HC modifies condition of bail order & allow submission of security for disputed amount of ITC availed

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HC modifies condition of bail order & allow submission of security for disputed amount of ITC availed


Amit Kumar Kataria v. State of U.P – [2021] 129 taxmann.com 13 (Allahabad)

 Short Overview:

The applicant was sole proprietor of firm registered GST and involved in the business of manufacturing and supply of meter boxes and distribution boxes to Government utilities. He was arrested for offence under section 132 for fraudulently availing input tax credit. It filed application for bail. The Special Chief Judicial Magistrate, Meerut granted bail on fulfillment of several conditions and one of the condition was to deposit remaining amount of ITC Rs. 4.51 crores before the Department within three months. It filed application before the High Court to set aside this condition of bail order.


It was also submitted that he had already deposited 5 crores and there is no statutory provision for compelling the applicant to deposit the entire amount without completing the investigation/enquiry or without launching prosecution by filing complaint or without initiating any recovery proceedings under section 73 or 74 of CGST Act.


The Honorable High Court observed that condition imposed by Special Chief Judicial Magistrate, directing applicant to deposit remaining amount of ITC of Rs. 4.5 crores before department within three months while granting bail to applicant, was unsustainable. This condition was too harsh and unreasonable, particularly in situation where enquiry/investigation was still pending and applicant had already deposited Rs. 5 crores, out of disputed amount of Rs. 9.5 crores. Therefore, this condition was modified and the applicant had to submit security equivalent to remaining disputed amount.

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