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Input Credit based on Fake Invoices – Rajasthan HC dismisses WP and imposes cost of Rs.1 Lakh on the Petitioner

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Input tax credit—The Petitioner No.1 is the Managing Director of M/s Leel Electricals Limited, Petitioner No.2. The CGST Department conducted a raid on 17.01.2019, at the premises of the Petitioners’ Company at Bhiwadi, Rajasthan. After recording of the statements of Officials of Company, they were arrested. As per the case of the Department, the Company had fraudulently availed input tax credit of Rs.40.53 crores by issuance of fictitious sale invoices and sister concerns of company and Petitioner-Company had fraudulently availed input tax credit of Rs.328 crores.

Held that— The case set up by the Department is that the Petitioner has claimed input tax credit on fake invoices, which fact is not controverted by the Petitioner. Hence, Department has all rights to take any action permissible by law. The contention that the tax is to be first determined under Section 73 & 74 of the Act does not have any force for the very reason that in an offence committed under Section 132 of the Act determination of tax is not required and the Department can proceed straight away by issuing summons or if reasonable grounds are available by arresting the offender. Since offence under Section 132 is made out and Senior Officials of Company are behind bars, Petitioner being Managing Director is responsible and Department has the right to proceed under Section 69 and 70 of the Act. The HC did not find any merit in Writ Petition and hence dismissed it with cost of Rs.1,00,000/- only.Bharat Raj Punj, Leel Electricals Limited Vs. Commissioner of Central Goods And Service Tax [2019] 10 TAXLOK.COM 033 (Rajasthan)