Gyaan Chandra Jaiswal vs. The Union Of INDIA By Shri Dinesh Kumar Intelligence Officer

Held

The Court allowed the bail application of the petitioner, Gyaan Chandra Jaiswal @ Gyan Chandra Jaiswal. The Court noted that the allegations against the petitioner were primarily based on witness statements, and the prosecution had not adduced sufficient documentary evidence to substantiate the claims of creating fake firms, availing, and utilizing ITC amounting to Rs.54.33 crore. Although the prosecution provided a list of documents in their counter-affidavit, the relied-upon documents were not annexed as proof. The Court considered that the petitioner had been in custody since June 25, 2024, and the alleged offence is punishable with a maximum of five years imprisonment. Given that the trial was unlikely to conclude soon and the prosecution had not demonstrated any apprehension of tampering with evidence or flight risk by the petitioner, the Court found it appropriate to grant bail. The petitioner was released on bail upon furnishing a bail bond of Rs.1,00,000/- with two sureties of the like amount, subject to conditions including cooperation in the investigation and trial, surrendering his passport, not leaving India without court permission, and not threatening witnesses or tampering with evidence. The issue regarding Section 137 of the CGST Act and the applicability of the circular were not explicitly decided but factored into the overall consideration for bail.

Facts

This bail application was filed by Gyaan Chandra Jaiswal @ Gyan Chandra Jaiswal, who was arrested in connection with Complaint Case No.2360 of 2024 for alleged offences under Sections 132(1)(b), 132(1)(c), and 132(5) of the Central Goods and Services Tax Act, 2017. The Directorate General of GST Intelligence (DGGI), Jamshedpur, developed intelligence indicating that M/s Jai Bhole Enterprises, registered for supplying ferrous waste and scrap, had supplied goods worth Rs.122 crore in its first year of operation. This firm had set off its GST liability of Rs.22.45 crore primarily through Input Tax Credit (ITC), amounting to Rs.22.26 crore, which raised suspicions. Investigations revealed that M/s Jai Bhole Enterprises appeared to be a non-existent firm. The petitioner is alleged to be the mastermind behind M/s Jai Bhole Enterprises, through which bogus ITC of Rs.22.31 crore was availed and passed on to firms where he was a director or his son was a director, including M/s Maa Sharda Endeavour Pvt. Ltd., M/s Makers Casting Private Limited, and M/s Kedarnath Trexim Private Limited. The total involvement of fake GST ITC is alleged to be Rs.54.33 crore.

Key Issues

1. Whether the petitioner is entitled to be released on bail given the allegations of masterminding the creation of a fake firm, availing, and passing on inadmissible Input Tax Credit (ITC) amounting to Rs.54.33 crore, as per Section 132(1)(b), 132(1)(c), and 132(5) of the CGST Act, 2017? Petitioner's Arguments: - The allegations are based on witness statements, and no documentary evidence has been adduced by the prosecution to support the claims against the petitioner. - The entire proceeding is vitiated due to the absence of named companies, alleged beneficiaries, as parties to the case, citing Section 137 of the CGST Act. - The petitioner's arrest and prosecution are in conflict with Circular No.171/03/2022-GST dated 06.07.2022 and Section 122(1)(ii) of the CGST Act, 2017, especially considering the maximum punishment is five years, as per the guidelines in Satyendra Kumar Antil Vs. CBI. - The petitioner is not a director or holds any position in M/s Kedarnath Trexim Private Limited, and has no criminal antecedent. - The petitioner poses no flight risk and is willing to abide by court conditions. Revenue's Arguments: - The petitioner is the mastermind who created M/s Jai Bhole Enterprises to avail bogus ITC of Rs.22.31 crore and passed it on to his directorship firms (M/s Maa Sharda Endeavour Pvt. Ltd., M/s Makers Casting Private Limited) and his son's directorship firm (M/s Kedarnath Trexim Private Limited). - The total involvement of fake GST ITC is Rs.54.33 crore, making the petitioner the main beneficiary and mastermind. - The bail application should be rejected.