The Supreme Court on Friday refused to grant anticipatory bail to one of the directors of a Company, allegedly involved in wrongfully availing Input Tax Credit (ITC) on the basis of fake bills.
A bench led by Justice A.M. Khanwilkar and Justice C.T. Ravikumar refused to grant pre-arrest bail against the dismissal of Anticipatory Bail application by the Gujarat High Court, where a plea for anticipatory bail was rejected by the High Court, for an offence under Section 132 of the GST Act, on grounds that the offence falls under the purview of ‘economic offence’ involving tax liability and public money.
However, the Bench in its order granted protection to the petitioner for a week till he applies for bail before the High Court, so that he may appear before the concerned authority.
Senior Advocate Kapil Sibal appeared on behalf of petitioner Nileshbhai Natubhai Patel today. He submitted that there was no dispute as to who supplied the goods that were registered under the GST Act, owing to the fact that such goods can’t be registered without verification. There is also no dispute that the money was sent through RTGS and sent to the bank. The respondent’s case is that all 36 firms are fictitious and the money sent to them through RTGS was taken out by them in cash and paid to the petitioner through anghadiyas.
Instead of going to the bank and getting the requisite information, they recorded the statements of two people under Section 132(1)(b) of the Gujarat GST Act, which provides for power to arrest, but does not contain other procedural guidelines. The accused named by the respondents were charged of blank billing and fraud, however, the name of the petitioner in this instant case was not included in the complaint, said Sibal.
He added, in the complaint, it was claimed that the petitioner challenged the provisional order before the High Court, failed to appear before the concerned authority and failed to appear before the High Court and had tampered with evidence stored in the petitioner’s mobile phone.
Sr. Adv. Sibal submitted that the petitioner did appear before the concerned authority and 279 questions were asked of him and he was made to write a statement that he had cooperated with the investigation. The petitioner did not submit his phone as it had been damaged in an accident, and in any case, since he was being summoned as an accused, they couldn’t lawfully ask him for evidence contained in his phone. At the Court’s urging, it was submitted that the petitioner would appear before the concerned authority in the upcoming week as he has been so summoned, with the adequate protection from arrest granted by the Court.
ASG, SV Raju, appearing on behalf of the respondents, submitted that the 36 firms were dummy firms meant to commit fraud. It was submitted material goods were brought from the black market, without an invoice and subsequently claim that such goods came from the 36 dummy firms and fabricated invoices were shown and the money was consequently submitted in the bank. However, this whole scheme is a fraud amounting to Rs 762 crore. The trucks and drivers involved in transportation belonged to the petitioner it was submitted.
Additionally, it was argued by the ASG that the evidence in the phone had been tampered with and evidence as to the ownership of the trucks, belonging to the petitioner had been found, submitted the Counsel for the respondents.
Sibal rebutted that the firms in question are listed companies and that input tax credit can only be claimed when the goods are sold further and cannot be shown in the books when materials are brought from the black market. Additionally, the petitioner was not named in the complaint and there has been no investigation. Yet the petitioner is ready to appear before the concerned authority on protection being granted by this Court.
The Single-Judge Bench of Justice Vipul M. Pancholi of Gujarat High Court, while refusing the anticipatory bail, said that if the applicants are enlarged on anticipatory bail, then there are all chances that the applicants will tamper with the evidence and witnesses and at the time of trial, the applicants would not be available.
Before the High Court, present applicant Nileshbhai Natubhai Patel is one of co-accused, along with Divya Arvindbhai Monpara, Rohitbhai Bhikhabhai Chauhan, Directors of the Madhav Copper Limited, who are allegedly claimed to have purchased the material worth Rs 762 crores, which in fact has not purchased but fake bills have been obtained so as to wrongfully claim Input Tax Credit and the said purchases have been allegedly made from 36 different firms and companies. It is further alleged that the applicants thereby evaded payment of State Tax worth Rs 137 crore by claiming wrongful Input Tax Credit as the suppliers have not paid tax to the Government though collected from the applicant’s Company.
Case Name- Nileshbhai Natubhai Patel vs State of Gujarat and Another.