2026-VIL-860-KAR
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SGST High Court Cases

GST - Anticipatory bail – Allegation of wrongful availment of Input Tax Credit - Petitioners purchased aluminium scrap from suppliers and obtained invoices. After a raid by authorities, suppliers were arrested for issuing concocted invoices for bogus supply of goods resulting in wrongful availment of ITC - Petitioners were summoned under Section 70 and apprehended arrest. Petitioners claimed they had paid invoice value and tax to suppliers through bank transactions and filed periodic returns with invoices. Learned Sessions Court rejected their bail application - Whether registered purchasers who have complied with GST framework and paid through bank channels are entitled to anticipatory bail despite suppliers being involved in fraudulent activities - HELD - GST framework is built on self-assessment and voluntary compliance. Purchaser is entitled to input tax credit only if tax invoice is possessed, goods actually received, tax charged by supplier is paid by purchaser through proper channels, and returns are filed by recipient along with invoices - In present case petitioners are in possession of invoices, have paid invoice value and tax through bank transactions and have periodically filed returns. Principal offender under Section 132 of the CGST Act, 2017 is the supplier who has been granted regular bail. In genuine case where purchaser has paid invoice value and GST and submitted returns periodically, purchaser cannot be held liable for default of supplier except under exceptional circumstances - Custodial interrogation of purchaser not necessary unless prima facie material shows collusion with supplier. Nature of punishment prescribed maximum five years is compoundable offence under Section 138 of Act - Petitioners do not have antecedents and have undertaken to cooperate and produce documents to prove receipt of goods. Arrest cannot be made to merely investigate whether conditions are being met but only when Commissioner has formulated duly recorded opinion that requirements are satisfied based on evidence as held in Radhika Agarwal case - Anticipatory bail granted subject to appearing on specified date, personal bond, cooperation with authorities, mobile phone operational, location dropping on google map, and passport surrender - The petitions are allowed
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