Case Tittle | Ajay Khanna VS State Tax Anti-Evastion Bereau, Jabalpur |
Court | Madhya Pradesh high court |
Honourable Judge | Justice Hon’ble Shri Rajeev Kumar Dubey |
Citation | 2019 (08) GSTPanacea 116 HC Madhya Pradesh M.Cr.C. No. 33306/2019 |
Judgment Date | 22th- August-2019 |
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Ut elit tellus, luctus nec ullamcorper mattis, pulvinar dapibus leo.
The present case involves an application for bail filed under Section 439 of the Criminal Procedure Code (Cr.P.C.) by Ajay Khanna. This is the initial application concerning his detention. Ajay Khanna was arrested on July 11, 2019, in relation to Crime No. GST IN 23ATVPA5829R2ZW. This crime was recorded at the State Tax Anti-Evasion Bureau’s Police Station in Jabalpur, Madhya Pradesh.
The charges against Khanna pertain to violations under the Madhya Pradesh Goods and Service Tax Act, 2017, as well as specific sections of the Central Goods and Service Tax Act, 2017. The relevant sections of the Central Act are Section 132 (1)(b) and Section 132 (1)(c), which deal with offenses related to the evasion of tax and other contraventions.
This application seeks to secure bail for Khanna, challenging his continued detention on the grounds specified under Section 439 of the Cr.P.C.
As per the prosecution case, an investigation was initiated following an order dated May 24, 2019, issued by the Commissioner of State Tax, Madhya Pradesh, Indore (Order No. GST INS-01 2019-20/67/AEB-JBP/09). Acting on this order, the Assistant Commissioner of the State Tax Evasion Bureau in Jabalpur conducted an enquiry on May 29, 2019, at M/s Commercial Corporation located at Flat No. 17, Second Floor, Gokuldham Society, District Seoni, under Section 67 of the M.P. Goods and Services Tax Act, 2017. Upon arrival, it was discovered that no business activities were taking place at the address registered officially for M/s Commercial Corporation Seoni. Statements were recorded from Amit Awadhiya, the proprietor of the corporation as per the registration records. During the investigation, it was found that M/s Commercial Corporation Seoni had been involved in certain discrepancies or irregularities (the specific nature of which would continue in the rest of the text) indicating a potential violation of the GST regulations.
As per the prosecution case, following an order dated May 24, 2019, issued by the Commissioner of State Tax, Madhya Pradesh, Indore (Order No. GST INS-01 2019-20/67/ AEB-JBP/09), the Assistant Commissioner of the State Tax Evasion Bureau in Jabalpur conducted an enquiry on May 29, 2019, at M/s Commercial Corporation, GST IN 23ATVPA5829R2ZW, located at Flat No. 17, Second Floor, Gokuldham Society, District Seoni, under Section 67 of the M.P. Goods and Service Tax Act, 2017. During the enquiry, it was discovered that no business activity was taking place at the registered address.
Statements from Amit Awadhiya, the proprietor of M/s Commercial Corporation Seoni as per the registration records, revealed that the company was issuing bogus, false, and fabricated bills to claim illegal financial profits through input tax credit (I.T.C). This constituted an offence under the M.P. Goods and Service Tax Act, 2017, as well as under Section 122 of the Central Goods and Service Tax Act, 2017. The investigation found that during the financial years 2017-18 and 2018-19, M/s Commercial Corporation Seoni misappropriated a total of Rs. 7,30,97,366/- by issuing false bills and transferring illegal input tax credits, resulting in significant revenue loss to the state.
Further investigation, including the examination of mobile numbers, email addresses, IP addresses, and statements from co-accused Amit Awadhiya, revealed that Deepesh Tiwari, in collaboration with Amit Awadhiya and applicant Ajay Khanna, created a bogus firm. This firm issued false I.T.C.s, granting illegal financial benefits to recipients without actual supply of goods. False bills and E-Way bills were generated and used for these transactions. The investigation determined that the total embezzled tax amount to date is Rs. 1822.52 lacs. Consequently, the Assistant Commissioner of the State Tax Evasion Bureau in Jabalpur arrested both the applicant and co-accused Amit Awadhiya.
As per the prosecution case, in compliance with an order dated May 24, 2019, issued by the Commissioner of State Tax, Madhya Pradesh, Indore (Order No. GST INS-01 2019-20/67/ AEB-JBP/09), on May 29, 2019, the Assistant Commissioner of the State Tax Evasion Bureau in Jabalpur visited M/s Commercial Corporation (GST IN 23ATVPA5829R2ZW) at Flat No. 17, Second Floor, Gokuldham Society, District Seoni for an inquiry under Section 67 of the M.P. Goods and Service Tax Act, 2017. During the inquiry, it was discovered that no business activities were being conducted at the registered address of M/s Commercial Corporation Seoni.
Statements from Amit Awadhiya, the proprietor of M/s Commercial Corporation Seoni as recorded in the registration documents, revealed that the corporation had issued fake and fabricated bills to illegally obtain financial benefits through input tax credit (ITC). These actions were offenses under the M.P. Goods and Service Tax Act, 2017, and Section 122 of the Central Goods and Service Tax Act, 2017.
Further investigation uncovered that, during the financial years 2017-18 and 2018-19, the corporation misappropriated a total of Rs. 7,30,97,366/- through tax evasion by issuing bogus bills and falsely claiming ITC, causing a significant revenue loss to the State. Analysis of mobile numbers, email addresses, IP addresses, and statements from the co-accused Amit Awadhiya indicated that Deepesh Tiwari, in collaboration with Amit Awadhiya and the applicant Ajay Khanna, created bogus firms to provide illegal financial benefits to recipients via false ITCs. These firms generated fake bills and downloaded and used e-Way bills without actually supplying any goods. The total embezzled tax amount was estimated to be Rs. 1822.52 lacs at that point. Consequently, the Assistant Commissioner of the State Tax Evasion Bureau, Jabalpur, arrested the applicant and co-accused Amit Awadhiya.
The applicant’s counsel argued that the applicant, Ajay Khanna, had not committed any offense and was falsely implicated. It was claimed that Ajay Khanna was merely a household servant of the prime accused Deepesh Tiwari, responsible for household chores like purchasing groceries, vegetables, and other goods, and also worked as a driver for Tiwari’s family. On July 11, 2019, Deepesh Tiwari instructed Khanna to visit the office of the Assistant Commissioner of the Tax Evasion Bureau, Jabalpur, and present himself as Tiwari’s accountant to inquire about the documents required by the department. Following these instructions, Khanna went to the office, where he was subsequently arrested by the Tax Evasion Bureau officers. The applicant’s counsel emphasized that Khanna was unaware of the financial offenses committed by Deepesh Tiwari and Amit Awadhiya. Moreover, a search of Khanna’s residence by tax officials did not yield any incriminating evidence.
In compliance with the order dated May 24, 2019, from the Commissioner of State Tax, Madhya Pradesh, Indore, the Assistant Commissioner of the State Tax Evasion Bureau in Jabalpur conducted an inquiry on May 29, 2019, at the registered address of M/s Commercial Corporation in Seoni. The inquiry, conducted under Section 67 of the M.P. Goods and Services Tax Act, 2017, revealed that no business activity was taking place at the address.
Statements from Amit Awadhiya, the registered proprietor of M/s Commercial Corporation, indicated that the corporation had been issuing fraudulent invoices and showing fictitious supplies to illicitly claim input tax credit (ITC). This fraudulent activity, aimed at obtaining illegal financial benefits, constituted an offense under both the M.P. Goods and Services Tax Act, 2017, and Section 122 of the Central Goods and Services Tax Act, 2017. It was discovered that during the financial years 2017-18 and 2018-19, the corporation facilitated illegal financial gains for recipients through fake invoices, resulting in a tax evasion totaling Rs. 7,30,97,366, thereby causing revenue loss to the state.
Further investigation, which included examining mobile numbers, email addresses, IP addresses, and statements from Amit Awadhiya, revealed that Deepesh Tiwari, in collaboration with Amit Awadhiya and applicant Ajay Khanna, created fake firms to grant illegal profits through bogus ITCs. It was found that false invoices and E-Way bills were generated without the actual supply of goods. The total tax amount embezzled was calculated to be Rs. 1822.52 lakhs. Consequently, the Assistant Commissioner arrested Ajay Khanna and co-accused Amit Awadhiya.
Ajay Khanna’s counsel argued that Khanna was innocent and falsely implicated. According to the counsel, Khanna was merely a household servant and driver for Deepesh Tiwari, responsible for household chores and driving Tiwari’s children to and from school. On July 11, 2019, Tiwari instructed Khanna to visit the Tax Evasion Bureau office in Jabalpur, posing as Tiwari’s accountant, to inquire about necessary documents. Khanna complied and was subsequently arrested. The counsel maintained that Khanna was unaware of the financial offenses committed by Tiwari and Awadhiya. The search of Khanna’s residence yielded no incriminating evidence, and there was no proof that Khanna benefited from the tax evasion or prepared any forged documents.
The counsel further argued that, at most, Khanna could be charged under Sections 132(1) and 132(5) of the Central Goods and Services Tax Act, 2017, which carry a maximum penalty of three months. Since Khanna had been in custody since July 11, 2019, and the trial was expected to be lengthy, the counsel requested bail for Khanna.
Download PDF:
For Reference Visit:
Read Another Case Law:
GST Case Law: