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July 17, 2020

Rajasthan HC allows bail to Chartered Accountant involved in Rs 100 crore GST scam

Rajasthan HC allows bail to Chartered Accountant involved in Rs 100 crore GST scam

Input Tax Credit (ITC) basically means reducing the taxes paid on inputs from taxes to be paid on output. When any supply of services or goods is supplied to a taxable person, the GST charged is known as Input Tax. According to Section 16(1) of the CGST Act, Every registered taxable person shall, subject to such conditions and restrictions as may be prescribed and within the time and manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.

Section 132(1) Whoever commits any of the following offences, namely:-

  • supplies any goods, services or both without issue of any invoice, with the intention to evade tax
  • issues any invoice or bill without supply of goods, services or both leading to wrongful availment/utilisation of ITC or refund of tax;
  • avails ITC using such invoice or bill referred to in clause (b)
  • collects any amount as tax but fails to pay the same to the Government beyond 3 months from the date on which such payment becomes due
  • evades tax, fraudulently avails ITC or fraudulently obtains refund and where such offence is not covered under clauses (a) to (d)
  • falsifies/substitutes financial records or produces fake accounts/documents or furnishes any false information with an intention to evade payment of tax due
  • obstructs or prevents any officer in the discharge of his duties
  • acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with, any goods which he knows or has reasons to believe are liable to confiscation
  • receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of any provisions
  • tampers with or destroys any material evidence or documents
  • fails to supply any information which he is required to supply or supplies false information
  • attempts to commit, or abets the commission of any of the offences mentioned in clauses (a) to (k) of this section shall be punishable as follows:-
Quantum of OffencePunishment
cases where the amount of tax evaded or the amount of ITC wrongly availed or utilised or the amount of refund wrongly taken exceeds Rs 500 lakhimprisonment for a term which may extend to 5 years and with fine
cases where the amount of tax evaded or the amount of ITC wrongly availed or utilised or the amount of refund wrongly taken exceeds Rs 200 lakh but does not exceed Rs 500 lakhimprisonment for a term which may extend to 3 years and with fine
case of any other offence where the amount of tax evaded or the amount of ITC wrongly availed or utilised or the amount of refund wrongly taken exceeds Rs 100 lakh but does not exceed Rs 200 lakhimprisonment for a term which may extend to 1 year and with fine
cases where he commits or abets the commission of an offence specified in clause (f) or clause (g) or clause (j)imprisonment for a term which may extend to 6 months or with fine or with both

Anup Ashopa (Petitioner) is a Chartered Accountant who had filed a bail application under Section 439 of the Code of Criminal Procedure (Cr.P.C.).

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The allegation against the petitioner is of making fake firms who later on claimed ITC. It is contended by counsel for the petitioner that the matter pertains to claim of wrong input tax credit on the basis of fake bills.

The applicant contended that as many as 21 fake firms were incorporated and ITC was claimed by Vijay and Kapil who have been enlarged on bail by Coordinate Bench of the Court. Vijay and Kapil had remained in custody for a period of more than a year. The ITC pertaining to their firms was more than Rs.100 crore. The petitioner was instrumental in incorporating fake firms. He had obtained documents and had got incorporated fake firms for the purpose of claiming input tax credit.

It is also contended that as per the charge-sheet, the input tax credit of about Rs.7.85 crore is alleged against Maruti Traders, Balaji Traders and Tirupati Enterprises. It is also contended that a sum of Rs.1 crore and 44 lac has also been deposited and the total input tax credit claim now is less than Rs.7 crore.

Counsel for Union of India has opposed the bail application. However, considering the contentions put forth by counsel for the petitioner, Rajasthan High Court deemed it proper to allow the bail application. The bail application was accordingly, allowed and it was directed that the accused-petitioner shall be released on bail provided he furnishes a personal bond of Rs.1,00,000 together with two sureties of Rs.50,000 each to the satisfaction of the trial Court with the stipulation that he shall appear before that Court and any Court to which the matter will be transferred, on all subsequent dates of hearing and as and when called upon to do so.

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