The Supreme Court has granted bail to an accused linked to a large-scale fraud involving 2600 fake firms, through which Input Tax Credit ( ITC ) exceeding Rs. 40,000 crore was allegedly claimed fraudulently.
The case involves an elaborate operation where a network of fake firms was created using the personal data of individuals collected under false pretences. This data was then uploaded to the Goods and Services Tax (GST) portal to register fake entities. According to allegations, an actual operational firm received funds, while others acted as conduits for fraudulent ITC claims.
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A First Information Report (FIR) was lodged, accusing the syndicate of identity theft, using Aadhaar and PAN details for unauthorized GST registration, and other criminal offenses under Sections 420, 467, 468, and 471 of the Indian Penal Code (IPC).
Justice Manju Rani Chauhan of the Allahabad High Court previously rejected bail for the accused, emphasizing the importance of ITC integrity within the GST regime. The High Court noted that ITC is critical to the GST structure, encompassing both intra- and inter-state transactions.
Given the complex, multi-state nature of the offense, and its impact across regions, the court upheld the FIR jurisdiction in Gautam Buddh Nagar despite the firms being registered in Punjab and Maharashtra. Given the accused’s significant role, the High Court concluded that granting bail was inappropriate.
Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here
In their appeal to the Supreme Court, the appellants argued that the alleged offenses are triable by a Magistrate, and the absence of prior criminal records should weigh in favor of bail. The Department countered, voicing concerns that the accused might tamper with prosecution witnesses if released due to the magnitude of the scam.
The Supreme Court directed that the appellants be presented before the Trial Court within a week for bail proceedings, with instructions for the Trial Court to determine bail conditions after consulting the Public Prosecutor.
The bench, consisting of Justice Abhay S. Oka and Justice Augustine George Masih, noted that the charges against the appellants are all triable by a Magistrate. Furthermore, a charge sheet has been filed, and no prior criminal history for the appellants was mentioned in the counter.
Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here
The Trial Court was permitted to impose stringent conditions to mitigate any potential influence on the case.
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