Shravan VS Superintendent of Central

imprisonment for a term which may extend to five years and with fine. He further submitted that the petitioners are ready to abide by any conditions that may be imposed by this Court and they will co-operate with the investigation.

claim input tax credit and thereby evading payment of tax. He further submitted that the offence under Section 132 of the GST Act is a serious economic offence and the petitioners cannot seek anticipatory bail. He further submitted that it is not a fit case to exercise the discretionary power under Section 438 of Cr.P.C. It is his further submission that there is a prima facie case made out against the petitioners and this Court cannot go into the merit of the case. It is his further submission that the tax has not been paid and the petitioners have fraudulently availed credit on the strength of fake invoices. It is also his submission that the petitioners have committed serious offence of fraudulently passing of credit which is prejudicial to the interest of the Revenue. It is also his submission that the interest of justice requires to reject the petitions. On these grounds, he prayed to reject the petitions.

6. Having heard both the parties and on perusal of the material available on record, it is to be noted that the petitioners have filed these petitions under Section 438 of Cr.P.C. for releasing them on anticipatory bail.

7. The G.S.T.Act is a new enactment and it is a fiscal statute. The object of the enactment is to provide for levy and collection of tax on intra-State supply of goods or services or both. The offences under the G.S.T.Act are cognizable and non-bailable. As per the section 132 of the G.S.T.Act, the offence is punishable with imprisonment for a term which may extend to five years and with fine.

8. As per the allegation made against the petitioners that they have obtained Invoices from the Company of the respondent without delivery of the goods and thereby evaded payment of tax. It is his submission that even the tax has been paid on the basis of the invoice raised. When once the tax has been paid that does not amount to an offence under section 132 of the G.S.T.Act. It is his further submission that the alleged offence is not punishable with death or imprisonment for life. The maximum punishment which is liable to be imposed is five years and fine. It is his further submission that the alleged offence is compoundable with the Commissioner, who has initiated the said proceedings. He further submitted that the object of the G.S.T.Act is to encourage trading and not to curtail the business of the traders. In the present case, the investigation is being carried out by the respondent and in the statement of objection, it is submitted that the investigation has revealed that the issuance of fake invoices without actual supply of goods has been done with an intention to enable other registered tax payers to fraudulently claim input tax credit and thereby evading payment of tax.

with the evidence and also influencing the witnesses, as they are the residents of this place. Hence, he prayed to reject the petitions.

6. Having carefully considered the rival submissions, it is clear that the petitioners have been accused of obtaining invoices without actual delivery of goods, allegedly to evade taxes under the Central Goods and Services Tax Act, specifically under Section 132(1)(b). The primary contention of the petitioners, argued by learned senior counsel Sri Ravi.B.Naik, is that they have cooperated with the investigation, attended summons, and dispute the severity of the alleged offence. He emphasized that under the GST Act, the offence in question is not punishable with death or life imprisonment, and can be compounded, reflecting a legislative intent to encourage compliance rather than punishment.

7. Conversely, the standing counsel for the GST Commissionerate contends that the issuance of fake invoices undermines the integrity of the GST system, allowing fraudulent claims of tax credits and causing substantial economic harm. Citing Section 69 of the GST Act, he argues that the gravity of the alleged offence warrants denial of anticipatory bail to prevent tampering with evidence and potential influence over witnesses.

8. After weighing these arguments, the Court finds that while the petitioners’ arguments regarding legislative intent and non-severity of punishment are noteworthy, the alleged offence pertains to deliberate malpractice under a critical tax legislation designed to safeguard economic integrity. The potential impact on the economy through fraudulent practices as alleged needs careful consideration.

9. Considering the totality of circumstances, the Court is of the view that custodial interrogation may be necessary for a thorough investigation, particularly given the allegations of systemic abuse through fake invoicing to evade taxes. However, in balancing the interests of justice and the liberty of the petitioners, and noting their willingness to comply with conditions, the Court deems it appropriate to grant anticipatory bail under stringent conditions to ensure their availability for further investigation.

10. Therefore, the petitions under Section 438 of the Cr.P.C. are allowed, and it is directed that the petitioners shall be released on anticipatory bail upon furnishing a bond with stringent conditions. They shall cooperate fully with the investigation, refrain from tampering with evidence or influencing witnesses, and shall appear before the investigating officer as and when required for further proceedings. The petitions are disposed of accordingly.

These two petitions were filed under Section 438 of the Criminal Procedure Code (Cr.P.C.) seeking anticipatory bail for the petitioners in connection with O.R.No.40/2018-19 under Section 132 of the Central Goods and Services Tax Act (GST Act).

In court proceedings, Senior Counsel Sri. Ravi.B.Naik represented the petitioners while Sri. Jeevan.J.Neeralgi appeared for the GST Commissionerate. The allegations against the petitioners revolve around obtaining invoices from a company without actual delivery of goods, purportedly to evade tax, constituting an offense under Section 132(1)(b) of the GST Act.

The crux of the defense’s argument was that the petitioners had previously cooperated with investigative summons issued by the respondent. They argued that no offense under Section 132 of the GST Act was committed as taxes had been paid based on the invoices raised. They highlighted that the maximum punishment for such offenses is five years and a fine, and that the Act provides for compounding of offenses, indicating legislative intent to encourage compliance rather than penalize excessively. The defense also emphasized readiness to comply with any conditions the court might impose.

In opposition, the standing counsel for the GST Commissionerate contended that the investigation revealed the issuance of fake invoices without goods supplied, facilitating fraudulent input tax credit claims, thus causing significant economic loss. Quoting Section 69 of the GST Act, they argued for the continuation of custody, suggesting risks of evidence tampering and absconding if bail were granted. They stressed the ongoing nature of the investigation and the necessity to uncover further facts.

After careful consideration of arguments from both sides and examining the records, the court deliberated on the provisions of Sections 132, 138, and 139 of the GST Act. These sections outline offenses related to tax evasion through improper invoicing and non-compliance with tax remittance obligations.

Ultimately, the court’s decision on whether to grant anticipatory bail hinges on balancing the gravity of the alleged offenses, potential risks to the investigation, and the petitioners’ cooperation during the proceedings.

These petitions under Section 438 of the Criminal Procedure Code seek anticipatory bail for the petitioners in relation to O.R. No. 40/2018-19, where they are accused under Section 132 of the Central Goods and Services Tax (GST) Act. The allegations center on their purported involvement in obtaining invoices from a respondent company without actual delivery of goods, thereby evading tax under Section 132(1)(b) of the GST Act.

During the hearing, Sri. Ravi B. Naik, representing the petitioners, argued that they had already cooperated with the investigation by attending summons and providing statements. He contended that no offense as described under Section 132 had been committed since taxes were duly paid based on the invoices in question. Moreover, he emphasized that the maximum penalty for such offenses is imprisonment for up to five years, which can be compounded under the GST Act, indicating legislative intent to support taxpayers and not overly penalize them. The counsel expressed readiness for any conditions imposed by the court and sought anticipatory bail for the petitioners.

In contrast, the learned standing counsel for the GST Commissionerate countered that the issuance of fake invoices without goods being supplied aims to fraudulently avail input tax credit, leading to substantial economic losses. He cited Section 69 of the GST Act, which authorizes arrest if there are reasonable grounds to believe an offense has been committed under Section 132. He argued against bail, citing ongoing investigations and the potential for tampering with evidence or flight risk if the petitioners were released.

After considering the arguments and perusing the records, the court noted the provisions of Sections 132, 138, and 139 of the GST Act, which outline various offenses and penalties related to tax evasion, issuance of fake invoices, and obstructing officers’ duties. These sections detail punishments including imprisonment for up to five years and fines for amounts exceeding five hundred lakh rupees in tax evasion cases.

Ultimately, the court has yet to decide on the petitions, weighing the arguments for and against anticipatory bail based on the seriousness of the alleged offenses, ongoing investigations, and the potential impact on economic integrity under the GST framework.

Two petitions have been filed under Section 438 of the Criminal Procedure Code (Cr.P.C.), seeking anticipatory bail in O.R. No. 40/2018-19 for alleged offences under Section 132 of the Central Goods and Services Tax Act (GST Act). The petitioners are accused of obtaining invoices from a company without actual delivery of goods, which allegedly facilitated fraudulent claims for input tax credit, thereby evading tax liability.

During the hearing, arguments were presented by both sides. Senior counsel for the petitioners contended that they had cooperated during earlier summons by the GST authorities, had paid the taxes based on the invoices received, and argued that no offence under Section 132 of the GST Act was committed as the tax had been duly paid. It was emphasized that the offences alleged were punishable with a maximum of five years’ imprisonment and were compoundable with the Commissioner, suggesting a legislative intent to support taxpayers rather than penalize them. The counsel assured the court of the petitioners’ readiness to comply with any conditions imposed for bail.

On the contrary, the standing counsel representing the GST Commissionerate opposed the bail petitions, asserting that the investigation revealed the issuance of fake invoices to fraudulently claim input tax credit, causing significant economic losses. Referring to Section 69 of the GST Act, which permits arrest in cases where specific offences are suspected, the standing counsel argued against granting bail, highlighting the ongoing investigation and the potential for tampering with evidence or absconding if the petitioners were released.

After considering the submissions from both sides and examining the relevant provisions of the GST Act, the court deliberated on the nature of the alleged offences under Section 132, which cover various acts like issuance of fake invoices or evasion of taxes. The court also referred to Sections 138 and 139 of the GST Act, which delineate the penalties and procedures related to such offences.

Given the complexity of the case and the arguments presented, the court reserved its decision on whether to grant anticipatory bail to the petitioners, noting the seriousness of the allegations and the ongoing investigation.

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