S. Nithyananda vs. State Of Karnataka

Facts

The petitioner, S. Nithyananda, proprietor of M/s N Square Enterprises, is before the High Court seeking regular bail in Crime No. 37/2026. The case was registered by the Directorate General of GST Intelligence for alleged offences under the Health Security and National Security Cess Act, 2025. The prosecution alleges that the petitioner was involved in the manufacture of pan masala using six machines in his factory premises since April 2024, evading GST payment and failing to submit declarations for the installed machines. The petitioner was arrested on August 20, 2026. He had previously filed bail applications before the Special Judge and the Sessions Court, both of which were dismissed. The maximum punishment for the alleged offence is five years imprisonment. The investigation has been completed, and a final report has been filed.

Held

The Court allowed the criminal petition and directed the enlargement of the petitioner on regular bail in Crime No. 37/2026, subject to certain conditions. The Court reasoned that the investigation had been completed, and a final report had been filed. It was also noted that the allegations against the petitioner were based on documentary evidence. Given these circumstances, the Court found that the petitioner's prayer for regular bail should be answered affirmatively. The conditions for bail include executing a personal bond of Rs. 1,00,000/- with two sureties, appearing regularly before the Trial Court unless exempted, not threatening or tampering with prosecution witnesses, and not involving in similar offences in the future. The issue of guilt or innocence was not decided, only the grant of bail was considered.

Key Issues

1. Whether the petitioner is entitled to regular bail in Crime No. 37/2026, considering the allegations of GST evasion and non-declaration of machinery under Section 26(2) of the Health Security and National Security Cess Act, 2025? Petitioner's Arguments: The petitioner argued that he is entitled to regular bail. He highlighted that the investigation is complete and a final report has been filed. He also pointed out that the allegations are based on documentary evidence and that the maximum punishment for the alleged offence is five years imprisonment. The petitioner had already approached the Special Court and the Sessions Court for bail, which were dismissed, leading him to approach the High Court. Respondent's Arguments: The respondent, the State of Karnataka represented by the Senior Intelligence Officer, Directorate General of GST Intelligence, contended that the petitioner was involved in manufacturing pan masala and evading GST. The prosecution's case is based on information received, leading to search and seizure operations at the petitioner's factory and residential premises, where the alleged illegal manufacturing and evasion were discovered.