Manish Kumar vs. Director General Of GST Intelligence

229 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH 1)

CRM-M-8675-2025(O&M) Date of decision: 28.07.2025 Manish Kumar ....Petitioner Versus Directorate General, Goods & Service Tax Intelligence, Zonal Unit, Ludhiana ...Respondent 2)

CRM-M-14956-2025 (O&M) Amit Kumar Goyal ....Petitioner

Versus Directorate General, Goods & Service Tax Intelligence, Zonal Unit, Ludhiana ...Respondent CORAM: HON'BLE MR. JUSTICE HARPREET SINGH BRAR Present: Mr. Vinod Ghai, Senior Advocate with Ms. Kashish Sahnia, Advocate and Mr. Arnav Ghai, Advocate for the petitioner in CRM-M-8675-2025. Ms. Muskaan Gupta, Advocate and Ms. Muskan Chauhan, Advocate for the petitioner in CRM-M-14956-2025. Ms. Sharmila Sharma, Senior Panel Counsel, DGGI in CRM-M-14956-2025. Mr. Sunish Bindlish, Senior Standing counsel for the respondent- DGGI Ms. Pridhi Sandhu, Senior Standing Counsel, CGST for Chief Commissioner, Panchkula, CGST. Mr. Manish Bansal, Public Prosecutor, U.T. Chandigarh and Mr. Alankrit Bharadwaj, Addl. P.P., U.T. Excise and Tax Department. Neha 2025.08.01 10:48 I attest to the accuracy and integrity of this document

CRM-M-8675-2025(O&M) CRM-M-14956-2025 (O&M) -2- HARPREET SINGH BRAR, J. (ORAL)

CRM-M-8675-2025(O&M) CRM-M-14956-2025 (O&M) -3- withdrew Rs.455.02 crore from 11 bank accounts. The petitioners herein created 27 fake firms, 02 of which were under the name of Amit Kumar Goyal while the remaining 25 were established by fraudulently obtaining IDs of other persons, though connected to the mobile number and email of Amit Kumar Goyal. On 08.10.2024, a search was conducted under Section 67(2) of the CGST Act at four locations in Mandi Gobindgarh and Zirakpur and a number of documents pertaining to fake GST billing as well as various electronic devises were recovered. On investigation, it was concluded that the petitioners issued forged and fabricated GST invoices worth approximately Rs.700 crore and availed input tax credit amounting to approximately Rs.107 crore based on the same. CONTENTIONS

CRM-M-8675-2025(O&M) CRM-M-14956-2025 (O&M) -4- 01/2025-GST dated 13.01.2025 mandates explaining the grounds of arrest to the accused, which the respondent officials failed to abide by in the present case. Further, the authorisation for arrest under Section 69 of the CGST Act has been granted in a mechanical manner, without duly appreciating the material available against the petitioner. Furthermore, the petitioner has been in custody since his arrest on 09.10.2024. However, a perusal of the zimini orders would indicate that the matter has been fixed for precharge evidence of the complaint for the last 06 months and is yet to be accomplished. Lastly, the investigation already stands completed qua petitioners-Manish Kumar as well as Amit Kumar Goyal, as such no useful purpose would be served by detaining them further.

CRM-M-8675-2025(O&M) CRM-M-14956-2025 (O&M) -5- relying on the judgment rendered by the Hon’ble Supreme Court in Sandeep the investigation qua another co-accused remains pending and therefore, 2023(6) KLT 253 (Ker), Rajesh Gandhi vs. Union of India (@024) 23 Centax 319 (Telangana), Ashok Kumar vs. Commissioner 2020(4) GSTL 111(SC), GSTL 191(P&H), Jatinder Manro vs. DGGI 2020(371) ELT 137 (P&H), vs. DGGI CRM-M-50256-2019 decided on 23.01.2020, Nigammadda Prasad On 01.05.2025, the following order was passed by this Court: Neha 2025.08.01 10:48 I attest to the accuracy and integrity of this document

CRM-M-8675-2025(O&M) CRM-M-14956-2025 (O&M) -6- “Having heard learned counsel for the parties and after perusing the record, this Court finds force in the arguments out forth by the petitioner. However, in order to test the veracity of the same, the relevant data requires to be solicited to conduct a logic-based, empirical analysis. As such, the following officers listed below:

CRM-M-8675-2025(O&M) CRM-M-14956-2025 (O&M) -7-

“59. However, relying upon the judgment in the case of Makemytrip (supra), it has been submitted on behalf of the petitioners, that the power under sub-section (5) to Section 132 cannot be exercised unless the procedure under Section 73 of the GST Act is completed and an assessment order is passed quantifying the tax evaded or erroneously refunded or input tax credit wrongly availed. According to us, this contention should not be accepted as a general or broad proposition. We would accept that normally the assessment proceedings would quantify the amount of tax evaded, etc. and go on to show whether there is any violation in terms of clauses (a) to (d) to sub-section (1) of Section 132 of the GST Acts and that clause (i) to sub-section (1) is attracted. But Neha 2025.08.01 10:48 I attest to the accuracy and integrity of this document

CRM-M-8675-2025(O&M) CRM-M-14956-2025 (O&M) -8- there could be cases where even without a formal order of assessment, the department/Revenue is certain that it is a case of offence under clauses (a) to (d) to sub-section (1) of Section 132 and the amount of tax evaded, etc. falls within clause (i) of sub-section (1) to Section 132 of the GST Acts with sufficient degree of certainty. In such cases, the Commissioner may authorise arrest when he is able to ascertain and record reasons to believe. As indicated above, the reasons to believe must be explicit and refer to the material and evidence underlying such opinion. There has to be a degree of certainty to establish that the offence is committed and that such offence is non-bailable. The principle of benefit of doubt would equally be applicable and should not be ignored either by the Commissioner or by the Magistrate when the accused is produced before the Magistrate.” (emphasis added)

CRM-M-8675-2025(O&M) CRM-M-14956-2025 (O&M) -9- offences and its impact, of late, it has been observed that the involvement of the criminal justice system in cases pertaining to the CGST Act seemingly begins at the stage of arrest and ends when a bail is secured. Allowing such tendencies to go unchecked would raise serious doubts about the efficacy of investigation, which naturally weakens the faith of the public in the justice dispensation mechanism. Moreover, this Court is of the considered opinion that the slow- paced trials stemming from complaints under Section 132 of the CGST Act and the departure from the established procedure qua Section 73 and 74 of the CGST Act, throughout the States of Punjab, Haryana as well as Union Territory of Chandigarh is symptomatic of a systemic problem. As such, it would be against the interest of justice to shield the prosecuting agencies from accountability with regard to timely conclusion of trials.

CRM-M-8675-2025(O&M) CRM-M-14956-2025 (O&M) -10-

CRM-M-8675-2025(O&M) CRM-M-14956-2025 (O&M) -11- ‘Whether an accused can be denied the concession of bail in a complaint under Section 132 of the CGST Act, on account of pending investigation qua another accused?’

“8. The juri iction to grant bail has to be exercised on the basis of well settled principles having regard to the circumstances of each case and not in an arbitrary manner. While granting the bail, the Court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character, behaviour, means and standing of the accused, circumstances which are peculiar to the accused, reasonable possibility of securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public or State and similar other considerations. It has also to be kept in mind that for the purposes of granting the bail the Legislature has used the words "reasonable grounds for believing" instead of "the evidence" which means the Court dealing with the grant of bail can only satisfy it as to whether there is a genuine case against the accused and that the prosecution will be able to produce prima facie evidence in support of the charge. It is not excepted, at this stage, to have the evidence establishing the guilt of the accused beyond reasonable doubt.”

However, a specific stand has been taken by the learned counsel for the respondent that the petitioners ought not to be granted the concession of regular bail as investigation qua another co-accused is yet to be concluded. Be that as it may, the final report qua the petitioners has already been presented after subjecting them to prolonged interrogation. Nowhere during the thorough investigation process did the respondent even remotely hint at any non- cooperation on part of the petitioners. Further, it remains unclear as to why Neha 2025.08.01 10:48 I attest to the accuracy and integrity of this document

CRM-M-8675-2025(O&M) CRM-M-14956-2025 (O&M) -12- arrest process has not been initiated against the co-accused qua whom investigation is pending. If the same is for want of sufficient material to satisfy the standards for grant of authorisation under Section 69 CGST Act, the respondent must explain the delay in investigation as well efficacy thereof. Additionally, while the possibility of evidence tampering has been flagged, the entire case is based on documentary and electronic evidence, which are already available with the investigating agency, and all of the prosecution witnesses are officials of the respondent. As such, there is no scope of tampering with the evidence or influencing the witnesses. In that vein, this Court finds it against objective standards of reason and justice to deny bail to those accused against whom final report has been presented merely on the ground that the investigation is under progress qua a co-accused. Nothing has been brought to the fore to suggest that the release of the petitioners would derail the investigation; therefore, this cannot be used as a reason to keep them under custody indefinitely. Lastly, the judgment in Sandeep Goyal (supra) is distinguishable on facts as it pertained to a situation when investigation was pending qua the bail applicant himself.

CRM-M-8675-2025(O&M) CRM-M-14956-2025 (O&M) -13- of S.L.P.(Criminal) No.4349 of 2025), speaking through Justice Abhay S. Oka, observed the following regarding the current state of affairs with regard to grant of bail in cases arising out of the CGST Act: “ The offences alleged against the appellant are under Clauses (c), (f) and (h) of Section 132(1) of the Central Goods and Services Tax Act, 2017. The maximum sentence is of 5 years with fine. A charge-sheet has been filed. The appellant is in custody for a period of almost 7 months. The case is triable by a Court of a Judicial Magistrate. The sentence is limited and in any case, the prosecution is based on documentary evidence. There are no antecedents We are surprised to note that in a case like this, the appellant has been denied the benefit of bail at all levels, including the High Court and ultimately, he was forced to approach this Court. These are the cases where in normal course, before the Trial Courts, the accused should get bail unless there are some extra ordinary circumstances.” Additionally, reliance can also be place on the judgment rendered by a two Judge bench of the Hon’ble Supreme Court in Sanjay Chandra vs. CBI (2012) 1 SCC 40, wherein it was held that bail cannot be denied merely in view of severity of the offence. The Courts ought to be conscious of the right to speedy trial bestowed on the accused by virtue of Article 21 of the Constitution of India. Speaking through Justice H.L. Dattu opined as follows:

“43. When the undertrial prisoners are detained in jail custody to an indefinite period, Article 21 of the Constitution is violated. Every person, detained or arrested, is entitled to speedy trial, the question is: whether the same is possible in the present case. There are seventeen accused persons. Statement of the witnesses runs to several hundred pages and the documents on which reliance is placed by the prosecution, is voluminous. The trial may take considerable time and it looks to us that the appellants, who are in jail, have to remain in jail longer than the period of detention, had they been convicted. It is not in the interest of justice that accused should be in jail for an indefinite period. No doubt, the offence alleged against the appellants is a serious one in terms of alleged huge loss to the State exchequer, that, by itself, should not deter us from enlarging the appellants on bail when there is no serious contention of the respondent that the accused, if released on bail, would interfere with the trial or tamper with evidence. We do not see any good reason to detain the accused in custody, that too, after the Neha 2025.08.01 10:48 I attest to the accuracy and integrity of this document

CRM-M-8675-2025(O&M) CRM-M-14956-2025 (O&M) -14- completion of the investigation and filing of the charge-sheet.

. The grant or denial is regulated, to a large extent,

by the facts and circumstances of each particular case. But at the same time, right to bail is not to be denied merely because of the sentiments of the community against the accused. The primary purposes of bail in a criminal case are to relieve the accused of imprisonment, to relieve the State of the burden of keeping him, pending the trial, and at the same time, to keep the accused constructively in the custody of the Court

, whether before or

after conviction, to assure that he will submit to the juri iction of the Court

and be in attendance thereon whenever his presence

is required.

CRM-M-8675-2025(O&M) CRM-M-14956-2025 (O&M) -15- 1978 Supreme Court 179 observed

that two

paramount considerations, while considering petition for grant of bail in non- bailable offence, apart from the seriousness of the offence, are the likelihood of the accused fleeing from justice and his tampering with the prosecution witnesses. Both of them relate to ensure of the fair trial of the case. Though, this aspect is dealt by the High Court in its impugned order, in our view, the same is not convincing. xxx xxx xxx

of the fact that the investigating agency has already completed investigation and the charge sheet is already filed before the Special Judge,

CBI, New Delhi. Therefore, their presence in the

custody may not be necessary for further investigation. We are of the view that the appellants are entitled to the grant of bail pending trial on stringent conditions in order to ally the apprehension expressed by CBI.”(emphasis added)

“6. In considering the application for bail, it is noted that the petitioner was arrested on 21.07.2022 and while in custody, the investigation has been completed and the charge sheet has been filed. Even if it is taken note that the alleged evasion of tax by the petitioner is to the extent as provided under Section 132(1)(l)(i), the punishment provided is, imprisonment which may extend to 5 Neha 2025.08.01 10:48 I attest to the accuracy and integrity of this document

CRM-M-8675-2025(O&M) CRM-M-14956-2025 (O&M) -16- years and fine. The petitioner has already undergone incarceration for more than four months and completion of trial, in any event, would take some time. Needless to mention that the petitioner if released on bail, is required to adhere to the conditions to be imposed and diligently participate in the trial. Further, in a case of the present nature, the evidence to be tendered by the respondent would essentially be documentary and electronic. The ocular evidence will be through official witnesses, due to which there can be no apprehension of tampering, intimidating or influencing. Therefore, keeping all these aspects in perspective, in the facts and circumstances of the present case, we find it proper to grant the prayer made by the petitioner.

CONCLUSION

CRM-M-8675-2025(O&M) CRM-M-14956-2025 (O&M) -17- respectively, to the satisfaction of the concerned Court. However, the bail shall also be subject to the following conditions: (a) They shall deposit their passports, if any, before the learned trial Court; (b) They shall cooperate in trial without seeking any unnecessary adjournments; (c) They shall not tamper with the prosecution evidence by intimidating or pressurizing the witnesses during trial; (d) They shall not dispose of any of their property or of the firms/companies in which they have substantial interest and which are also under investigation;