GST ITC Fraud: Punjab and Haryana HC grants Bail to accused considering Non-Framing of necessary charges [Read Order]

A Single Bench consisting of Justice Jasjit Singh Bedi of the Punjab and Haryana High Court granted bail to the accused considering their medical condition and non-framing of necessary charges in the case of fraudulent availing of Input Tax Credit (ITC).

An investigation into the business activities of firms under the subject has revealed that a group of persons as mentioned below has colluded and connived with each other to make a network of fake firms and defraud the state exchequer. All these below-mentioned individuals have made a total of 40 firms and have evaded tax amounting to Rs.122.28 Crores.

No tax has been ever paid in the inward supply chain of these firms and a mechanism has been devised by all these individuals to cover the movement of clandestine goods with fake invoices so that fraudulent ITC could be availed for adjustment against the output tax liability. Further bank accounts uploaded at the GSTN Portal of these firms are different than the bank accounts through which money transaction has happened and even parallel and fake bank accounts have also been opened

The verification of inward supplies of these firms from the E-Way portal revealed that the inward supply chain of these firms is NIL at subsequent stages and these firms themselves were also found to be non-existent at their registered place of business. All these individuals are therefore individually and severally responsible for defrauding the state exchequer. Accordingly, a case for arrest of the following 7 persons has been granted by the Commissioner of State Tax, Punjab.

The Court observed that “Coming back to the facts of the present case, it may be pertinent to mention here that the petitioners were arrested on 13.03.2021 and the complaint came to be filed on 12.05.2021. Therefore, as of date, they have undergone a total custody period of approximately 01 years and 06 months. The maximum sentence that could be awarded would be 05 years. As yet, even the charges have not been framed and as many as 66 prosecution witnesses are yet to be examined. Therefore, at any rate, the trial cannot be concluded any time soon. Further, no serious apprehension has been expressed by the prosecution of the petitioners being flight risks, or that they would tamper with the evidence or influence witnesses in case bail was granted to them.”

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates