Wrongful Utilization Of Input Tax Credit Amounting To ₹315 Cr May Affect County's Economy: Allahabad High Court Denies Bail

The Allahabad High Court has rejected bail to four persons accused of wrongfully availing input tax credit of about Rs. 315 crores on grounds that an economic offence of such magnitude may affect the economy of the country.

Justice Nalin Kr Srivastava noted that the applicants' office-cum-residence was subjected to a search where several forged rubber stamps, chequebooks, Aadhaar Card, PAN Card, Mobile Phones, SIM cards along with various electronic gadgets were recovered. On inquiry, it was found that activities on the searched premises were being controlled by persons situated at other premises.

Upon search at the second premises, various incriminating documents including chequebooks of various bank accounts, and KYC (PAN and Aadhaar Cards) of various persons were recovered. It was found that out of 102 firms being operated by the 4 accused, only 9 were in existence, the rest were bogus.

Eventually, the bail applicants confessed to the creation of fake firms and fake GST invoices. They had obtained a fake input tax credit of Rs. 274.89 Cr by issuing fake invoices without an actual supply of goods.

Counsel for applicants pleaded that the applicants had been falsely implicated by the Department. It was argued that the applicants worked for someone who had opened various bank accounts using their Aadhar and PAN card details. It was also submitted that the applicants did not own the firms, nor had anything to do with them.

The Court observed that blaming the other person for the bogus firms, the accused wanted to escape liabilities as there was sufficient evidence to show that the activities were being carried on by them.

Upholding the rejection of the bail order passed by the Sessions Judge, the Court observed that if the accused were granted bail, there was high likelihood that they would flee from justice and/ or tamper with the evidence. The Court observed that there was no possibility of false implication of the applicants.

The Court relied on Tarun Kumar vs. Assistant Director Directorate of Enforcement where the Supreme Court held that serious view must be taken in economic offences which have deep-rooted controversies and can seriously affect the economy of the country.

Considering the seriousness of the offences and the amount involved, the Court rejected the bail applications.

Case Title: Mukesh Kumar Jha vs. Union of India 2024 LiveLaw (AB) 261 [CRIMINAL MISC. BAIL APPLICATION No. – 3080 of 2024]

Case Citation: 2024 LiveLaw (AB) 261

Counsel for Applicant: D.M.Tripathi, Rahul Tiwari

Counsel for Opposite Party: Parv Agarwal

Click Here To Read/Download Order