The Patiala House Court rejects bail application of accused involved in GST fraud of Rs. 1285 crore in alleged iPhone smuggling case.
In the iPhone Smuggling Case, the Accused was involved in GST fraud of Rs. 1285 crore files bail application before Patiala House Court under Section 480 of the Bhartiya Nagrik Suraksha Sanhita, 2023.
Table of Contents
Background – GST Fraud Case
Vishal Pal Singh, Commissioner Customs IGI Airport received the information that M/s Arora Communication was indulging in trading iphones and consequently, on 24 October, 2024, a search was conducted on the premises, and Kapil Arora (proprietor) of M/s Arora Communication was unable to produce the documents pertaining to the stock/goods therefore, the goods were seized.
The department recorded the statements of the proprietor, Kapil Arora. The proprietor of the firm stated that Arora Communication was dealing in trading of Apple phones, which are of both Indian origin and foreign origin.
The proprietor disclosed that the travelling passengers provide him with this type foreign origin mobile phones.
The department on further investigation found that the ledgers from the laptop demonstrated the total sale from 2018-19 to 2024-25 was Rs. 12,84,54,31,007. However, as per GST portal the total turnover of M/s Arora Communication 1,00,92,469 and of M/s Cellphone Badlo Rs. 21,16,05,811.
On the enquiry by the department the Proprietor stated that the excess amount pertains to kachha sale (Cash sale) on which GST has not been paid.
The Proprietor admitted that he has shown a marginal amount of sale in the GST Returns and mostly he sold the goods in cash transactions.
It is noteworthy that the amount of GST evaded comes out approx. Rs. 200 Crore on the value of suppressed sales. The person is found indulged in sale and purchase of the goods without invoices and thereby resulting in evasion of tax which is more than Rs. 5 crores.
The accused proprietor was sent to judicial custody for 14 days by the Patiala House Court to ensure proper investigation of the offence and he may influence the witnesses and tamper with the evidence as he is still involved in passing on the fraudulent ITC.
Ground Of Bail
The accused submitted that he is in judicial custody since 23.10.2024 who is a sole bread earner for his family. That the dependent family of the applicant comprises his wife, minor child and his mother.
The accused contended that the applicant has no prior criminal record or involvement in similar matters. He is a law-abiding businessman and reputed member of society,, with a stable residence in Delhi, making him unlikely to abscond or evade legal proceedings.
The accused contended that while the alleged offence is categorised as cognizable and non-bailable under Section 132 (5) of the CGST Act, the applicant contends that pre-trial detention is unnecessary and excessive, especially given his willingness to cooperate and his community ties. Moreover, the investigation is based on documentary evidence and no fruitful purpose will be served keeping the applicant behind bars, as both the investigation and trial are likely to take time.
Conclusion
The court while rejecting the bail application held that Although, the court is mindful of the fact that pre-trial detention is frowned upon by law, however, considering the facts and circumstances of the case, the allegations levelled against the applicant/ accused as well as the fact that investigation is at initial stage, offence alleged is grave and serious in nature where tax evasion is alleged to be tune of Rs. 216 Crores and apprehension of applicant tampering with the evidence cannot be ruled out, the Court is not inclined to allow the present bail application. Accordingly, bail application of applicant/accused Kapil Arora is dismissed.
