Mere Apprehension of Tampering Prosecution Evidence cannot be Grounds to Refuse Bail: Andhra Pradesh HC grants Anticipatory bail to wrongful claim of GST ITC [Read Order]

The Andhra Pradesh High Court held that mere apprehension of tampering prosecution evidence cannot be grounds to refuse bail and granted the anticipatory bail to wrongful claim of Goods and Service Tax ( GST ) ITC ( Input Tax Credit ).

Prathipati Teene Venkayamma , Kurra Jogeswera Rao, and Other, Prathipati Pulla Rao, and Others, Bsr Infratech India Limited and Others , the petitioners filed the anticipatory bail.    

The A.P.S.D.R.I. office conducted a search operation under the provisions of Section 67 of the Andhra Pradesh Goods and Services Tax (A.P.G.S.T.) Act, 2017, at various premises of the taxpayer, on a reasonable belief that the company in question, Avexa Corporation Private Limited ( A.C.P.L. ), was improperly availing Input Tax Credit (I.T.C.) for G.S.T. payments. During the operation, it was discovered that the Directorate General of Goods and Services Tax Intelligence (D.G.G.I.) in Hyderabad had already investigated the matter. Additionally, a Show Cause-cum-Demand Notice had been issued by the D.G.G.I., proposing a penalty of approximately Rs.16 Crores under the provisions of the Central Goods and Services Tax (C.G.S.T.) Act, 2017, for the irregular availment of I.T.C.

M/s. Avexa Corporation Private Limited (A.C.P.L.) in Andhra Pradesh has wrongly or illegitimately claimed Input Tax Credit (I.T.C.) based on invoices despite not receiving the associated services from July 2017 to March 2022. Moreover, it is acknowledged that they transferred these irregularly claimed I.T.C. amounts to various entities without providing any services during the mentioned period. Based on the admission of A.2, it appears that they intentionally misrepresented facts in their GSTR3B returns by indicating receipt of services when, in fact, they had not received them.

Explanation 2 of Section 74 of the Central Goods and Services Tax (C.G.S.T.) Act 2017 defines "suppression" as the act of not disclosing facts or information that a taxable person is obligated to declare in returns, statements, reports, or any other documents as required under the Act or the rules established therein.

It also includes the failure to provide information when requested in writing by the proper officer. M/s. Avexa Corporation Private Limited (A.C.P.L.) has fraudulently and improperly claimed inadmissible Input Tax Credit (I.T.C.), intentionally misrepresented facts, and suppressed information. Consequently, they have violated the C.G.S.T. Act, 2017 provisions and the rules framed thereunder.

According to Section 6 of the A.P.G.S.T. Act, particularly Section 6(b), if a proper officer acting under the Central Goods and Services Tax Act, 2017 has already initiated proceedings concerning a specific subject matter, no additional proceedings on the same subject matter shall be undertaken by the proper officer under the A.P.G.S.T. Act.

Section 132(1)(b) of the G.S.T. Act states that issuing invoices or bills without actual supply of goods or services, thereby violating the Act or its rules, leading to incorrect availment or utilization of input tax credit or tax refund, is deemed an offence under the Act.

Section 134 of the G.S.T. Act stipulates that no court can initiate legal proceedings for any offence under this Act or its rules without prior approval from the Chief Commissioner.

Justice T Mallikarjuna Rao viewed that “ No arrest can be made routinely on a mere allegation of the commission of an offence made against a person. It would be prudent and wise for a police officer not to arrest without reasonable satisfaction being reached after some investigation into the genuineness of the allegation. “

The Court found that there is no indication of a likelihood that the Petitioners would abscond from the court's jurisdiction and the Petitioners have expressed a willingness to cooperate with the investigation agency.

The Court granted anticipatory bail can be granted to the Petitioners under certain conditions. The Petitioners/Accused are directed to surrender before the Station House Officer, Machavaram Police Station, Vijayawada City, within two (2) weeks from today and upon their surrender, they shall be released on bail upon furnishing a personal bond for Rs.1,00,000/- (Rupees One Lakh Only) each with two sureties for a like sum each to the satisfaction of the concerned Investigating Officer.

Further stated that Petitioners shall cooperate with the investigation and make themselves available for interrogation by a police officer as and when required. Furthermore, they are prohibited from making any direct or indirect inducement, threat, or promise to any person acquainted with the facts of the case to dissuade them from disclosing such facts to the Court or any police officer.

To Read the full text of the Order CLICK HERE

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