Fake ITC | The Supreme Court has granted bail to the accused who was involved in 2600 fake firms registration and the input tax credit (ITC) availed with these 2600 Firms was more than Rs. 40,000 Crores.
The bench of Justice Abhay S. Oka and Justice Augustine George Masih has observed that all the offences alleged against the appellants are Magistrate triable offences. Charge-sheet has been filed. Moreover, in the counter, antecedents of the appellants have not been pleaded.
Table of Contents
Background – Fake ITC
The applicant formed a syndicate and their modus operandi configures four segments: assignment of job of collection of SIM Cards and personal data of people that have been uploaded on the portal of Goods & Service Tax to use personal data for creation of fake Firms by uploading it on GST Portal. There will be one actual Firm which will be working and money transaction will flow to this actual Firm and the input tax will be availed. The distribution of monetary benefits among all.
It was alleged that 2600 fake firms were found to be registered and the input tax credit availed with these 2600 Firms was more than Rs. 40,00,00,00,000.
The informant levelled allegations of misusing his Aadhaar and PAN Cards for GST registration, thus, FIR has rightly been lodged under the relevant Sections 420, 467, 468, 471 IPC.
Bail Rejection By Allahabad High Court – Fake ITC
A bench of the Allahabad High Court, comprising of Justice Manju Rani Chauhan while refusing the bail to accused held that backbone of Goods Services Tax regime and Input Tax Credit, is that under the GST Regime ITC follows supply chain not only in intra-state but also inter- state supply.
Thus, on the ground of jurisdiction as argued by learned counsel for the applicant this Court is of the view that though registration of fake firms were at Punjab and Maharasthra, the complainant is resident of New Delhi and the FIR has been lodged at Gautam Buddh Nagar, the genuineness of complaint questioning the territorial jurisdiction cannot be raised on the basis of occurrence as the same cannot be said to be at one place where the GST firm was registered but its connections with other fake firms are also required to be seen.
The court held that looking at the nature of accusation of offence, role of the applicants, it is not a fit case for granting bail.
As a result the applicant filed the criminal appeal before the Supreme Court.
Arguments
The applicant contended that all the offences alleged against the appellants are Magistrate triable offences. Charge-sheet has been filed. Moreover, in the counter, antecedents of the appellants have not been pleaded.
The department while expressing the apprehension stated that considering the huge amount involved in the scam subject matter of the offence, if the appellants are enlarged on bail, there is a likelihood they tempering with the prosecution witnesses.
Conclusion
The court directed that the appellants shall be produced before the Trial Court within a maximum period of one week from today. The Trial Court shall enlarge the appellants on bail on appropriate terms and conditions. However, the Trial Court shall hear the Public Prosecutor before finalising the terms and conditions. It will be open for the Trial Court to impose appropriate stringent terms and conditions.
Case Details
Case Title: Rajiv Jindal Versus The State Of U.P.
Case No.: Special Leave to Appeal (Crl.) Nos.13548-13550/2024
Date: 25/10/2024
Counsel For Appellant: Harsh Sethi, Anant Nigam, Varun Arya
Counsel For Respondent: Garima Prasad