Timber trade scam case: Uttarakhand HC refuses to grant bail to mastermind

New Delhi, Jul 29 (PTI) The Uttarakhand High Court has refused to release a timber trade scam mastermind on bail, saying that the accused misrepresented the facts and his offence is of "serious nature".

The accused, Mohd. Shahnawaz Hussain, allegedly operated shell firms with other persons in Jaspur area of Udham Singh Nagar district and issued fake invoices of timber to different buyers within as well as outside the state on commission basis causing huge loss of revenue to the state government as well as the Centre.

Hussain was arrested on October 22, 2023 after the GST Department of the state carried out a thorough investigation and collected incriminating evidence against him. He had approached the high court after his bail application was rejected by the Sessions Court.

While refusing to grant Hussain a bail, the high court, whose detailed order came in public domain on July 26, 2024, said, “To examine this issue, this Court also examined the allegation which appears to be serious in nature and the present applicant is certainly indulged in committing the economic offences due to which he caused a huge revenue and tax losses to the government exchequer, amounting to more than Rs 20 crore.” The high court also found that Hussain made all possible efforts to procure the bail by misrepresenting as well as by suppressing material facts.

“Apart from this, there is one more aspect, which has been argued by the learned State counsel that the present applicant has also misused the bail since he was threatening to the witnesses and this aspect is also one of the relevant factor for cancelling the bail,” Justice Rakesh Thapliyal said in his order.

The investigation against Hussain started by the GST Department when it received two complaints on February 26, 2021 and August 12, 2021 respectively with the allegation that a huge number of shell firms were registered and operated by various persons in Jaspur area of Udham Singh Nagar district.

The complaint further said that these persons were indulged in issuance and selling of fake invoices of timber to different buyers within and outside of the state on commission basis without causing actual supply of goods which caused loss of Goods and Services Tax (GST) revenue to Uttarakhand and the Centre.

The tax authorities acted on the said complaint and found that some persons were running a nexus of selling of fake GST invoices and other bills without getting actual sale-purchase of wood by using shell firms registered in the name of dummy persons.

According to the state GST Department, the investigation revealed that the nexus was started somewhere in July 2019 by Hussain who allegedly operated various shell firms by using fake IDs and fake documents of other persons like truck drivers, labourers, unknown persons, women, etc.

The GST Department said that the investigation further revealed that he operated the entire nexus of shell firms through android phones and laptops.

The Special Investigation Branch also investigated the financial records of such shell firms formulated, operated and purchased by Hussain, the GST Department told the high court.

According to the department, when Hussain’s house was searched on May 15, 2023, it recovered and seized several documents and devices relating to fake firms which included cell phones, SIM cards, blank and filled invoices, pre-signed cheque books, unsigned cheque books, bank passbook, bank letters, sign boards of different fake firms, stamp of fake firms, e-way bills, IDs of different persons, among others.

“The Special Investigation Branch has gathered evidence relating to 28 such fake firms, which were created, managed and operated by the accused to issue fake invoices of evaded tax of INR 20,29,42,026.58...,” the GST Department told the high court.

The department also stated that Hussain was earlier convicted in the same nature of allegations i.e. a frequent tax evader and is a habitual offender of tax frauds, and was sentenced to rigorous imprisonment of three years for keeping and using fake stamps of different departments. PTI JP JP KVK KVK