Gulam Fareed S/O Abdul Satar vs. State Of Rajasthan

Held

The Court dismissed the bail applications of both petitioners, Gulam Fareed and Yash Chandani. The Court found that the petitioners were involved in a systematic network to evade tax with the help of others. For Gulam Fareed, the Department established that M/s Aravali Steels and M/s Apollo Steels were operated by him, and he systematically transferred goods without legal documents, destroying evidence afterward. The evaded tax was to the tune of ₹13,61,76,573. For Yash Chandani, associated with M/s Yash Trading Company, the Department collected material showing his involvement in purchasing and supplying iron scrap without bills and tax receipts, including the preparation of fake invoices. His individual contribution to the tax evasion was assessed at ₹8,33,20,465, with a total estimated loss of ₹58.46 crores. The Court emphasized that tax collection is vital for national growth and that tax evasion denies citizens opportunities for development. Considering the seriousness of the offenses and the supporting evidence, the Court concluded that neither petitioner was entitled to bail. The Court noted that while various judgments were cited, each case has its own merit, and the material on record was a relevant consideration for granting bail.

Facts

The Rajasthan High Court at Jaipur heard two connected bail applications filed by Gulam Fareed and Yash Chandani. The applications arose from complaints filed by the Directorate General of GST Intelligence (DGGI) for offences under Section 132(1) of the CGST Act, 2017. The DGGI initiated an investigation based on intelligence regarding large-scale GST evasion during business transactions. The petitioners argued that the investigation focused on other individuals, suggesting their innocence, and that the evidence against them was inadmissible. They also contended that offenses involving evasion up to ₹5,00,000 are bailable, and that the trial would be lengthy. Gulam Fareed specifically denied clandestine dealings with alleged masterminds, stating his association with firms like M/s Apollo Steels and M/s Aravali Steels was misinterpreted as an offense, and that M/s Apollo Steels was owned by another individual. Yash Chandani, proprietor of Yash Trading Company, claimed he was not the primary target of the initial intelligence and that there was no evidence of his involvement in tax evasion. Both petitioners had been in custody since February 19, 2025.

Key Issues

1. Whether the petitioners are entitled to be released on bail given the nature and gravity of the accusations of GST evasion under Section 132(1) of the CGST Act, 2017? 2. Whether the evidence collected by the DGGI, including electronic evidence and statements, is sufficient and admissible to establish the petitioners' involvement in tax evasion, particularly concerning the alleged loss to the State exchequer? 3. Whether the petitioners have made out a case for bail based on precedents cited, including Supreme Court judgments on economic offenses and bail considerations, and their period of custody? Petitioner's Arguments: - The petitioners are innocent and falsely implicated, with the investigation focusing on others. - Offenses involving evasion up to ₹5,00,000 are bailable; the value of evasion by the petitioners is disputed or not conclusively proven against them personally. - The evidence relied upon by the department is non-admissible and non-legal. - The Supreme Court has granted bail in identical facts (Vineet Jain Vs. Union of India). - The trial will take a long time, and the offense is triable by a Judicial Magistrate First Class. - Gulam Fareed denies clandestine dealings and ownership of M/s Apollo Steels, arguing his association with M/s Aravali Steels was misinterpreted. - Yash Chandani claims he was not the subject of the initial intelligence and lacks evidence of involvement. Respondent's (State/DGGI) Arguments: - The petitioners are part of a large, systematic network of tax evaders. - Statements of accused are admissible and indicate evasion. - Sufficient evidence has been collected to show huge loss to the State exchequer. - This is a white-collar crime, and the petitioners were actively involved in clandestine tax evasion. - Bail applications in similar cases have been dismissed by this Court and upheld by the Supreme Court, emphasizing that petitioners must plead their own case.