Lalit Dogra VS Commissioner, CGST, Gurugram

M/s Alexa Impecs Solutions, M/s Global Solar Solution, and M/s EL Bella Export were implicated in a significant case of fraudulent activity related to Input Tax Credit (ITC). They were accused of accumulating a substantial amount of fraudulent ITC by using fake purchase invoices from non-existent and fraudulent firms. These companies further misrepresented their sale invoices at lower tax rates to claim inverted tax refunds. This scheme involved filing and unloading fake documents, including CA certificates. This fraudulent activity was not isolated, as a cartel of economic offenders was found to be using similar methods to file bogus refund applications involving various fake firms.

However, a petitioner represented by legal counsel argued that they had no association with the implicated firms, nor was their name mentioned in the department’s report. The petitioner claimed innocence, stating that they were called for investigation based on a false disclosure statement made by a co-accused. Allegedly, the petitioner’s signature was obtained on blank papers during the investigation, and they contested the admissibility of the disclosure statement, claiming it was made under duress.

The prosecution’s case lacked evidence tying the petitioner to any running firm or receiving refunds of Central Goods and Services Tax (CGST) in their bank account. It was argued that no recovery of CGST amounts was made from the petitioner, and their name did not appear in any documents presented by the prosecution. The petitioner maintained their innocence, disputing any involvement in the fraudulent activities outlined in the case.

M/s Alexa Impecs Solutions, M/s Global Solar Solution, and M/s EL Bella Export were implicated in a scheme involving fraudulent accumulation of Input Tax Credit (ITC) through bogus purchase invoices from non-existent firms. They manipulated sales invoices to claim lower tax rates and filed for inverted tax refunds using fake documents, including certificates from chartered accountants (CAs). A cartel of economic offenders employed similar tactics to submit fake refund applications through various fake firms.

In response to these allegations, counsel for one of the accused, the petitioner, argued that their client had no connection with the implicated firms and wasn’t named in the department’s report. The petitioner claimed that their signature was obtained under duress on blank papers during interrogation by tax authorities. They denied receiving any money from CGST and argued that no evidence linked them to the fraudulent activities. Notably, two main accused CAs had already been granted bail.

The petitioner’s counsel cited legal precedents to support their defense, emphasizing the need for credible evidence and fair trial. However, the state counsel contended that a complaint had been filed against the petitioner and highlighted statements from the accused implicating the petitioner in the scheme. These statements alleged the petitioner’s involvement in creating bogus firms to claim fraudulent ITC and refunds, managing documentation, and recruiting others for the operation.

The prosecution’s case relied on evidence such as statements under the CGST Act and the accused’s admission of orchestrating the fraudulent scheme. The petitioner’s defense rested on challenging the admissibility and credibility of these statements and emphasizing their lack of direct involvement or financial gain from the scheme.

fraudulent activities involving the accumulation of fraudulent Input Tax Credit (ITC) by M/s Alexa Impecs Solutions, M/s Global Solar Solution, and M/s EL Bella Export. These companies were found to be involved in obtaining high amounts of ITC through bogus purchase invoices from non-existent and fraudulent firms, subsequently showing sale invoices at lower tax rates and claiming inverted tax refunds. The modus operandi employed by a cartel of economic offenders involved filing bogus applications for refund using various fake firms.

The petitioner, however, claims no connection with the aforementioned firms and asserts that his name was not implicated in the Department’s report on the matter. He argues that he was summoned for investigation based on a false disclosure statement made by a co-accused under duress, during which he was coerced into signing blank papers. The petitioner denies receiving any money from Central Goods and Services Tax (CGST).

According to the prosecution, the petitioner’s involvement is evident as he allegedly provided work to the main accused chartered accountants, who then facilitated the filing of refunds for bogus firms. These firms, which were found to be non-existent, were created by the petitioner to fraudulently claim ITC and refunds without engaging in any genuine business activities. The petitioner admitted to overseeing the documentation and liaison work for these bogus firms and even recruited individuals to open bank accounts and endorse fraudulent transactions.

Further investigation revealed that the petitioner engaged in habitual fraudulent activities, including using different identities to manipulate facts and evade taxes. For instance, he appeared as “Rahul Sharma” in front of bank officials while using the name “Rahul Sharma” in one case and “Gurmeet Singh” in another case. Additionally, he was involved in recruiting individuals on a monthly payment basis to open companies or firms, aiming to engage in tax evasion activities.

In light of the evidence presented, it is evident that the petitioner orchestrated the entire racket of fraudulent activities, manipulating documents and identities to accumulate substantial amounts of fraudulent ITC and refunds.

M/s Alexa Impecs Solutions, M/s Global Solar Solution, and M/s EL Bella Export were implicated in a significant fraudulent scheme involving the accumulation of a substantial amount of fraudulent Input Tax Credit (ITC). This fraudulent activity was carried out through the submission of bogus purchase invoices from non-existent and fraudulent firms. Additionally, these entities purportedly showed sale invoices at lower tax rates and claimed inverted tax refunds by filing and unloading fake documents, including CA certificates. Investigations revealed a modus operandi employed by a cartel of economic offenders who filed bogus applications for refunds involving various fake firms.

The petitioner, represented by learned counsel, disclaimed any connection with the implicated firms and denied involvement, stating that their name did not appear in the Department’s report. Allegations against the petitioner stemmed from a purported false disclosure statement made by a co-accused under duress and fear, during which the petitioner was allegedly coerced into signing blank papers. The petitioner maintained that they did not receive any money from CGST (Central Goods and Services Tax).

Contrary to the prosecution’s claims, it was argued that no firm operated under the petitioner’s name, and no refunds of CGST were received in their bank account. The petitioner’s name did not appear in any planted documents, nor were any forged or fabricated documents prepared by them. Notably, two main accused individuals, CA Sunil Mahlawat and CA Gaurav Dhir, had already been granted bail by a Co-ordinate Bench.

However, the State counsel contended that a complaint had been filed against the petitioner, citing statements made under Section 70 of the CGST Act. According to these statements, the petitioner allegedly facilitated the filing of refunds for bogus firms and admitted to creating these fraudulent entities to claim ITC and refunds without conducting any actual business. The petitioner’s involvement extended to managing documentation and liaison work for these bogus firms. Moreover, it was alleged that the petitioner recruited individuals to open bank accounts and facilitate the receipt of fraudulent ITC and refunds.

Further investigations revealed the petitioner’s involvement in other fraudulent activities, including the manipulation of E-way bills and the use of fictitious identities. The petitioner was accused of habitual offenses, including appearing under different names to conduct fraudulent activities.

The prosecution argued that the petitioner was the mastermind behind the entire racket, orchestrating the fraudulently obtained Input Tax Credit refunds amounting to Rs. 18.73 crores through non-existent firms.

The State counsel referenced legal precedents to strengthen the prosecution’s case and opposed the petitioner’s request for bail.

After hearing submissions from both sides, the court noted the seriousness of the economic offense and the petitioner’s custody since May 26, 2022. Legal precedents were cited regarding the considerations for granting bail, and the court deemed the case fit for continued custody, considering the facts and circumstances presented.

M/s Alexa Impecs Solutions, M/s Global Solar Solution, and M/s EL Bella Export were implicated in a scheme involving significant fraudulent activity related to Input Tax Credit (ITC). The scheme included the creation of bogus purchase invoices from non-existent or fraudulent entities, followed by the submission of sales invoices at lower tax rates to claim inverted tax refunds. This fraudulent activity involved the filing and unloading of fake documents, including CA certificates, to support the false claims.

The investigation revealed a pattern of fraudulent behavior orchestrated by a cartel of economic offenders, who filed bogus applications for refunds using various fake firms. The petitioner, although not directly connected to the implicated firms, was called for further investigation based on a false disclosure statement allegedly obtained under duress from a co-accused. The petitioner denied receiving any money from CGST and argued that no firm was found operating under their name, nor were they involved in any refund transactions.

Contrary to the petitioner’s claims, the prosecution asserted that the petitioner was indeed involved in the fraudulent activities. According to the prosecution’s case, the petitioner facilitated the filing of refunds for bogus firms and admitted to creating these fictitious entities to claim fraudulent ITC and refunds without engaging in any legitimate business activities. The petitioner’s involvement extended to managing documentation and liaising for these bogus firms, including recruiting individuals to open bank accounts and endorse fraudulent transactions.

The investigation also uncovered instances of identity fraud, where the petitioner allegedly used fictitious names to conduct banking transactions. Additionally, the petitioner was accused of recruiting individuals on a monthly payment basis to facilitate government tax evasion activities.

Based on the evidence presented, it was concluded that the petitioner was the mastermind behind the fraudulent scheme, which resulted in the illicit availing of Input Tax Credit refunds totaling Rs. 18.73 crores through non-existent firms.

During the legal proceedings, the petitioner remained in custody since May 26, 2022. The prosecution cited precedents and legal principles to argue against granting bail, emphasizing the seriousness of the economic offenses and the risk of hampering the investigation if the petitioner were released.

However, considering the completion of the investigation and the filing of the complaint, along with the bail granted to co-accused individuals, the court decided to grant bail to the petitioner. The court ordered the petitioner’s release on regular bail, subject to certain conditions, including surrendering their passport, providing a mobile number, and posting bail/bond amounting to Rs. 10 lakhs with two sureties.

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Punjab and Haryana High Court

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