A Special Court for Prevention of Corruption in Greater Bombay has denied bail to Mohammed Farooq Mohammed Hanif Shaikh, a key accused in an alleged ₹175.93 crore fraudulent GST refund scam. The bail application, filed by the accused, was rejected by Special Judge S.B. Joshi on the grounds that the nature of the crime, involving public funds, required strict judicial scrutiny. The court emphasized the risk of tampering with evidence and interference with the ongoing investigation.
The Alleged Fraud
According to the prosecution, the scam revolves around fraudulent GST refunds issued to 16 bogus companies through forged documents. The Anti-Corruption Bureau (ACB) Mumbai reported that the refunds, facilitated by senior officials during 2020-2021, amounted to a total of ₹175.93 crore.
The primary allegations focus on Anilkumar Babulal Runthala, a Sales Tax Officer (STO) from Ghatkopar Division, who is accused of bypassing procedures and approving fake refunds to several non-existent firms. The companies involved allegedly engaged in fake transactions and fabricated invoices to claim GST refunds they were not entitled to receive.
The ACB alleges that Shaikh, along with other co-accused, had a significant role in preparing forged documents to facilitate these illegal refunds. Several key suspects in the scam are still at large, and investigations are ongoing across multiple locations, including Mumbai, Ahmedabad, and Surat.
Details of the Bogus Companies
The scam involved companies registered with falsified documents and managed by individuals with no legitimate business operations. Some of the companies cited in the investigation include:
Liberty Traders: ₹28.25 crore
S.K. Fashion Expo: ₹26.08 crore
Tradeset Export & Marketing Pvt. Ltd.: ₹20.17 crore
Technotip Marketing Pvt. Ltd.: ₹19.96 crore
Outsource Optimization Pvt. Ltd.: ₹19.54 crore
These and other companies allegedly existed only on paper, and their GST refunds were funneled into fake accounts using fraudulent licenses and identity documents.
The Bail Hearing
In the bail plea, the accused, Mohammed Farooq Shaikh, argued that he had no direct involvement in the fraudulent transactions. His lawyer emphasized that Shaikh was neither a director nor a beneficiary of the implicated companies. It was also contended that the case primarily involved documentary evidence, and as such, the risk of tampering with witnesses or evidence was minimal.
Shaikh’s counsel further noted that the accused was a permanent resident of Mumbai with no intention of absconding. The defense argued that “bail is the rule, and jail is the exception”, citing various precedents.
Prosecution’s Opposition to Bail
The prosecution opposed the bail application, describing Shaikh as a central figure in the scam. They contended that the accused played an active role in the creation of fraudulent bank accounts and forged documents. The prosecution also highlighted that Shaikh had prior criminal cases against him, including investigations by the CBI and Enforcement Directorate (ED).
The Anti-Corruption Bureau (ACB) expressed concerns that releasing Shaikh on bail could jeopardize the investigation. Officials argued that key witnesses and suspects were yet to be questioned, and crucial documents were still being collected. The prosecution warned that the accused might influence witnesses or hinder the apprehension of other culprits still at large.
The ACB also emphasized that the fraud involved public funds, making the nature of the crime more serious. “Economic crimes that drain government funds pose a significant threat to society and must be handled with a stricter judicial approach,” the prosecution argued.
Court’s Observations
In its order, the court acknowledged that Shaikh had no known criminal antecedents in the GST-related case. However, it noted that the gravity of the allegations and the large sum of money involved necessitated careful consideration. The court found prima facie evidence of Shaikh’s involvement in the preparation of forged documents and fraudulent bank accounts.
The judge emphasized that economic offences involving public funds require a cautious approach in granting bail. “These types of offences are more harmful to the nation and society. They must be dealt with strictly to prevent financial harm,” the court observed.
The court also pointed out that the investigation was still at a crucial stage, with suspects yet to be arrested and witnesses waiting to be examined. Releasing Shaikh at this juncture, the judge ruled, could undermine the investigation and disrupt efforts to track down other culprits involved in the scam.
Final Decision and Impact
The Special Judge concluded that granting bail to Shaikh at this stage would send the wrong message to society, given the large-scale misuse of public funds. Consequently, the bail application was rejected, and the case will proceed with Shaikh remaining in custody.
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