Bharat Raj Punj and other vs.  The Commissioner of CGST and Others

Introduction

The case involves M/s Leel Electricals, a company that was allegedly involved in fraudulently availing Input Tax Credit (ITC) on fake invoices. The GST Department summoned Mr. Bharat Raj Punj, the Managing Director of the company, along with other senior officials for questioning. The premises of Leel Electricals were raided, and the investigation revealed that the company had not conducted any legitimate business in the past two years, relying instead on issuing fake invoices to claim ITC. The total amount of wrongfully availed ITC by M/s Leel Electricals was Rs. 40.5 crores, while its sister concerns also engaged in similar malpractices and availed ITC worth Rs. 328 crores.

Facts:

• M/s Leel Electricals, under the management of Mr. Bharat Raj Punj, was found to have fraudulently availed ITC on fake invoices.
• The senior officials of the company were issued summons and subsequently arrested for their involvement in the fraudulent activities.
• The petitioner, Mr. Bharat Raj Punj, fearing arrest, filed a writ petition against the GST officials to seek protection from arrest.
• The petitioner, who was residing in the United States, returned to India in August 2018 and was appointed as the Managing Director of the company.
• The petitioner argued that he could not be arrested under Section 70 of the GST Act.
• The petitioner had deposited GST worth 7.15 crores, which the respondents deemed inconsequential and inadequate.
• The petitioner referred to similar cases where the accused were allowed to appear before authorities instead of being arrested.

Issues Raised:

• Whether the petitioner and M/s Leel Electricals fraudulently availed ITC on fake invoices?
• Whether the petitioner can be arrested under Section 70 of the GST Act?
• Whether the cases cited by the petitioner for protection from arrest are relevant to the present case?

Judgement:

• The court found that M/s Leel Electricals and its sister concerns did indeed wrongfully avail ITC to the tune of 328 crores.
• The petitioner, Mr. Bharat Raj Punj, also availed ITC amounting to 40.53 crores.
• The court dismissed the petitioner’s plea to refer to other cases for protection from arrest, as the present case involved proven wrongdoings, unlike the cited cases.
• The court stated that suspicion of wrongdoing alone is not enough to prove guilt and cited that the accused officials not being granted bail is evidence of the offense being committed and accepted.
• The petitioner’s plea was dismissed, and a cost of Rs. 1 lakh was imposed on them.

Observation:

The court carefully considered the evidence presented and the arguments made by the petitioner. It emphasized the distinction between the present case, where fraudulent activities were established, and the cited cases, where no wrongdoings were proven. The court also acknowledged the seriousness of availing ITC through fake invoices and non-existent transactions.

Conclusion:

The court’s judgement upheld the seriousness of the offenses committed by M/s Leel Electricals and its sister concerns, along with Mr. Bharat Raj Punj, who was the Managing Director of the company. The petitioner’s plea for protection from arrest was rejected due to the proven fraudulent activities. This case serves as a reminder of the legal consequences of tax evasion and fraudulent practices, and it emphasizes the need for businesses to maintain transparency and comply with tax regulations.

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