Case tittle | Sri Neeraj Karande VS The Directorate General of GST lntelligence |
Court | Telangana high court |
Honourable Judge | JUSTICE K. LAKSHMAN |
Citation | 2020 (11) GSTPanacea 167 HC Telangana CRIMINAL PETITION NO: 5967 OF 2020 |
Judgment Date | 30-November-2020 |
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that the petitioner’s actions resulted in wrongful availment and utilization of input tax credit, constituting offenses under Sections 132(1)(x) and 132(1)(b)(c) of the Central Goods and Services Tax Act, 2017 (CGST Act). Neeraj Karande, identified as the sole accused in the case, serves as the managing director of M/s. GE Godavari Engineering Industries Limited, which holds GST registration under GSTIN No. 36AACCG9862H3Z7.
During the hearing for regular bail, Mr. Balram Mohan Reddy appeared as counsel for the petitioner, while Mr. P. Dhalmesh represented the respondent. The court reviewed the pertinent records presented before it.
The prosecution alleges that Neeraj Karande, in his capacity as managing director, orchestrated a scheme involving the issuance of GST invoices and bills without actual goods being supplied. This purportedly enabled him to improperly avail and utilize input tax credit, contrary to the provisions stipulated in the CGST Act and its accompanying rules. The modus operandi described involves the issuance of invoices and bills to customers, indicating supply of goods, while no such goods were actually transferred.
The offense outlined against Neeraj Karande falls under Sections 132(1)(x) and 132(1)(b)(c) of the CGST Act, which pertain to fraudulent activities related to input tax credit under GST regulations. These allegations form the basis of the criminal complaint filed against him.
In the application for regular bail, Mr. Balram Mohan Reddy argued on behalf of the petitioner, presenting his case for bail consideration. The court, having reviewed the submissions and records, is now tasked with adjudicating on whether to grant Neeraj Karande regular bail in light of the charges brought against him.
The petitioner, according to the business needs of the Company, procured invoices without actual receipt of goods and used these invoices to increase the Company’s annual turnover, thereby enhancing his banking loan facilities. Additionally, he issued GST invoices without supplying goods to various other parties, helping them to falsely show these invoices as expenses in their accounts. It is further alleged that he supplied invoices without supplying goods to some customers to avoid paying GST in cash.
Specifically, he procured GST invoices without receiving materials between 29.10.2020 and 02.11.2020 through M/s. Advance Power Infra Tech Limited, M/s. Radhika Electrocast Private Limited, Bharat Gupta, Pratik Chaturvedi, Janki Lal Sureka, and Siddarth Sharma, at his request, for his Company located in Hyderabad. This issuance of GST invoices and e-way bills without actual supply of material/services contravenes the provisions of Section 31 of the CGST Act. Furthermore, availing input tax credit (ITC) of GST on the basis of fake GST invoices issued without the supply of material violates Section 16 of the CGST Act.
As a result, the petitioner wrongfully availed or utilized input tax credit and also availed input tax credit on the basis of invoices/bills issued without the supply of actual goods or services. This constitutes an offense under Clause (b) and (c) of Sub-Section (1) of Section 132 of the CGST Act, as detailed in the statements given by him.
The petitioner, driven by the business needs of the Company, procured invoices without the actual receipt of goods and used these invoices to significantly increase the Company’s annual turnover. This was done to enhance his banking loan facilities. Additionally, he issued GST invoices without supplying goods to various parties, aiding them in falsely reporting these as expenses in their accounts. It is further alleged that the petitioner supplied invoices without the supply of goods to some customers to avoid GST payment in cash.
The petitioner is accused of procuring GST invoices without the receipt of materials between 29.10.2020 and 02.11.2020 through entities such as M/s. Advance Power Infra Tech Limited, M/s. Radhika Electrocast Private Limited, Bharat Gupta, Pratik Chaturvedi, Janki Lal Sureka, and Siddarth Sharma, all at his request for his Company located in Hyderabad. This act of issuing GST invoices and e-way bills without actual supply of materials or services contravenes Section 31 of the CGST Act. Furthermore, availing input tax credit of GST based on these fake GST invoices, without the supply of material, violates Section 16 of the CGST Act.
Thus, the petitioner has wrongfully availed or utilized input tax credit based on invoices or bills issued without the supply of actual goods or services. This constitutes an offense under Clause (b) and (c) of Sub-Section (1) of Section 132 of the CGST Act, as mentioned in the statements given by him.
The petitioner, in alignment with the company’s business needs, procured invoices without actual receipt of goods and supplied these invoices to increase the company’s annual turnover, thereby enhancing his banking loan facilities. Additionally, he issued GST invoices without the actual supply of goods to various parties, enabling them to record these as expenses in their accounts. It is further alleged that he supplied invoices without the supply of goods to some customers to avoid the payment of GST in cash.
Between October 29, 2020, and November 2, 2020, he procured GST invoices without the actual receipt of materials through various entities including M/s. Advance Power Infra Tech Limited, M/s. Radhika Electrocast Private Limited, Bharat Gupta, Pratik Chaturvedi, Janki Lal Sureka, and Siddarth Sharma, for his company located in Hyderabad. The issuance of GST invoices and e-way bills without the actual supply of material or services contravenes the provisions of Section 31 of the CGST Act. Moreover, availing input tax credit (ITC) of GST based on fake GST invoices issued without the supply of material violates Section 16 of the CGST Act.
Thus, the petitioner wrongfully availed or utilized ITC and availed ITC based on invoices or bills issued without the supply of actual goods or services, constituting offenses under Clause (b) and (c) of Sub-Section (1) of Section 132 of the CGST Act. The CST amount involved in these operations from July 1, 2017, to August 31, 2020, is Rs. 10.89 crores (Rs. 5.46 crores inward irregular ITC credit plus Rs. 5.43 crores outward irregular ITC credit), which exceeds Rs. 500.00 lakhs, making it an offense punishable under Section 132(1)(i) of the CGST Act. These details were provided by the petitioner in his statements dated October 29, 2020, recorded under Section 70 of the CGST Act
The petitioner is accused of procuring invoices without the actual receipt of goods and using these invoices to artificially inflate the company’s annual turnover, thereby enhancing their banking loan facilities. Additionally, the petitioner issued GST invoices without supplying goods to various parties, enabling them to falsely show these as expenses in their accounts. It is further alleged that the petitioner provided invoices without the supply of goods to avoid paying GST in cash. Specifically, between 29.10.2020 and 02.11.2020, the petitioner procured GST invoices without the receipt of materials through several companies, including M/s. Advance Power Infra Tech Limited, M/s. Radhika Electrocast Private Limited, Bharat Gupta, Pratik Chaturvedi, Janki Lal Sureka, and Siddarth Sharma for his company in Hyderabad. This practice of issuing GST invoices and e-way bills without actual supply of materials or services contravenes Section 31 of the CGST Act.
Furthermore, the petitioner wrongfully availed or utilized input tax credit (ITC) based on fake GST invoices, which is a violation of Section 16 of the CGST Act. The offense falls under Clause (b) and (c) of Sub-Section (1) of Section 132 of the CGST Act. The petitioner’s actions from 01.07.2017 to 31.08.2020 resulted in a GST amount involved of Rs.10.89 crores (Rs.5.46 crores inward irregular ITC credit plus Rs.5.43 crores outward irregular ITC credit), significantly exceeding the Rs.500.00 lakh threshold for an offense punishable under Section 132(1)(i) of the CGST Act. These facts were explained by the petitioner in his statements dated 29.10.2020 recorded under Section 70 of the CGST Act.
The petitioner’s counsel argues that there has been no loss to the Government exchequer, emphasizing that the GST is beneficial legislation and that Section 138 of the CGST Act allows for the compounding of offenses. The counsel also points out that the offense is punishable by five years, is cognizable, and non-bailable, requiring the authorities to follow the procedure under Section 41A of the Code of Criminal Procedure, 1973, which was not adhered to in this case. The counsel contends that the petitioner has been wrongfully implicated, noting an abnormal delay in lodging the complaint, as the alleged ITC credit irregularities occurred from 01.07.2017 to 31.08.2020, but the complaint was not lodged until 02.11.2020.