ITC without any actual payment of GST.

The Senior Counsel for the accused/applicant has prayed for a grant of bail on the ground of parity with the co-accused.

It is alleged that the companies owned and controlled by accused Rakesh Kumar Goyal have availed most of the amount of ITC from companies owned or controlled by said Rakesh Kumar Goyal himself.

Thus, there was a complex web of circular trading among these companies which was used to pass on ITC, without any actual payment of GST at any stage.

It is further alleged that the investigation in this case revealed that companies owned or controlled by the applicant have issued invoices to companies of Vikas Chowdhary without any corresponding supply of the goods.

There are allegations of fraudulent passing on of ITC by companies owned and controlled by Rakesh Kumar Goyal. These companies have passed on inadmissible ITC of approximately Rs.61.02 Crores to M/s Aastha Apparels Pvt. Ltd., M/s JBB Apparels Pvt. Ltd., M/s JBN Apparels Pvt. Ltd. and M/s Nautilus Metal Craft Pvt. Ltd. controlled and owned by Vikas Chowdhary and Vikas Chandan.

Firms of co-accused have taken refund of around Rs.61 crores in this manner in which accused has been the beneficiary by way of circular trading whereas firms of accused have directly taken the IGST refund of around more than 9 crores.

The applicant’s companies have paid the amount of duty to the supplier who actually deposited the same with the government as per the provisions under the GST laws. After receipt of the goods with corresponding tax invoice, the applicant’s companies availed the credit of the GST paid on such supplies to its supplier, as per Section 16 of the CGST Act.

In the case of imported goods, the applicant’s companies discharged tax obligation at the time of import as part of Customs duty levied under the Customs Act, 1962 read with Customs Tariff Act, 1975.

This bail application is strongly opposed by respondents on the ground that the offense has been committed in a very planned manner in the connivance of co-accused in which huge losses are inflicted upon the Govt. Exchequer.

It is further contended that the accused has failed to join the investigation, he has not provided the necessary documents and information, he has not even got his statement recorded and thereby misled the investigating agencies.

The Roster Judge, Sanjay Khanagwal said, “in today’s time when the country is fighting with coronavirus pandemic and struggling all over on the economic front such evasion and false claims have further pushed the country towards poverty, unemployment and starving. Such offences are committed with a cool mind and scrupulous planning. Therefore, in this case, the offence alleged against the accused is grave in nature considering the manner in which it committed and the amount involved in the commission of the offence.”

The court held that the accused has not cooperated in the investigation therefore, apprehension of tampering of witness as alleged against him is not unfounded. Ground of parity with the co-accused is not available to the applicant considering his role and involvement.