Gujarat High Court grants bail to the accused who evaded GST

Gujarat High Court grants bail to the accused who evaded GST

The alleged fudged amount was Rs.21 crores    

The Gujarat High Court has granted bail to an accused who allegedly evaded the Goods and Services Tax (GST). The court reasoned it was being done, as the investigation by the department was virtually over.

The GST department arrested the applicant based on the conclusion that Mohmed Hasan Aslam Kaliwala, along with others, was indulging in creating a fictitious entity to pass ineligible Input Tax Credit (ITC) using two fake firms.

The investigation showed that the firms were wrongfully issuing fake invoices to pass ineligible ITC to the beneficiaries without any actual movement of goods. The applicant, therefore, caused a revenue loss of Rs.21.59 crores to the government exchequer.

Meanwhile, the petitioner contended that both the firms had filed regular returns for the business transactions and to date had not received any show-cause notice, raising any dispute with respect to fake invoices, etc. It was also contended that the firms filed their return in GSTR1 and GSTR2A, disclosing the sale of goods. Hence, the question of availing of ITC wrongfully did not arise.

Justice Ilesh J. Vora observed, "As regards the two firms, the investigation is virtually over. The applicant, an authorized attorney of the firms, had initially evaded the investigation. But, after his arrest, and during his remand period, he was interrogated extensively, and necessary documents were recovered from him. The department also filed a complaint against him."

He added, "To show his bonafide, the applicant is willing to deposit Rs.2 crores, which is approximately 10 percent of the alleged amount. Considering the facts and circumstances of the case, it is to be noted that the observation made by the apex court in the Sanjay Chandra vs CBI case, it was observed that 'constitutionally protected liberty must be respected unless detention becomes necessary'. Thus, the balanced approach is to grant bail subject to certain conditions rather than to keep the individual under detention for an indefinite period."