Sh. Ashish Goyal S/O Sh. Radhey Shyam vs. Union Of INDIA

Held

The Court held that the petitioner's argument that his actions fall under Section 122(1)(i) and not Section 132 of the CGST Act is not acceptable. The Court noted that the CBIC circular dated 06.07.2022 explicitly states that in cases of wrongful/fraudulent availment or utilization of input tax credit, or issuance of invoices without supply of goods or services, provisions of Section 132 of the CGST Act may be invokable, subject to facts and circumstances. The investigation revealed that the petitioner, through various fake companies, issued fake invoices without supplying goods and availed and passed on fraudulent ITC amounting to approximately ₹55 crores. The Court found that the petitioner committed this offence with a well-planned and deliberate design. Considering the gravity of the offence, which affects the economy of the country, and in light of the judgments of the Supreme Court regarding economic offences, the Court found it inappropriate to grant bail to the petitioner. The Court cited precedents like Y.S. Jagan Mohan Reddy vs. CBI, Ram Narain Poply vs. CBI, and State of Gujarat vs. Mohanlal Jitamalji Porwal and Anr., emphasizing that economic offences are a class apart and require a different approach in bail matters, as they pose a serious threat to the financial health of the country.

Facts

The petitioner, Sh. Ashish Goyal, is seeking bail under Section 439 CrPC in connection with a criminal case registered for offences under Section 132(1)(b)(c)(i) and 132(5) of the Central Goods and Services Tax Act, 2017. The Directorate General of Goods and Services Intelligence (DGGI) investigated the petitioner, who is the proprietor of M/s Shailu Goyal, a firm allegedly involved in issuing fake invoices without supply of goods. The petitioner claims he was merely an intermediary and passed on fraudulent input tax credit (ITC), while the ultimate beneficiary was another firm. He argues his actions fall under Section 122(1)(i) of the CGST Act, not Section 132, making him liable only for penalty. The petitioner also highlights that the main conspirator, Manjeet Kumar, has not been arrested and that he has already spent six months in custody. The revenue contends that the petitioner not only passed on fraudulent ITC but also availed it himself, and his supplier firms were non-operational.

Key Issues

1. Whether the petitioner's alleged act of passing on fraudulent input tax credit (ITC) constitutes an offence under Section 132 of the CGST Act, 2017, or falls under Section 122(1)(i) of the said Act, as argued by the petitioner? 2. Whether the petitioner is entitled to bail, considering the nature of the allegations, the severity of the punishment, and the precedents cited by both parties? Petitioner's arguments: The petitioner contends that he was merely an intermediary who passed on fraudulent ITC, and the ultimate beneficiary was another firm. He argues that his actions fall under Section 122(1)(i) of the CGST Act, making him liable only for penalty, and not under Section 132. He relies on a CBIC circular dated 06.07.2022. He also points out that the alleged mastermind, Manjeet Kumar, has not been arrested and that he has already spent six months in custody. He further argues that there is no direct evidence against him and that the investigation is complete. He cites various judgments supporting the grant of bail in similar cases. Revenue's arguments: The revenue argues that the petitioner not only passed on fraudulent ITC but also availed it himself, violating Section 16(2)(b) of the CGST Act. It is contended that the petitioner's supplier firms were non-operational, making the passed-on ITC ineligible. The revenue asserts that the issuance of fake invoices without supply of goods or services constitutes an offence punishable under Section 132(1)(b)(c) of the CGST Act. It is argued that the CBIC circular dated 06.07.2022 does not exclude the applicability of Section 132. The revenue also highlights that the alleged fraudulent ITC availed and passed on by the petitioner is substantial, approximately ₹55.25 lakhs, and that this case is distinct from the investigation involving Manjeet Kumar. It emphasizes that economic offences are serious and bail should not be granted.