Punjab and Haryana High Court rejects Bail in bogus Tax Refund Case [Read Order]

Punjab and Haryana High Court - Bail - bogus Tax Refund Case - Taxscan

The Punjab and Haryana High court rejected the bail application of a person who has allegedly been involved in bogus tax refund and wrongful availment of Input Tax Credit (ITC).

The Goods and Services Tax Department had information that three firms by the name of M/s La Mode Fashions, M/s Decent Fashions and M/s Murari Enterprises were engaged in availing and passing bogus ITC. The firms had issued bills worth Rs. 158 crores involving Rs.13.39 crores of tax. Firms had availed fake ITC of Rs.21.60 crores and claimed refund of Rs. 5.02 crores.

Mr. Ashok Aggarwal, senior counsel appearing for the petitioner contended that petitioner is in custody since 5th December, 2020 and till date no complaint is filed. The matter is of Magistrate trial and is punishable maximum for five years.

Mr. Sourabh Goel, senior panel counsel appearing for Union of India contended that the scam of more than Rs.150 crores came to light as result of information collected by BIFA software. He refuted the contention that if bail is granted, the petitioner is not likely to flee.

Mr Goel submitted that the petitioner had changed his identity. It was only during investigation when certain documents were found that he could be identified and arrested. It is argued that the petitioner if granted bail would tamper with the evidence and shall be in a position to influence the witness.

The contention is fortified by relying upon the statement of Tarun to the effect that petitioner took him forcibly in his Car to a farm house in Ludhiana and was detained there till Rs. 68 lakhs were transferred from the account of Saroj Bala to M/s Decent Fashions.

The single judge bench of Justice Avneesh Jhingan held that  the veil created for establishing firms was required to be pierced. The fact that the petitioner remained behind a smokescreen by withholding his identity and true identities of partners of the firms could not be ignored. To state such a person, if granted bail, would not flee or abscond was a risky proposition to be accepted.

The court said that the GST was introduced with the object of ‘one nation, one tax’. There is a chain of sellers and purchasers who are inter-connected, as the purchaser gets the credit of the tax paid or suffered by the seller. The chain can be within the state or Pan-India. One non-genuine or bogus link in the chain has an impact on all.

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