GST: Patiala House Court rejects bail plea of persons alleged of wrongfully claiming ITC to the tune of Rs.25 Cr [Read Order]

Patiala House Court - bail plea - wrongfully claiming ITC - Taxscan

The Patiala House Court rejected the bail plea of persons accused of wrongfully claiming ITC to the tune of Rs.25 Crores.

The applicants, Naresh Mittal and Chhedi Lal Mittal has been dealing in sales and supply of rice and pulses since 2016 and during the course of the aforesaid business, he started his proprietorship concerned named M/s Prag Enterprises formed for intra state sales and supply of unbranded rice and pulses to various retailers and wholesalers. The firm is registered under GST Tax 2017 and as per notification dated June 28, 2017 issued by Central Government, no tax under GST is leviable on the supply of rice and pulses.

The applicant has been regularly filing Nil GST returns which means that all outward and inward supply are Nil rated/exempted category. It is submitted that the applicant was never eligible for any ITC under IGST, CGST, and SGST.

It is submitted that the authority visited his office of M/s Prag Enterprise and on the pretext of conducting a search and thereafter he was arrested. It is submitted that the applicant was falsely implicated by the department and has been languishing in jail since November 19, 2020.

The department has submitted that investigation was carried out with respect to various fake firms who had passed on fake ITC running into crores of rupees to various firms and while visits were conducted at their registered addresses these firms were not found in existence and fabricated documents such as electricity bills, fake rent agreements were uploaded on GST portal for obtaining registration and even bank accounts which were declared in the GST registration was found nonexisting or in other persons name.

Thereafter, on detailed investigations these firms were found fake and it is revealed that they were engaged only in issuance of paper invoices without supply of any goods and they were passing fake ITC.

The Court consisting of CMM, Pankaj Sharma observed that applicants together created fake firms and availed fake ITC to the tune of Rs. 25 crore. 

The court noted that these firms were engaged only for issuance of paper invoices without supply of any goods and both the accused used to create fake bills of metals without actual supply of goods for passing of ineligible ITCs to various firms and was ultimate beneficiary of the amount passed through non existing to their firms.

The court while dismissing the application held that the applicant’s release would certainly impact a fair investigation which is at a crucial stage at this juncture.

Subscribe Taxscan Premium to view the Judgment
taxscan-loader