The Additional Chief Judicial Magistrate, Mumbai has granted bail first day bail within few hours of arrest to accused involved in wrongful Input Tax Credit (ITC) availment citing it to be in an illegal and hasty manner.
The bench of G. R. Dhepe, Additional Chief Judicial Magistrate has observed that the offence under Section 132 of the GST Act is punishable upto 5 years. Pursuant to the second summons accused could have attended the office of the complainant for recording his statement. Therefore, the arrest of the accused was in a hasty manner though issued second summons for recording his statement on 30.12.2024.
The department has filed an application seeking judicial custody of the accused till completion of pending investigation by the complainant. The Special PP submitted that the investigation is in progress.
The accused is indulged in fraudulent activities of wrongfully availing or utilising input tax credit using invoices from GSTIN cancelled suppliers who have issued invoices or bills without supply of goods or services. The taxpayer has affected inward supplies of 53.02 crores without actual movement of goods or services in violation of provisions of MGST Act, 2017 leading to wrongful availment or utilisation of non genuine input tax credit at Rs. 9.54 crores.
The taxpayers place of business was visited on 28.11.2024. He introduced himself as Director of business. The summons were issued to the accused and his wife Ashita. The deposition of the accused has been recorded at the place of Mishal Jaswant Shah business on 29.11.2024. He stated in his statement that he is aware of the fact that he claimed input tax credit from suppliers Ms/ Manidhari Trading Co. but not aware that its GSTIN has been canceled and declared as non genuine tax payer.
It was stated that, the case is communicated by Additional Commissioner of Commercial Taxes by letter dated 29.06.2024 ot the Commissioner of State Tax Mumbai that Joint Commissioner of Commercial Taxes Bangalore has noticed that M/s Manidhari si a non existence business entity who has fraudulently obtained the registration. It also found taxpayers involving receiving fictitious inward supply of the fake tax invoice without receipt of goods to claim input tax credit in order to evade the taxes. Hence tax payer is not entitled to claim input tax credit in respect of inward supplies for the period April, 2018 to March, 2019 as provided under Section 16 (2) of the Act.
It is also found there is no acknowledgment of the receipt of goods on the lorry receipts. The verification of M/s Manidhari Trading that involved deliveries of 199 trucks of materials from April, 2018 to June, 2019 during a very short period and the documents filed by tax payer company are highly questionable and pointers to be fake. On all these amongst other grounds it is submitted to grant judicial custody of the accused.
Dr. Sujay Kantawala, the Counsel for the accused submitted that the summons was issued to the accused calling for recording his statement on 30.12.2024. The writ petition was pending in the Bombay High Court challenging the bank account freezing. Accused has been co-operating and attended the officers in his office on 28.11.2024 and 29.11.2024 when officers conducted inspection of premises. Hence, no reason to believe existed for arresting illegally and hasty manner.
The court strongly observed that the arrest is in a hasty and illegal manner and so arrest is illegal. Hence accused cannot be taken in judicial custody and is liable to be released.
Case Details
Case Title: State Goods and Service Tax V/s Mishal Jaswant Shah
Case No.: RA No. 950/2024
Date: 20.12.2024
Counsel For Applicant: Special PP Mr. R. K. Pathak
Counsel For Accused: Dr. Sujay Kantawala
