Manoj Kumar S/O Bhagwanaram vs. State Of Rajasthan

Held

The Court dismissed the bail applications, holding that the petitioners had not made out a case for bail. The Court reasoned that the GST evasion of approximately Rs. 95 Crores had significant implications for the economy, classifying the case as white-collar crime. It was noted that the companies involved fell under the ambit of "supplier" of taxable supplies in the nature of actionable claims pertaining to online money gaming. The applicant-Manoj, despite awareness of these transactions, suppressed the supply by not declaring it in statutory returns and furnishing false information. Balancing the statutory scheme, the gravity of allegations, the documentary and electronic evidence, recorded admissions, and the tangible risk of tampering with evidence and flight, the Court found the judgments relied upon by the petitioners to be distinguishable. The Court emphasized that in tax evasion matters, the facts are material, and the present case reflects a substantial evasion. Furthermore, referencing the ratio in Radhika Agarwal vs. Union of India, the Court stressed that special acts are enacted for specific purposes, and judicial review in cases of arrest under such acts should be exercised cautiously, as liberal approaches could frustrate the objectives of the acts. The Court concluded that the applicants have not made out a case for bail due to the massive evasion and the nature of the offence.

Facts

The petitioners, Manoj Kumar and Jagdish, are seeking bail in connection with offences under Section 132(1)(i) and 132(5) of the Central Goods and Services Tax Act, 2017. Their bail applications were rejected by the Additional Sessions Judge. The Directorate General of GST Intelligence (DGGI) alleges that the petitioners facilitated the onboarding of certain private limited companies with online payment aggregators, enabling them to receive online gaming revenues amounting to approximately Rs. 45 Crores without paying GST. The initial GST evasion was quantified at Rs. 11.20 Crores, later revised upwards. The petitioners were arrested on September 12, 2025, and have been in judicial custody since. They contend they are merely facilitators who received commissions and have been erroneously treated as deemed suppliers. The DGGI, however, claims a significantly higher GST evasion of approximately Rs. 95.77 Crores on total transactions of Rs. 342.04 Crores, based on further investigation and statements recorded under Section 70 of the CGST Act.

Key Issues

1. Whether the petitioners, who acted as facilitators for online gaming revenue collection, can be considered "deemed suppliers" under the CGST Act, thereby making them liable for GST evasion? (Section 2(105) and Section 2(98) of the CGST Act, 2017). 2. Whether the continued judicial custody of the petitioners is warranted given that the investigation is concluded with the filing of a final complaint, and whether their role as facilitators with no direct culpability justifies bail? (Section 132(1) and Section 132(5) of the CGST Act, 2017). 3. Whether the alleged GST evasion, particularly the computation methodology and the magnitude of the amounts involved, necessitates the denial of bail at this interlocutory stage? (Section 132(1) of the CGST Act, 2017). Petitioner's Arguments: - The petitioners are mere facilitators who received commission and have been erroneously treated as deemed suppliers. - The offences are triable by a Magistrate, and the investigation is concluded, making continued custody unnecessary. - Arrest is not warranted in cases of technical nature or divergent interpretations of law, citing Finance Ministry Instruction No. 2022-23 (GST Investigation Guidelines) and Supreme Court judgments like Vineet Jain Vs. Union of India. - The department's computation methodology for GST liability is flawed and under challenge before the Supreme Court. Respondent's (State/Union of India) Arguments: - The petitioners deliberately concealed the true scale of evasion, with total transactions approximating Rs. 90 Crores and GST evasion of Rs. 25.21 Crores, later revised to Rs. 95.77 Crores on Rs. 342.04 Crores. - Statements recorded under Section 70 of the CGST Act show admissions of facilitating transactions and providing company credentials. - The magnitude of the evasion, the gravity of the offence, potential for tampering with evidence, and risk of absconding are grounds for denying bail, citing Sanjay Chandra v. CBI.