Ajay Khanna VS State Tax Anti Evasion Bureau Jabalpur (M.P.)

In this case, there are allegations of illegal financial activities involving the fraudulent use of Input Tax Credit (I.T.C) under the Central Goods and Services Tax Act, 2017. The primary accusation is that fabricated bills and false supplies of goods were created to misappropriate a total of Rs.7,30,97,366/- in the financial years 2017-18 and 2018-19. This activity was reportedly aimed at granting illegal financial benefits to certain recipients, causing a significant loss of revenue to the state through tax evasion.

The investigation revealed that during this period, mobile numbers, email addresses, IP addresses, and statements from co-accused Amit Awadhiya were examined. It was found that Deepesh Tiwari, in collaboration with Amit Awadhiya, the proprietor of M/s Commercial Corporation Seoni, and Ajay Khanna, created bogus firms to facilitate these illegal transactions. The firms generated false bills without supplying actual goods and used E-Way bills fraudulently, leading to an embezzled tax amount totaling Rs.1822.52 lacs.

As a result of these findings, the Assistant Commissioner of the State Tax Evasion Bureau in Jabalpur arrested Ajay Khanna and Amit Awadhiya. The counsel for Ajay Khanna, however, argues that Khanna has been falsely implicated. According to the defense, Khanna was merely a household servant of Deepesh Tiwari, tasked with mundane duties such as shopping for groceries and driving Tiwari’s children to school. On July 11, 2019, Tiwari allegedly instructed Khanna to visit the office of the Assistant Commissioner of the Tax Evasion Bureau, Jabalpur, to inquire about necessary documents while posing as Tiwari’s accountant. Upon visiting the office, Khanna was arrested.

The defense maintains that Khanna had no knowledge of the financial crimes committed by Tiwari and Awadhiya. Moreover, a search of Khanna’s residence yielded no incriminating evidence, suggesting his lack of involvement in the fraudulent activities. Thus, the defense claims that Khanna’s arrest was unwarranted and based on a misunderstanding of his role and responsibilities.

In this case, Deepesh Tiwari, Amit Awadhiya, and Ajay Khanna were involved in a scheme to illegally claim Input Tax Credit (ITC) under the Central Goods and Services Tax (CGST) Act of 2017. They issued fake bills and falsely reported supplies of goods, which is a punishable offense under Section 122 of the CGST Act. The fraudulent activities occurred during the financial years 2017-18 and 2018-19, resulting in a tax evasion amounting to Rs. 7,30,97,366, causing significant revenue loss to the State.

The investigation revealed that mobile numbers, email addresses, and IP addresses linked Deepesh Tiwari to the fraudulent activities. Deepesh Tiwari, in collusion with Amit Awadhiya, the proprietor of M/s Commercial Corporation Seoni, and Ajay Khanna, created a bogus firm to facilitate illegal profits through fraudulent ITC claims. False bills were generated without any actual supply of goods, and E-Way bills were improperly used. The investigation estimated the total misappropriated tax amount to be Rs. 1822.52 lakhs.

Ajay Khanna was arrested by the Assistant Commissioner of the State Tax Evasion Bureau, Jabalpur, along with Amit Awadhiya. Khanna’s counsel argued that he was innocent and falsely implicated. Khanna was merely a household servant for Deepesh Tiwari, performing tasks such as grocery shopping and driving. On July 11, 2019, Tiwari instructed Khanna to visit the Tax Evasion Bureau office and present himself as Tiwari’s accountant to inquire about necessary documents. During this visit, Khanna was arrested. Khanna claimed ignorance of the financial crimes and emphasized that no incriminating evidence was found during a search of his home. He stated that he had no role in preparing forged bills or other documents and was not the accountant for M/s Commercial Corporation Seoni, merely a domestic worker.

The counsel for the State Tax Anti-Evasion Bureau opposed Khanna’s bail request, arguing that he was indeed the accountant for M/s Commercial Corporation Seoni and involved in the tax evasion scheme. They claimed Khanna admitted to preparing forged documents in a statement recorded under Section 70 of the Act, which is admissible in court. Due to the ongoing investigation, the Bureau argued against Khanna’s release on bail.

Under Section 69 of the CGST Act, the Commissioner has the authority to arrest individuals believed to have committed offenses under Section 132(1)(a), (b), or (c) of the GST Act. These sections cover offenses such as supplying goods or services without issuing an invoice, issuing invoices without actual supply, and availing ITC based on such invoices, punishable by up to five years of imprisonment and fines if the amount involved exceeds Rs. 500 lakhs.

Despite the accusations, Khanna’s counsel argued that he had been in custody since July 11, 2019, and the trial’s conclusion was likely to take a long time. They requested bail for Khanna, highlighting the lack of evidence linking him to the financial benefits from the tax evasion. The counsel emphasized that the maximum punishment for the alleged offenses under Sections 132(1) and 132(5) of the CGST Act was three months, a period Khanna had already served in custody.