Wrongful Availment Of ITC: Chhattisgarh High Court Refuses Bail

The appellants created several fictitious and physically non-existent trading company firms in Chhattisgarh, Jharkhand, Madhya Pradesh, West Bengal and Maharashtra, got them registered in GSTN portal online using identity credential of several persons using forged PAN and issued fake bills to transmit fake ITC to several other traders.

It was alleged that the appellants had fraudulently shown in their GST returns to have procured several kinds of goods from within and across the State. The Directorate General of Goods and Service Tax Intelligence, Raipur Zonal Unit, Raipur cracked this racket on the basis of intelligence against a taxpayer, namely, M/s Manoj Enterprises, who during the month of July, 2020 and August, 2020, claimed Rs.44.72 crores from ITC by way of trading activities even when their statutory returns did not indicate purchase of any such goods for trade.

On the basis of information gathered, the appellants were arrested for the offence under Section 132(1)(b) & (c) of the Central Goods and Service Tax Act, 2017 from Raipur and produced before the Chief Judicial Magistrate, Raipur.

The appellants filed an application under Section 167(2) of CrPC for granting them default bail on the ground that despite the lapse of 60 days from the date of their judicial custody, no charge sheet was filed by the respondent/GST authority against them. The application was rejected by the Chief Judicial Magistrate, Raipur which was subsequently affirmed by the revisional Court and the writ petition filed against the order was also dismissed by the Single Judge.

The appellant contended that as per the Act of 2017, offence under Section 132 is a cognizable offence. There is no provision to file any complaint instead of a charge sheet. No FIR was lodged against the appellants, no investigation was conducted by the concerned police station, no charge sheet was filed against them under Section 173 of CrPC, as such, the learned Single Judge was in error in not enlarging the appellants on default bail.

The court observed that the offence allegedly committed by the appellants is an economic offence. If on further investigation any new relevant fact or document comes within the knowledge of the investigating officer, he can file the supplementary report. So far as the appellants are concerned, the material collected against them during investigation as filed with the complaint are sufficient for establishing a prima facie case against them under Section 132(1)(b) & (c) of the CGST Act of 2017 and therefore, on filing of such complaint, the Magistrate has taken cognizance of the offence against them.

The court held that though the complaint filed by respondent cannot be said to have been filed under Section 173 of CrPC but for the purpose of default bail, it can be said that respondent, who is an authorised officer under the CGST Act of 2017 to carry out investigation/enqiury, filed the complaint within the prescribed time limit which satisfies the requirement under Section 167 of CrPC and as such, no right accrues to the appellants to seek default bail under Section 167(2) of CrPC.

Case Title: Paritosh Kumar Singh Versus State Of Chhattisgarh

Citation: 2022 LiveLaw (Chh) 36

Case No.: Writ Appeal No. 348 of 2021

Dated: 22.04.2022

Counsel For Petitioner: Advocate B.P. Sharma

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