Nikhil Gupta S/O Sh. Sanjay Gupta vs. Union Of INDIA

Held

The Court granted bail to both petitioners, Nikhil Gupta and Sanjay Gupta. The Court considered the fact that the investigation is complete, charge sheet has been filed, and the case is pending before the Magistrate Court, which is likely to take time for completion. The Court noted that the petitioners have been in custody since October 20, 2022. Citing the Supreme Court's observations in Ratnambar Kaushik vs. Union of India, the Court acknowledged that while allegations and counter-allegations exist, it is not necessary to delve into the details at the bail stage, as the matter is sub-judice before the trial court. The Court found it proper to grant bail, considering the duration of incarceration, the stage of the proceedings, the nature of evidence (primarily documentary and electronic, with official witnesses), and the absence of any apprehension of tampering or influencing witnesses. The bail was granted on furnishing a bail bond of ₹2 lakh and two sureties of ₹1 lakh each, subject to the condition that they appear before the trial court on fixed dates and whenever required. The Court explicitly stated that it was not commenting on the merits of the case.

Facts

The petitioners, Nikhil Gupta and Sanjay Gupta, are seeking bail in connection with a case registered under Section 132(1)(l)(i), (ii), (iii), and (iv) of the Central Goods and Services Tax Act, 2017. The Directorate General of Goods and Services Tax Intelligence (DGGI) alleged that the petitioners were involved in issuing fake invoices and availing Input Tax Credit (ITC) of approximately ₹11,00,47,126 without any actual supply of goods. Investigations revealed that M/s Gupta Plastics, Delhi, was involved in this scheme, with the petitioners allegedly facilitating the issuance of fake invoices and claiming ITC based solely on such invoices, with the amounts being credited to bank accounts. The petitioners have been in custody since October 20, 2022. The charge sheet has been filed, and the case is at the preliminary stage before the Magistrate Court.

Key Issues

1. Whether the petitioners are entitled to bail given the allegations of issuing fake invoices and availing fraudulent Input Tax Credit (ITC) amounting to approximately ₹11 crore under Section 132(1)(l)(i), (ii), (iii), and (iv) of the CGST Act, 2017? 2. Whether the statements recorded under Section 70 of the CGST Act, which are relied upon by the prosecution, are admissible as evidence to deny bail, especially when the petitioners claim they were made under duress? 3. Whether the freezing of ₹11 crore of the petitioners by the department without releasing any refund in their favour warrants granting bail? Petitioner's Arguments: The petitioners argued that they are innocent and have been falsely implicated. They contended that there is no direct evidence against them and that the statements recorded under Section 70 of the CGST Act were made under pressure and have no legal sanctity. They also highlighted that a significant amount of their funds has been frozen without any justification. They further argued that the investigation is complete, charge sheet has been filed, and the trial is likely to take time, and there is no apprehension of their absconding. They relied on various High Court judgments granting bail in similar circumstances. Respondent's (Union of India) Arguments: The respondent argued that the petitioners are beneficiaries of fake invoices issued by their firm, leading to fraudulent ITC claims of approximately ₹11 crore. They asserted that the statements recorded under Section 70 of the CGST Act are admissible and that the petitioners have played an active role in the entire conspiracy of creating fake invoices and obtaining ITC without any underlying supply. They emphasized the gravity of the offense and prayed for the rejection of the bail applications.