NIRAJ JAIDEV ARYA Vs. STATE OF GUJARAT

JUDGEMENT

(1.) By this application filed under Sec. 439 of the Code of Criminal Procedure, the applicant has prayed to release him on regular bail in connection with the Memorandum of Arrest dtd. 30/11/2021 in File No. DCST/Enf.-10/Rajkot/AC-3/UT LLP/2021-22 for the alleged offences under Sec. 132(1)(c) of the Gujarat Goods and Services Tax Act 2017 (for short, 'the GGST Act") and Central Goods and Services Tax Act 2017 (for short, "the CGST Act") punishable under Sec. 132(1)(i) of the GGST Act and CGST Act.

(2.) Mr. Y. S. Lakhani, learned Senior Advocate appearing with Mr. Pankaj D. Rachchh and Mr. Rahul Dholakia for the applicant, submitted that the applicant herein is a designated Partner of one "Utkarsh Ispat LLP", which is engaged in the business of purchasing mild steel scrap and thereafter, converting it into mild steel Billet. On 19/11/2021 the respondent No.2 conducted a search and seizure operation at the factory and office premises of the LLP as also at the residence of the applicant on the ground that several purchase transactions had been made from fictitious entities. It was alleged that the applicant had shown fake purchases from 24 fictitious entities to the tune of Rs.172.36 Crores and had thereby, availed illegal Input Tax Credit to the tune of Rs.31.02 Crores.

(3.) Mr. Mitesh Amin, learned Public Prosecutor, relied upon the Affidavit-in-reply filed on behalf of original complainant- tax authority and submitted that during the recent investigations carried out by the State GST Department, several entities, which were never in existence, had shown their outward supply to various beneficiaries, including "Utkarsh Ispat LLP", which is the firm belonging to the applicant herein. Therefore, discreet inquiry was carried out on all the purchases of "Utkarsh Ispat LLP" and it was found that the said firm had shown voluminous purchase transactions from fictitious entities. Search operations were carried out, which revealed the creation of numerous fictitious firms issuing fake invoices to "Utkarsh Ispat LLP" and subsequently, search u/s.67(2) of the said Act was carried out. From a primary scrutiny of the books of accounts and the evidence collected from the search operations, it was found that "Utkarsh Ispat LLP" had indulged in the activity of showing fake purchase transactions in its books of accounts leading to wrongful availment of ineligible Input Tax Credit. A huge cartel is working in collusion with the ill-intention to siphon-off the legally payable dues and thereby, causing huge loss to the Government exchequer.