Shri Jaswant Singh @ Rolly Babu, Prop. Of M/S Maa Vaishnavi Singh @ Sons vs. Union Of INDIA, Represented By Sri Sachidananad Yadav, Additional Assistant Director, Director Gene

Held

The Court, having heard the learned counsel for both parties and considering the facts and circumstances of the case, was inclined to enlarge the petitioner on bail. The Court did not explicitly address the legal questions regarding the "reason to believe" standard or the sufficiency of evidence in detail. However, the decision to grant bail suggests that the Court found the petitioner's arguments regarding his innocence, lack of direct evidence, and the filing of the charge sheet persuasive enough for release. The Court's inclination to grant bail implies a prima facie assessment that continued custody was not warranted at this stage. The reasoning appears to be based on the overall circumstances, including the petitioner's length of custody and the completion of the investigation, rather than a definitive ruling on the merits of the allegations. The operative direction was to release the petitioner on bail.

Facts

The petitioner, Shri Jaswant Singh @ Rolly Babu, proprietor of M/s Maa Vaishnavi Singh @ Sons, sought regular bail in a case registered under Section 132(1) of the Central Goods and Service Tax (CGST) Act, 2017. The prosecution alleged tax evasion, issuance of invoices without actual supply of goods, fraudulent availment of input tax credit, falsification of accounts, and abetment/operation of shell entities. The revenue implication was stated to be approximately Rs. 73.75 crores. The petitioner was arrested on the basis of summons and interrogation. The petitioner contended that he was falsely implicated, arrested on suspicion without sufficient reason to believe, and that allegations were based on statements of other parties without cross-examination. He denied controlling GST credentials of other firms and claimed that his accountant was responsible for filing returns. The petitioner was in judicial custody since May 26, 2026, and the charge sheet had been filed.

Key Issues

1. Whether the arrest of the petitioner was justified based on the "reason to believe" standard stipulated in Section 69 of the CGST Act, 2017, considering the petitioner's contention of lack of evidence and denial of allegations? 2. Whether the allegations of issuing invoices without supply, fraudulent availment of input tax credit, falsification of records, and operation of shell entities are sufficiently substantiated by the prosecution's evidence, particularly in light of the petitioner's defense that his accountant was responsible and that no incriminating material was found at his residence? Petitioner's Arguments: The petitioner argued that his arrest was based solely on suspicion and statements from other parties without proper cross-examination, violating the "reason to believe" requirement under Section 69. He denied controlling shell entities or GST credentials, attributing the filing of returns to his accountant. He also highlighted the absence of incriminating material during the search of his residence and emphasized that the charge sheet had been filed, rendering continued custody unnecessary. He relied on various judgments, including State of Punjab v. Davinder Pal Singh Bhullar and Radhika Agarwal v. Union of India. Revenue's Arguments: The Union of India opposed the bail, characterizing the case as an economic offense that harms the economy and requires a stern approach. They pointed to the severity of the offenses under Section 132(1) of the CGST Act, noting the potential imprisonment terms based on the quantum of wrongly availed credit or refund.