Neeraj Karande VS The Director General of GST Intelligence

that Neeraj Karande, the sole accused in the case, is seeking regular bail in relation to a case filed under the Central Goods and Services Tax Act, 2017 (CGST Act). The specific allegations against him, detailed in the First Information Report (FIR) F.No. INV/DCGI/FIZUIGST/Gr’H’/4212020-21 dated 02.11.2020, involve offenses under Section 132(1)(x) read with Section 132(1)(b)(c) of the CGST Act.

Neeraj Karande is identified as the managing director of M/s. GE Godavari Engineering Industries Limited, a company registered under GSTIN No. 36AACCG9862H3Z7. The prosecution alleges that in his capacity as managing director, Karande issued invoices or bills without actual supply of goods, which violates the CGST Act and its rules. This alleged activity enabled him to wrongfully avail or utilize input tax credit, benefiting both himself and purported customers through fraudulent means.

The modus operandi described involves the issuance of GST invoices or similar documentation, ostensibly for goods, and passing on input tax credit to customers without any corresponding actual supply of goods. This practice, according to the complaint, facilitated financial advantages through illicit means.

In court proceedings, the petitioner is represented by learned counsel Balra Mohan Reddy, while the respondent’s interests are advocated by Sri P. Dhalmesh, the standing counsel. The court has reviewed the records pertinent to the case.

The bail application seeks to secure Neeraj Karande’s release pending trial, arguing presumably on grounds such as absence of flight risk, no previous criminal record, or cooperation with the investigation. The decision on whether to grant bail typically hinges on factors including the seriousness of the charges, potential risk to the investigation, and the likelihood of the accused appearing for trial.

In summary, Neeraj Karande’s application for regular bail is based on denying the allegations and asserting his entitlement to bail under legal principles governing pretrial release, pending further judicial proceedings.

Neeraj Karande, the petitioner in this case, is seeking regular bail in relation to a case filed against him under the Central Goods and Services Tax Act, 2017 (CGST Act). He is accused of offenses under Section 132(1)(xi) read with Section 132(1)(b)(c) of the CGST Act. Neeraj Karande is identified as the sole accused in a complaint dated November 2, 2020, related to his role as the managing director of M/s. GE Godavari Engineering Industries Limited.

The allegations against Neeraj Karande include issuing invoices or bills without actual supply of goods, which led to improper availment or utilization of input tax credit under the CGST Act. It is claimed that he facilitated this by issuing GST invoices or e-way bills to customers without actual transactions, allegedly to inflate the company’s turnover for banking loan purposes and to assist others in manipulating their financial records by showing these invoices as expenses.

Specific instances are cited where Neeraj Karande purportedly obtained GST invoices without receipt of goods and passed them on to his company and others. These actions, according to the complaint, violate Section 31 of the CGST Act regarding invoice issuance and Section 16 regarding wrongful input tax credit claims.

In summary, Neeraj Karande is accused of engaging in fraudulent practices involving GST invoices to deceive the tax system and financial institutions. The case against him alleges serious violations of GST laws, impacting both his company’s financial standing and potentially aiding others in tax evasion.

This is an application for regular bail filed by Neeraj Karande, the sole accused in a case under the Central Goods and Services Tax Act (CGST Act). The allegation against him pertains to offenses under Section 132(1)(i) read with Section 132(1)(b)(c) of the CGST Act, relating to issuing invoices without actual supply of goods, leading to wrongful availment or utilization of input tax credit.

Neeraj Karande is described as the managing director of M/s. GE Godavari Engineering Industries Limited, possessing GST registration under GSTIN No. 36AACCG9862H3Z7. It is alleged that he orchestrated a scheme where GST invoices and bills were issued without actual goods being supplied, purportedly to inflate the company’s turnover and facilitate enhanced banking loan facilities. The prosecution claims that invoices were also issued to other parties, enabling them to falsely report expenses and evade GST payments.

Specific instances are cited where invoices were allegedly procured without material receipt from October 29, 2020, through M/s. Advance Powertra Tech Limited, M/s. Radhika Electrocast Private Limited, Bharat Gupta, Pratik Chaturvedi, Janki Lal Sureka, and Siddarth Sharma, all purportedly for the benefit of his company in Hyderabad. Such actions are asserted to violate Section 31 of the CGST Act regarding invoice issuance and Section 16 concerning wrongful input tax credit claims.

The prosecution contends that the total GST amount involved in these operations from July 1, 2017, to August 31, 2020, amounts to Rs. 10.89 crores, including irregular input tax credits both inward and outward. This allegedly exceeds Rs. 5.00 lakhs, constituting a punishable offense under Section 132(1)(i) of the CGST Act.

In defense, Neeraj Karande’s counsel argues that there was no loss to the government exchequer and points to Section 138 of the CGST Act, which allows for the compounding of offenses. They assert that the respondent authorities did not follow the procedural requirements under Section 41A of the Code of Criminal Procedure, 1973 (CrPC). The defense also raises concerns about the delay in filing the complaint and suggests that the alleged wrongful input tax credit was attributable to a third party.

In conclusion, the defense seeks bail on grounds that the offenses are compoundable and that the respondent authorities failed to comply with procedural norms. They argue that Neeraj Karande has cooperated with the investigation and should not be denied bail unjustly, considering the nature of the alleged offenses and the circumstances surrounding the case.

The application before the court pertains to Neeraj Karande, the sole accused in a case registered under Sections 132(1)(x)(i) and 132(1)(x)(b)(c) of the Central Goods and Services Tax Act, 2017 (CGST Act). Neeraj Karande is identified as the managing director of M/s. GE Godavari Engineering Industries Limited, holding GST registration under GSTIN No. 36AACCG9862H3Z7.

The allegations against Neeraj Karande include the issuance of GST invoices and bills without actual supply of goods, which led to wrongful availment and utilization of input tax credit under the CGST Act. It is claimed that these actions were part of a scheme to inflate the company’s turnover artificially, purportedly to enhance loan facilities. The petitioner allegedly collaborated with various entities to procure invoices without receiving goods, thereby facilitating tax evasion by customers and inflating expenses in their accounts.

The complaint specifies instances where Neeraj Karande allegedly obtained GST invoices without material supply from entities such as M/s. Advance PowerTech Limited, M/s. Radhika Electrocast Private Limited, Bharat Group, Pratik Chaturvedi, Janki Lal Sureka, and Siddarth Sharma, between October 29, 2020, and November 2, 2020. These actions are stated to violate Section 31 of the CGST Act and Section 16 regarding input tax credit.

The petitioner is accused of wrongfully availing and utilizing input tax credit amounting to Rs. 10.89 crores during operations from July 1, 2017, to August 31, 2020. This sum allegedly includes irregular claims of inward and outward ITC, far surpassing the threshold for the offense under Section 132(1)(x)(i) of the CGST Act.

In response, the petitioner’s counsel argues that there has been no loss to the government exchequer, citing Section 138 of the CGST Act which allows for compounding of offenses. The defense contends that the authorities did not follow proper procedures under Section 41-A of the Code of Criminal Procedure, 1973 (CrPC) and raises concerns over the delay in lodging the complaint.

Further, the petitioner denies claims that M/s. GE Godavari Engineering Industries Limited was sold under the SARFAESI Act, presenting a sale deed executed in favor of M/s. Bajaj Heavy Engineering Limited as evidence to support this assertion. Additionally, the petitioner’s counsel points to a letter dated September 11, 2019, issued by the Assistant Commissioner (ST), Madhapur-III Circle, Hyderabad Rural Division, indicating no objection to the sale or mortgage of the company’s immovable property.

The defense asserts that the allegations against Neeraj Karande are based on flawed premises and procedural irregularities, advocating for regular bail on these grounds.

The present application pertains to Neeraj Karande, the sole accused in a case registered under the Central Goods and Services Tax Act, 2017 (CGST Act). He is accused of offenses under Section 132(1)(x) read with Section 132(1)(b)(c) for issuing GST invoices without actual supply of goods, leading to wrongful availment of input tax credit (ITC). Neeraj Karande is the managing director of M/s. GE Godavari Engineering Industries Limited and allegedly engaged in generating invoices and e-way bills without actual supply of materials or services, thereby inflating the company’s turnover to facilitate higher bank loans. The prosecution claims he facilitated others in falsely showing expenses and evading GST payments by issuing invoices without goods supply.

The allegations specify transactions involving significant amounts, totaling Rs. 10.89 crores, from July 2017 to August 2020, categorized as irregular ITC credits. The respondent asserts that such actions constitute offenses punishable under Section 132(1)(x) of the CGST Act.

In defense, Neeraj Karande’s counsel argues that there is no loss to the government exchequer and points to Section 138 of the CGST Act, which provides for compounding of offenses. They contend that the respondent authorities did not follow proper procedures under Section 41-A of the Code of Criminal Procedure, 1973 (Cr.P.C.), suggesting procedural lapses in the investigation and arrest.

Further, the defense challenges the delay in lodging the complaint, asserting it was filed long after the alleged period of offense, and disputes claims regarding the closure and sale of the company under the SARFAESI Act. They present documents indicating the company was sold to a private entity, not through bank enforcement.

The petitioner’s counsel also cites legal precedents and discrepancies in the statements recorded under Section 70 of the CGST Act, alleging coercion and misrepresentation.

Meanwhile, the prosecution maintains that Neeraj Karande’s role as managing director substantiates his involvement in serious offenses, referencing discrepancies in company records and non-existence of the registered office. They argue for continued custody citing the gravity of the offenses and ongoing investigation.

In conclusion, the bail application hinges on conflicting claims regarding procedural adherence, the gravity of alleged offenses, financial implications, and the petitioner’s role. The court is tasked with weighing these arguments to decide on the petitioner’s bail under the applicable legal provisions. 

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