Bahadur Islam vs. The Union Of INDIA

Held

The Court held that the petitioner is not entitled to bail at this stage. While acknowledging the petitioner's contention that he is a small businessman assisting customers with business entries, the Court found that the investigation materials, if accepted at face value, indicate that the petitioner was aware of and participated in the fraudulent activities for which he received remuneration. The Court noted that the petitioner was evasive regarding his bank accounts and pertinent queries related to fraudulent transactions and non-existent companies. The investigation revealed a network of co-accused from different states operating in an organized manner to defraud the department. Considering the nature of the alleged offences, the materials revealed by the investigation, and the fact that the investigation is still in an active stage, the Court concluded that granting bail at this juncture would not be in the best interest of effective and complete investigation. Therefore, the bail petition was rejected.

Facts

The petitioner, Bahadur Islam, sought bail in connection with CGST, Guwahati Case No. 93/GST/2025-26, under Section 132 read with Section 69 of the CGST Act. He was arrested on November 14, 2025. The prosecution alleges that the petitioner, along with others, was involved in obtaining GST registrations for non-existent firms and issuing fake invoices to pass on fake Input Tax Credit (ITC) without actual supply of goods or services, for monetary remuneration. The alleged fraudulent transactions were stated to be over Rs. 8,00,00,000/- for the period June 2025 to October 2025. The petitioner claims he is a small businessman who merely helps customers with business entries and cannot be held liable for fraudulent activities of his clients. The Anti-Evasion Unit, CGST, Guwahati, is the authority that initiated the action.

Key Issues

1. Whether the petitioner is entitled to bail in connection with CGST, Guwahati Case No. 93/GST/2025-26, under Section 132 read with Section 69 of the CGST Act, considering the nature and gravity of the alleged offences and the stage of investigation? Petitioner's Arguments: The petitioner argued that he is a small businessman who merely assists customers with business entries and registration, and it is not practicable for him to verify the correctness or fraudulent nature of these entries. He contended that he cannot be held liable for fraudulent activities committed by his customers. He also raised concerns about the procedural aspects of his arrest, alleging that departmental officials entered his house without following stipulated procedures and took him to an undisclosed location. Revenue's Arguments: The Revenue strongly opposed the grant of bail, submitting that the investigation has revealed a large racket involving a gang engaged in fraudulent activities of making GST entries without corresponding supply of goods and fraudulently securing input tax credits. They contended that these activities are organized on a large scale, causing significant illegal gain to offenders and serious loss to the department. The Revenue emphasized that the investigation is ongoing and in an active stage, and granting bail may hinder its effective completion.