The Punjab and Haryana High Court refused to grant Anticipatory Bail to persons accused of Wrongful Availment of Input Tax Credit (ITC).
The petitioners Arpit Garg, Hema Garg and Vijay Garg prayed for anticipatory bail, in response to the notices issued by the respondents-Department, just in the shape of demand in form GST DRC-01A with an advice to pay the amount of tax, as the petitioners have liability of paying tax of more than Rs.36.00 crores, which they are evading on the basis of certain fake documents.
A team constituted by ETO, Haryana State GST Intelligence Unit raided shops of the petitioners and after carrying the inspection, summons under Section 70 of HGST/CGST Act, 2017 were issued to appear before the concerned authority. Later on, accounts of petitioners Hema Garg and Vijay Garg, in Indian Bank and Punjab National Bank and petitioner Arpit Garg in Axis Bank, were frozen by the State Tax Unit, as a provisional attachment order was passed. It is also submitted that the petitioners could not appear before the concerned authority, however, the reply was sent to extend the time.
Mr. Amitabh Tewari, counsel for the petitioners, that during the analysis of inward supplies (purchases) of the firms, the petitioners have availed input tax credit on the strength of tax invoices issued from some suspicious firms of Delhi and the Department, on verification of E-way bills and invoices, has initiated the proceedings against the petitioners. It is also submitted that one of the ground for issuing the summons, is that on verification by the Department, of suspicious tax payers of Delhi, from whom the petitioners have shown the inward supplies (purchases) to their firms, were found to be non- existent and verification of some of the firms was pending. It is next submitted that the respondents have formed an opinion, after recording statements of the vehicle owners, that they have never transported the inward supplies from the firms of Delhi to firms of the petitioners, therefore, bogus documents are prepared by the petitioners.
The Single Judge Bench of Justice Arvind Singh Sangwan while dismissing the petition held that the petitioners have failed to appear before the authorities, which has issued the notices, as they are involved in availing and utilizing wrongful input tax credit on the strength of invoices and E-way bills, which are issued from the non-existent and suspicious firms and further passed on input tax credit to various taxpayers throughout the country, thereby causing huge loss to the State Exchequer.
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