The High Court of Madhya Pradesh refused to grant anticipatory bail to the accused who had refunded the Goods and Service Tax (GST) by forming 25 Bogus Firms.
Mohit Jain, the applicant apprehended arrest in a case registered for the offences punishable under 132 of the Central Goods and Service Tax Act, 2017 in connection with Crime No. Nil at Office of the Commissioner & Central Excise.
The applicant is the proprietor of M/s Manchan Overseas and which is his partnership concerned, and he is also the Director of Shankheshwar Impex Pvt. Ltd. Both firms have GSTIN and regularly submit GST returns and Income Tax returns.
The office of the Additional Police Commissioner, Indore received a complaint through email from one Shri Krushna Das, Export Manager of Seven Seas Global Freight System Private Limited alleging that one Akash Singh Proprietor of M/s Akash Chemicals had exported goods through them to Dubai but no one came to collect goods at Dubai. The company had to pay shipping charges amounting to Rs. 52,00,000/-.
It was further alleged that M/s Akash Chemicals illegally obtained a GST refund on the export amount of Rs. 1,47,30,914/-. Another complaint of similar nature was received from the Manager of Translink Logistics Private Limited Company, Vadora Gujrat through an email dated 10.04.2023 in respect of a consignment exported by Rakesh Prajapati proprietor of M/s Ruday Chemicals in which the shipping charges are Rs. 8,00,000/-.
An investigation has revealed that a refund of GST amounting to Rs.1,47,30,914/- was credited to the account of coaccused Meherban Singh proprietor of ABC Exports and the mobile number of the present applicant was found linked in the aforesaid bank account.
The Applicant was added accused, arrested and remanded for 13 days. The family members of the applicant settled the dispute with the complainant. That bail application was allowed, by granting bail to the applicant basically on the ground of compromise and was released on bail on 30.05.2023.
The non-applicant moved an application before the Judaical Magistrate First Class seeking the formal arrest of the applicant for interrogation in the matter of CGST refund in these transactions. Since the applicant had already been released, the Non-applicant could not formally arrest him. Thereafter, the non-applicant issued summons under Section 70 of the Central Goods and Service Tax Act, 2017 calling upon the applicant to appear before the GST Investigation Wing.
Shri R S Chhabra, Senior Counsel on behalf of the applicant submitted that for the offence punishable under section 132 of the Central Goods and Service Tax Act, 2017, guidelines have been issued by the Revenue Department, GST Investigation Wing , the Non-applicant is trying to arrest the applicant without following these guidelines hence he is entitled to the protection.
The non-applicant stated that the Central Board of Indirect Tax and Customs has developed Business Intelligence and Fraud Analytics (BIFA) tools to grab fake firms involved in the evasion of GST. After analyzing the data the BIFA found that certain firms procured the goods on which they passed on /availed the Government ITC to M/s Aneesha Thenix, M/s Rudhra Thenix, M/s Leary Thenix and M/s Grey Medico Pharma Private Limited, Shankheshwar Impex Pvt. Ltd., M/s Vinay Chemical etc.
Shri P. Prasad, counsel appearing on behalf of the non-applicant submitted that without taking this applicant on remand, the effective interrogation cannot be done in the natter.
“The statement of Meharban Singh, Shubham Singhal, Chetan Narwani, Kapil Manglani, Akash Singh Kushwaha and Rakesh Prajapti, reveals that the applicant is the main accused in these GST refunds by forming fake firms.”, Justice Vivek Rusia held.
GST-RI and GST-3B sales and purchase of as many as 25 bogus firms are liable to be investigated, hence, looking to the gravity of the offence and huge amount of refund of GST through bogus firms, no case is made out for grant of anticipatory bail.
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