Bail denied to a Chartered accountant in case of issuance of fake GST invoices: Calcutta High Court
What is Section 132(1) of the CGST act?
Punishment related to certain offence under GST is covered under section 132(1). Section 132(1) states that Whoever commits any of the following offences:
(a) supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made thereunder, with the intention to evade tax;
(b) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax;
(c) avails input tax credit using such invoice or bill referred to in clause (b);
(d) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
(e) evades tax, fraudulently avails input tax credit or fraudulently obtains refund and where such offence is not covered under clauses (a) to (d);
shall be punishable–
(i) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five years and with fine;
(ii) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds two hundred lakh rupees but does not exceed five hundred lakh rupees, with imprisonment for a term which may extend to three years and with fine;
(iii) in the case of any other offence where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds one hundred lakh rupees but does not exceed two hundred lakh rupees, with imprisonment for a term which may extend to one year and with fine;
(iv) in cases where he commits or abets the commission of an offence specified in clause (f) or clause (g) or clause (j), he shall be punishable with imprisonment for a term which may extend to six months or with fine or with both.
(2) Where any person convicted of an offence under this section is again convicted of an offence under this section, then, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to five years and with fine.
What is Section 69 of the CGST act?
Power to arrest is granted to commissioner under section 69 of the CGST act. Where the Commissioner has reasons to believe that a person has committed any offence specified in section 132 (1) which is punishable under said section, than commissioner may, by order, authorise any officer of the central tax to arrest such person.
Where a person is arrested under section 132 (1) for an offence specified under section 132 (5), the officer authorised to arrest the person shall inform such person of the grounds of arrest and produce him before a magistrate within 24 hours.
Fact and Issue of the case
The petitioner has renewed his prayer for bail under Section 439 of the Code of Criminal Procedure, 1973 as his earlier application being CRM No. 10075 of 2019 was rejected by this Court vide order dated 24.12.2019. The petitioner prayer for bail was lastly rejected by the Court of Judicial Magistrate, 2nd Court, Alipore, 24 Parganas (South) vide order dated 31.12.2019 which is evident from the Annexure-P1 being the orders. The petitioner as I have been found in the earlier order that he is a Chartered Accountant by profession and with the similar contention he has averred that he is no way connected with the instant case.
The petitioner has been brought under the court of law as an accused in this case under section 69 read with section 132 on the allegation that in connivance with the other accused persons he allegedly issued GST Invoices without any supply of the goods or services to anybody on commission basis causing loss of more than 98 crores approximately. His earlier bail application was rejected by this Court. The petitioner is in custody since 06.6.2019 and his further detention is not warranted as the Charge-sheet has already been submitted on completion of the investigation.
Observation of the court
That high court have vividly discussed the facts and the law involved in the case and bearing in mind the gravity of the economic offence and the principle as laid in case of P.V. Ramanna Reddy vs. Union of India reported in 2019(26) GSTL J(175) SC holding that though Section 69 confers power upon the Commissioner to order the arrest of a person for cognizable and non-bailable offence does not contain safeguard incorporated in section 41 and 41A of the Code of Criminal Procedure, 1973 in view of the provision of section 70(1) of the said Act same must be kept in mind before arresting a person. However, section 41A(3) of the Code of Criminal Procedure does not provide an absolute irrevocable guarantee against arrest, while turning down the prayer for the release of the petitioner on bail and thereby held that petitioner would not be entitled to be enlarged on bail but gave him the liberty to approach the authority for compounding of the offence under section 138 of CGST Act.
The court held that the petitioner may be released on bail by the trial Court if he finds that he has approached the authority for compounding of the offence on deposit of at least 20% of the evaded amount on account of CGST.
Read the full order of the court from below LinkA-Chartered-accountant-denied-bail-in-case-of-issuance-of-fake-GST-invoices