Abhishek Pandey vs. Government Of INDIA

Held

The Court held that the submission that prior assessment was not made before invoking powers under Section 67 of the GST Act for inspection, search, and seizure does not stand. Section 67 allows the Proper Officer to authorize inspection, search, and seizure after recording reasons to believe that a taxable person has suppressed transactions, claimed excess input tax credit, or evaded tax. The Court noted that there was no argument that no reasons were recorded. Regarding bail, the Court acknowledged that the applicants were arrested for offences punishable under Sections 16 and 132(1)(b) & (c) of the GST Act. While these are economic offences, the Court considered the provisions of Section 138 of the GST Act concerning compounding of offences. The Court also took into account the quantum of input tax credit stated to have been wrongly availed/utilized, the period of detention (since July 20, 2021), and the filing of the charge sheet after due investigation. Citing Supreme Court judgments in Shri Gurbaksh Singh Sibbia & ors vs. State of Punjab, Sanjay Chandra vs. CBI, and P. Chidambaram vs. Directorate of Enforcement, the Court, without commenting on the merits of the case, inclined to enlarge the applicants on regular bail. The applicants were directed to be released on furnishing a personal bond of Rs.1,00,000/- with one surety, subject to conditions including regular appearance, not tampering with witnesses, and the possibility of bail cancellation if involved in similar future offences.

Facts

Two applications for regular bail were filed by Rohan Tanna and Abhishek Pandey, who are in custody since July 20, 2021. They were arrested in connection with Crime No.133/2020-21 registered by the Senior Intelligence Officer, Director General of GST Intelligence, Zonal Unit, Raipur. The allegations are that the applicants, through fake input tax credit invoices without actual supply of goods, facilitated fraudulent input tax credit to recipients, affecting GST collection. The total fake input tax credit availed by M/s Abhishek Marketing, M/s Shree Ji Traders, and M/s Ishant Traders was Rs.7,60,54,780/-. Bail applications filed before the Sessions Judge were rejected. The applicants contend that the proceedings are not in accordance with law, that they are falsely implicated, and that the offences are compoundable. The prosecution argues that material collected during search and investigation prima facie shows the applicants' involvement in committing offences under the GST Act.

Key Issues

1. Whether the search and seizure conducted by the non-applicant Department without prior assessment of the amount of fraudulent transactions of input tax credit is contrary to the provisions of the GST Act, specifically Section 67? 2. Whether the applicants are entitled to regular bail considering the nature of the alleged economic offence, the quantum of input tax credit involved, the period of detention, and the provisions for compounding of offences under Section 138 of the GST Act? Petitioner's Arguments: - The proceedings are not in accordance with law as search and seizure were conducted without prior assessment. - Applicant Rohan Tanna is not involved in the business of M/s JR Traders and is falsely implicated. - Necessary bills were produced to substantiate purchases, and there is no evidence of non-purchase against invoices. - There is a delay in the proceedings. - The offences alleged under Section 132(1)(b) and (c) of the GST Act are compoundable under Section 138. - Charge sheet has been filed, and further custodial interrogation is not required. - Applicant Abhishek Pandey is only a friend of Rohan Tanna and not connected with the business dealings of M/s Abhishek Marketing. Revenue's Arguments: - Search and seizure were conducted based on an intelligence report and materials indicating involvement in issuing invoices without supply of goods or services. - Statements of persons, including bank employees and the applicants, were recorded. - Shri Vipin Tanna's statement confirms Rohan Tanna's management of M/s JR Traders. - Prima facie material shows transactions with co-accused and the generation of fake invoices and e-way bills for illegal input tax credit. - The offences are serious economic offences, and the applicants have not deposited any amount towards their liability, thus compounding is not applicable. - The applicants are not entitled to bail due to the gravity of the offence and severity of punishment.