Directorate General Of GST Intelligence vs. Manish Goyal

Facts

The Directorate General of GST Intelligence (DGGI) filed a petition challenging an order dated December 21, 2022, by which Manish Goyal was granted regular bail. Goyal, proprietor of M/s Radiant Traders, was arrested on November 25, 2022, under Sections 132(1)(b) and (c) of the CGST Act for alleged GST evasion amounting to Rs. 218 crores. The DGGI alleged that M/s Radiant Traders manufactured spurious smoking mixtures using procured cigarettes worth Rs. 221 crores and sold finished products for Rs. 69 crores, a transaction deemed economically unviable and fraudulent. Goyal's bail was initially dismissed by the ACMM but later granted by the ASJ. Subsequently, Goyal failed to appear for four summonses after his bail, leading the DGGI to seek cancellation of bail, which was granted by the ASJ on September 15, 2023. Goyal then filed a petition challenging this cancellation.

Held

The Court held that on a prima facie view, Manish Goyal appeared to be acting on the directions of co-accused Chirag Goel and was not responsible for or aware of the day-to-day functioning of M/s Radiant Traders. It appeared that Chirag Goel had set up the firm using Goyal's documents, with the real control residing with Goel. The Court found no infirmity in the ASJ's order dated December 21, 2022, granting bail to Goyal, noting that he had already spent approximately one month in custody and further custodial interrogation was not required. Regarding the cancellation of bail, the Court agreed with Goyal's submission that non-appearance on one or two dates could not be a ground for cancellation, especially since Goyal had appeared on other occasions. Therefore, the order dated September 15, 2023, cancelling bail was deemed harsh and set aside. The Court warned Goyal that future non-compliance would lead to cancellation of bail but stipulated that the DGGI must provide at least 48 hours' notice for appearance. The DGGI was granted liberty to seek cancellation of bail if Goyal failed to appear timely in the future. The observations made were limited to the grant of bail and not on the merits of the case.

Key Issues

1. Whether the order dated December 21, 2022, granting regular bail to Manish Goyal was sustainable in light of the alleged serious economic offence involving GST evasion of Rs. 218 crores and the findings of spurious products? 2. Whether the subsequent order dated September 15, 2023, cancelling the bail granted to Manish Goyal was justified on account of his alleged non-appearance for investigation? Petitioner (DGGI) argued that Manish Goyal was involved in a serious economic offence, with M/s Radiant Traders showing procurement of raw material worth Rs. 221 crores and sales of Rs. 69 crores, indicating fraud. They contended that the seized smoking mixture was spurious and unfit for consumption, and Goyal's custodial interrogation was necessary to unearth the conspiracy and prevent interaction with co-accused. The DGGI also relied on Goyal's statement under Section 70 of the CGST Act, where he allegedly admitted no manufacturing activity and that cigarettes were sold in the wholesale market, citing Tofan Singh v. State of Tamil Nadu for the admissibility of such statements. They further argued that Goyal violated bail conditions by being late for two summonses and not appearing for two others. Respondent (Manish Goyal) argued that the CRCL report was inconclusive regarding the use of cigarettes as raw material. They contended that finding one consignment spurious did not imply all were, and that the order granting bail was not infirm. Goyal's counsel also pointed out that no criminal complaint had been filed, making it a pre-chargesheet case, and that non-appearance on one date was not a ground for cancellation, attributing his absence on one occasion to ill-health.