Mohit Bathla vs. Central Goods And Service Tax Division Panipat

Held

The Court dismissed the petition for regular bail. The primary allegations against the petitioner concerned the availment of fake Input Tax Credit (ITC) from four firms, which, when clubbed, amounted to approximately Rs. 18 crores as calculated by the respondent. While acknowledging the petitioner's arguments regarding initial verifications and procedural aspects, the Court found that the alleged amount of fake ITC was substantial. Considering that the petitioner had been in custody for less than three months at the time of the decision, the Court deemed it inappropriate to grant the concession of regular bail at that stage. The Court did not explicitly discuss the specific legal provisions under challenge or the constitutional validity arguments raised by the petitioner's counsel, focusing instead on the prima facie case and the period of custody. The Court's decision was based on the gravity of the alleged financial fraud and the ongoing judicial custody.

Facts

The petitioner, Mohit Bathla, filed a petition under Section 439 of the Code of Criminal Procedure seeking regular bail. He was arrested on 25.10.2020 for alleged offences under Sections 132(1)(b) and 132(1)(c) of the Central Goods and Services Tax, 2017 (CGST Act). The petitioner's counsel argued that initial verifications of his firms' accounts and GST returns did not reveal any suspicious activity. Subsequent searches under Section 67 of the CGST Act also indicated that e-Way bills and transport documents were in order. The petitioner contended that the procedure under Section 67(10) of the CGST Act and Section 100(4) of the Cr.P.C. was violated during a search. He also argued that the alleged fake Input Tax Credit (ITC) amount was inflated by clubbing different amounts to attract a higher punishment. The respondent revenue authority argued that the petitioner's firm received invoices without actual supply of goods from fake/bogus firms and that the petitioner was operating multiple firms, including those registered in the names of his parents, which had filed fake ITC claims totaling approximately Rs. 18,85,47,218/-. The respondent also stated that a complaint had been filed against the petitioner.

Key Issues

1. Whether the petitioner is entitled to regular bail under Section 439 Cr.P.C. for alleged offences under Sections 132(1)(b) and 132(1)(c) of the CGST Act, 2017, considering the stage of proceedings and the allegations of availing fake Input Tax Credit (ITC)? Petitioner's Arguments: - Initial verifications of accounts and GST returns did not find anything suspicious. - Searches conducted under Section 67 of the CGST Act did not yield adverse findings regarding e-Way bills and transport documents. - Procedural irregularities occurred during searches, violating Section 67(10) of the CGST Act and Section 100(4) Cr.P.C. - The alleged fake ITC amount was inflated by clubbing different amounts to attract maximum punishment. - No fake or bogus invoices or false claims were made; all documents were filed as per rules. - The case against the petitioner is not proven as no complaint was filed (this was later contradicted by the respondent). - Relied on precedents where bail was granted in cases involving challenges to Sections 69 and 132 of the CGST Act and in similar circumstances. - Emphasized the principle of presumed innocence until guilt is proved beyond reasonable doubt. Respondent's Arguments: - A complaint has been filed against the petitioner. - The petitioner's firm received invoices without actual supply of goods from fake/bogus firms. - The petitioner is operating multiple firms, including those registered in his parents' names, which have filed fake ITC claims totaling approximately Rs. 18,85,47,218/- - The petitioner acknowledged these facts in a statement, though he claimed to be operating the firms. - Relied on a precedent where bail was declined after finding the accused prima facie violating penal provisions.