Debiting through electronics ITC ledger a valid deposit: Delhi High Court

Debiting through electronics ITC ledger a valid deposit: Delhi High Court

It set aside the trial court's order against the petitioner being granted bail

The single bench of the Delhi High Court presided by Justice Mukta Gupta on the issue of Input Tax Credit (ITC) fraud has held that debiting through an electronic ITC ledger is a valid deposit to fulfill the bail conditions.

The petitioner, Amit Gupta, is one of the directors of Brilliant Metals Pvt. Ltd., Progressive Alloys India Pvt. Ltd., and JBN Impex Pvt. Ltd.

He was allegedly the mastermind behind devising a mechanism of availing ITC based on the bills of various non-existing and fictitious suppliers. He, thus, availed fraudulent ITC worth Rs.27.05 crores and was arrested and granted regular bail subject to certain conditions, which included depositing Rs.2.70 crores.

He deposited Rs.1.10 crores through a cash ledger and Rs.1.60 crores by way of debiting/reversals through an electronic ITC ledger.

However, the trial court canceled the bail granted to the petitioner believing that the ITC availed were through fraudulent means. Since the entire ITC claimed by the companies was under a cloud, the petitioner was not entitled to furnish Rs.1.60 crores by reversal of the ITC as a condition of bail.

Aggrieved by the trial court's order, the petitioner filed a writ petition before the Delhi High Court.

The petitioner's counsel Rajesh Jain submitted that the petitioner had to his credit ITC worth Rs.260 crores, but the investigation did not show it beyond Rs.42 crores. Therefore, the reversal of the ITC credit for depositing the part amount of Rs.2.70 crores with the department could not be illegal or unwarranted.

But the respondent's counsel Harpreet Singh submitted that the ITCs were fraudulent, therefore, those could not be availed for deposit.

But, setting aside the trial court's impugned order, the high court held, "The petitioner fulfilled the condition of deposit of the amount partly by cash ledger and partly by a debit ledger of the ITC. It could not be said that he had failed to fulfill the conditions imposed on him."