Bharat Raj Punj S/O Late Shri Brij Raj Punj vs. Central Goods And Service Tax Commissionerate

Held

The Court considered the submissions and the material placed before it. It noted the serious allegations against the petitioner regarding the wrong availment of Input Tax Credit (ITC) exceeding Rs. 40.53 Crores, which was involved in the supply of goods. The Court also took into account that the matter was still at the stage of investigation. Without expressing any opinion on the merits of the case, the Court found itself not inclined to grant the benefit of bail to the accused-petitioner due to the gravity of the offence and the ongoing investigation. The Court dismissed the bail application filed under Section 439 Cr.P.C. The specific issues raised by the petitioner regarding the determination of tax liability, issuance of show cause notice, bailability of the offence, and the petitioner's role were not explicitly decided in favour of the petitioner, leading to the dismissal of the bail application. The Court's reasoning focused on the seriousness of the allegations and the stage of investigation.

Facts

The petitioner, Bharat Raj Punj, filed a criminal miscellaneous bail application under Section 439 Cr.P.C. before the Rajasthan High Court. The application arose from a complaint case registered by the Central Goods and Services Tax Commissionerate, Alwar, for alleged offences under Sections 132(1)(b), (c), and (d) of the Central Goods Services Tax Act, 2017. The petitioner contended that he was falsely implicated, no tax liability was determined before invoking Section 132, no show cause notice was issued, and the alleged offence was bailable. He also claimed he was not the Managing Director during the investigation period (July 2017 to March 2018) and was unaware of the company's affairs, which were managed by his father. The petitioner highlighted that the company had revised credit by issuing a Credit Note and paid an additional Rs. 4 crore without demand, and he had no criminal antecedents and had been in custody for over two months. The respondent-Department opposed the bail, stating the company availed Input Tax Credit (ITC) of Rs. 40.53 crores on invoices from a bogus company without receiving goods, making the offence cognizable and non-bailable as the wrongly availed ITC exceeded Rs. 5 crores. The investigation was ongoing, and the petitioner, as Deputy Managing Director, was deemed involved. Bail applications of co-accused were dismissed.

Key Issues

1. Whether the offences alleged against the petitioner under Sections 132(1)(b), (c), and (d) of the Central Goods Services Tax Act, 2017, are made out without prior determination of tax liability and issuance of a show cause notice? 2. Whether the alleged offence is bailable, considering the mention of 'fraudulently' in the arrest memo and the provisions of Section 132(4) read with Section 132(5) of the Act? 3. Whether the petitioner, not being the Managing Director during the relevant period and not involved in day-to-day affairs, can be held liable for the alleged offences? Petitioner's Arguments: - The Department invoked Section 132 without determining tax liability and issuing a show cause notice. - The offence is bailable as per Section 132(4) read with Section 132(5) of the Act, evidenced by the term 'fraudulently' in the arrest memo. - The petitioner was not the Managing Director during the period of alleged offence (July 2017-March 2018) and was unaware of the company's affairs, which were managed by his father. - The company revised credit via Credit Note and paid Rs. 4 crore without demand, making the position neutral. - The petitioner has no criminal antecedents and has been in custody for over two months. Respondent's Arguments: - The company wrongly availed inadmissible ITC of over Rs. 40.53 crores on goods valued at Rs. 225.19 crores from a bogus company without receiving goods. - Offences where wrongly availed/utilized ITC exceeds Rs. 5 crores are punishable with imprisonment up to five years and are cognizable and non-bailable. - The investigation is ongoing. - The petitioner, as Deputy Managing Director, is deemed involved in all company activities. - Bail applications of co-accused were dismissed, and the allegations are serious, affecting the economy.