Manoj Kumar Pareek vs. The State Of Jharkhand

Held

The Court held that the petitioner's contention regarding the mandatory adjudication under Section 74 of the JGST Act prior to the institution of the criminal case was not sustainable in law. The Court noted that the Director General of DGCEI had found the petitioner liable after an inquiry, and prior to the institution of the case, the petitioner had already been issued a notice under Section 74 of the Act. The Court found the statements of GSTR-2A and GSTR-3B, along with the claim of transit sale, to be contradictory. Furthermore, the Court observed that the petitioner had not made payments to the sellers from whom materials were purchased but instead made payments to another firm, M/s Jai Hanuman Metallicks, which substantiated the allegation of fake transactions to obtain a huge amount of input tax credit based on forged documents. The Court also noted that the petitioner had created fabricated rental papers and other documents to show a forged address, and no factory was found at the given address. Given the serious nature of the case, the huge financial amount involved, and the findings of fabricated documents and fake transactions, the Court was not inclined to exercise its power under Section 438 Cr.P.C. Therefore, the prayer for anticipatory bail was rejected.

Facts

The petitioner, Manoj Kumar Pareek, sought anticipatory bail in connection with a case registered under sections of the Indian Penal Code and the Jharkhand Goods and Services Tax Act, 2017. The allegations include obtaining GST registration based on forged documents, wrongly claiming input tax credit of Rs. 5,73,42,065.90 without inward supply, and fraudulently adjusting input credit worth Rs. 2,39,56,138.42 (SGST/CGST) and Rs. 3,43,99,080.27 (IGST) between October 2017 and February 2018. The petitioner argued that the FIR was filed without initiating mandatory proceedings under Section 73/74 of the GST Act and cited judgments from the Madras and Delhi High Courts. The State opposed the bail, presenting an inquiry report detailing discrepancies in sales and purchase records, alleged fake transactions, and the absence of a physical office or factory at the registered address.

Key Issues

1. Whether the criminal proceedings under the Indian Penal Code and the Jharkhand Goods and Services Tax Act, 2017, are maintainable without prior adjudication under Section 73 or 74 of the JGST Act, 2017, as contended by the petitioner, relying on M/s Jayachandran Alloys (P) Ltd. vs. Superintendent of GST and Central Excise and Ors. and MAKEMYTRIP (India) Pvt. Ltd vs. Union of India & Ors? 2. Whether the petitioner is entitled to anticipatory bail given the serious allegations of fraud, forgery, and substantial financial implications involved, as argued by the State based on inquiry reports and counter-affidavits? Petitioner's Arguments: The petitioner argued that the FIR was filed prematurely, as mandatory adjudication under Section 73/74 of the JGST Act was not completed. They relied on High Court judgments supporting this procedural requirement before initiating criminal cases. The petitioner also contended that transactions were electronic, no actual loss was suffered by the State, and documents showing corresponding entries in debit and credit accounts were produced. They further claimed their business was closed and registration surrendered prior to inspection, making forgery allegations unsustainable. State's Arguments: The State opposed the bail, presenting detailed findings from an inquiry report. They highlighted contradictions in the petitioner's GSTR-2A and GSTR-3B statements regarding stock and sales, questioned the mode of transportation and payment, and alleged that payments were made to an unrelated firm (M/s Jai Hanuman Metallicks) instead of sellers, indicating fake transactions. The State also pointed to the absence of a physical office or factory and the creation of fabricated documents. They relied on the judgment in Vikas Goel and Another vs. Central Goods and Services Tax Commissionerate, Gurugram.