GST: Chhattisgarh HC grants Bail to Accused after 9 Months, Says Wrongful Availment of ITC

In a ruling granting bail to an accused person involved in a GST scam of around 7 crores, the Chhattisgarh High Court has held that the accused shall be released on bail since the offence of wrongful availment of input tax credit under section 138 of CGST Act, 2017 is a bailable, non-cognizable and compoundable offence.

The applicant, Subhash Chauhan is the Proprietor of M/s Minal Traders, Bhilai and is doing the business of Iron Trading. The applicant was arrested by the officers of the CGST on 27.10.2021 and after investigation, a complaint has been filed against the applicant on 24.12.2021 alleging that the applicant carried out purchases from different entities and wrongly availed Input Tax credit of Rs.6,95,32,472/- by procuring invoices from fake and fictitious firm and also supplied goods without payment of tax and without issuing invoices to the tune of Rs.27,70,559/-. Thus, the total Input Tax Credit availed and non-payment of tax is Rs.7,23,03,031/-.

The counsel appeared for the applicant, Smt. Fouzia Mirza, Sr. Advocate with Shri Ali Afzal Mirza, Advocates, contended that the applicant has been in jail for last 9 months and the investigation is yet to be concluded by the GST department. In the light of these facts, the counsel argued that bail shall be granted to the applicant.

Considering the submissions of the parties, Justice Deepak Kumar Tiwari observed that “particularly considering the fact that the allegation against the present applicant is of wrongfully utilizing Input Tax Credit of Rs.6,95,32,472/- and supplied taxable goods without payment of taxes and without issuing invoices to the tune of Rs.27,70,559/-, totalling Rs.7,23,03,031/-, and that offence under the Act are bailable and non-cognizable except for the offence under Section 132 (5) of the Act, further considering that the applicant can be punished with maximum sentence of 5 years with fine, he is in jail since 27.10.2021, further considering that Proprietor of the firm namely, Rohan Tanna and Abhishek Pandey have already been enlarged on bail by the co-ordinate Bench and also considering that the applicant in the bail application raised a ground that the offence is compoundable in nature and, therefore, this Court after considering all the aspects of the matter, particularly the period of detention and the amount involved finds appropriate that if the applicant deposits Rs.70 lakhs under protest or admission of the disputed amount, which would be adjusted in accordance with law, the applicant can be enlarged on bail.”

GST: Fitment Company recommends GST Rate Changes, Exclusion of Certain Items from Exemption ListRe

The Goods and Services Tax (GST) Council is likely to change the present tax rates and slabs as the fitment committee has suggested further GST rate rationalizations and clarifications.

As per the recent tweet by CNBC-TV18, says “the Fitment committee recommends further GST rate rationalisations, clarifications, sources.”

GST Council-Nominated Fitment Committee Prescribes Rate Change For 14 Goods.

As per reports, the Fitment Committee has recommended rate change for 22 Services and rejected change for 113 goods.

Evidence for Verification of Cash Deposit would invalidate Reopening of Assessment u/s 147: ITAT

The Income Tax Appellate Tribunal (ITAT), Amritsar bench has held that reopening of assessment u/s 147 of Income Tax Act 1961 would invalidate in the presence of evidence for verification of cash deposit.

The Assessing Officer reopened assessment u/s 147 of the Income Tax Act, 1961 on the basis that the assessee had deposited cash in his bank a/c held with Punjab National Bank Bank, Kapurthala amounting to Rs. 27,34,000/-. A notice u/s 148 was issued to the assessee which remained uncompiled, the Assessing Officer proceeded to frame assessment u/s 144 r.w.s. 147 of the Act treating the cash deposit in bank a/c of Rs.27,34,000/- as unexplained income and further interest thereon of Rs. 2,809/- was also treated as unexplained income of the assessee.

Ld. CIT(A) partly allowed the appeal by reducing the addition to the extent of Rs.7,14,766/- and the remaining addition of Rs. 20,10,000/- made by the Assessing Officer was sustained.

The appellant contended that the assessment opened merely having information about cash deposits would not be sufficient to form the belief that the income had escaped assessment. In the absence of material which shows the deposit, there was no reason to form a belief by the AO that the income had escaped assessment.

The Assessing Officer has recorded that verification letters were issued to the assessee seeking an explanation regarding the source of the cash deposit for which no explanation was given by the assessee.

Shri Kul Bharat, judicial member observed that the evidence regarding receipt of the lease amount which was considered the source for the deposit was not believed by the authorities and the revenue has failed to bring any material to suggest that the land remained uncultivated. In the absence of such evidence, the evidence filed by the assessee should have been enquired into and verified by the authorities.

The Tribunal restored the issue related to the balance addition amounting to Rs.15,89,700/- to the Assessing Officer for decision after verifying the evidence filed by the assessee. The appeal filed by the assessee was partly allowed. The appellant was represented by Sh. J. S. Bhasin and the respondent were represented by Sh. Manpreet Singh Duggal.