Patiala House Court denies bail to man charged with obtaining fraudulent ITC

The Patiala House Court has denied bail to Yogesh Kumar Goyal, who is accused of claiming Input Tax Credit (ITC) by using fake bills from non-existent companies. The court found that the applicant's contentions were questionable, as the firms appeared to be paper entities and the transactions manipulated. The court emphasised that economic offences, which involve deep-rooted conspiracies and significant public fund losses, are serious and require a distinct approach when considering bail.

In State vs. Yogesh Kumar Goyal [Bail Application No. 1676/21 dated August 31, 2021], Yogesh Kumar Goyal ("the Applicant") has filed the current bail application - against FIR No. DZU/INV/GST/A894/2021, made against him under Section 132 (1) (b) & (c) of The Central Goods and Services Tax Act, 2017 ("CGST Act").

The Applicant is accused of procuring bogus bills from companies that did not exist in order to claim Input Tax Credit ("ITC") and hence was taken into Judicial Custody (JC). The Applicant thereby has contended that the companies in question have ceased to manufacture goods but have not ceased to exist in entirety. Furthermore, the Applicant also contended that he was not provided with any reason or grounds before his arrest and hence, the Applicant is entitled to bail.

On the other hand, the Respondent rebutted the contentions of the Applicant by stating that there exists no judicial precedent which states that the accused is automatically entitled to bail after the completion of 30 days in Judicial Custody.

The Honorable Patiala House Court quashed the bail application of the Applicant as all the contentions and documents submitted by the Applicant are under serious cloud as the said firms appear to exist only on papers and the entire so called business transactions seems to have been manipulated by the Applicant himself. The Court relied on the judgment of Y.S. Jagan Mohan Reddy vs CBI (2013) [7 SCC 439] while rejecting the bail application at hand, in that judgment it was held that Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.