Ajjimullah Naim Choudhary And Anr vs. The State Of Maharashtra

Held

The Court held that the applicants were not entitled to anticipatory bail. The reasoning was based on the strong prima facie evidence presented by the Revenue Department indicating fraudulent activities. The investigation papers revealed that major suppliers were either suspended or cancelled, and a verification of M/s Anu Enterprises showed it was non-existent, with no goods supplied. The statement of one Aakash further supported the allegations of fraudulent activities and the creation of bogus firms to avail fake ITC. The Court noted that the goods in stock were inconsistent with the documents, and there was a lack of supporting material for the delivery of goods, despite transactions involving crores of rupees. The Court concluded that custodial interrogation was necessary to thoroughly investigate the fraudulent activities. Relying on previous judgments of the High Court in similar cases where pre-arrest protection was denied, the Court found no case made out for granting the relief sought by the applicants. Therefore, the application was rejected.

Facts

The applicants, Ajjimullah Naim Choudhary and Hafjullaj Choudhary, proprietors of Maharashtra Steel Traders Prop. and Hira Steel Prop. respectively, sought anticipatory bail. They were summoned by the Revenue Department under Section 70 of the CGST Act, 2017, in connection with alleged fraudulent availment of Input Tax Credit (ITC). The Revenue Department contended that the applicants availed fake ITC on invoices from non-existent companies. Initially, the applicants attended the office but failed to produce documents. Later, they failed to appear despite summons. The alleged amounts of fake ITC are Rs. 15,86,82,750/- for Hira Steel Prop. and Rs. 7,17,94,443/- for Maharashtra Steel Traders Prop. The trial court had declined jurisdiction under Section 438 of Cr.P.C., leading the applicants to approach the High Court.

Key Issues

1. Whether the applicants are entitled to anticipatory bail in light of the allegations of fraudulent availment of Input Tax Credit (ITC) under the Central Goods and Services Tax (CGST) Act, 2017? The applicants argued that their kin was managing affairs without their knowledge and that they had cooperated initially and assured future cooperation, thus seeking protection. They relied on their initial attendance and assurance of cooperation. The Revenue Department argued that the applicants had fraudulently availed ITC on invoices of non-existent companies. They presented investigation papers indicating that major suppliers were suspended or cancelled, and verification of a supplier, M/s Anu Enterprises, revealed it was non-existent. A statement from one Aakash corroborated fraudulent activities, suggesting bogus firms were created to avail fake ITC. The department contended that the goods in stock were inconsistent with documents, and there was no supporting material for delivery of goods, indicating fraudulent ITC availment and the necessity for custodial interrogation. The Revenue Department relied on several previous orders of the Bombay High Court in similar cases where pre-arrest protection was declined.