Vinod Chandra Sahay vs. The State Of Madhya Pradesh

Held

The Court allowed the application for regular bail. The Court noted that various High Courts and the Apex Court have considered similar matters in favour of applicants. Specifically referencing Section 132 of the GST Act, the Court observed that for wrongful utilization of input tax credit, if the amount involved is more than Rs. 5 Crores, the maximum sentence is five years. The Court also highlighted the provision under Section 138 of the Act for compounding of offences, indicating that compounding is a possibility. The Court took note that anticipatory bail had been granted to a co-accused. Considering the applicant's custody period since July 2, 2025, and the potential adverse effect on his business if further detained, the Court found it inclined to grant bail. The applicant was released on bail upon furnishing a personal bond and sureties, with conditions including appearance in court, not inducing witnesses, keeping his mobile operational, sharing his location, not committing further offences, and surrendering his passport.

Facts

The applicant, Vinod Chandra Sahay, sought regular bail in a case registered under various sections of the IPC and the IT Act. The prosecution alleged that a complainant was induced to form a proprietorship firm, Maa Narmada Traders, for a loan. Documents were handed over, and without the complainant's consent, an email ID and the complainant's son's mobile number were registered for GST purposes. A GST registration was issued, and subsequently, tax dues of Rs 72,66,408/- were found outstanding. The FIR stated that bogus transactions worth crores were shown, and fraudulent GST returns were filed using OTPs and documents. Several other bogus firms were allegedly floated to generate fake GST returns and fraudulent transactions, causing a loss of approximately Rs 33.80 Crores to the State exchequer. The applicant is in custody since July 2, 2025.

Key Issues

1. Whether the applicant is entitled to regular bail considering the provisions of the GST Act and the quantum of the alleged fraud, particularly in light of Section 132 of the GST Act which prescribes punishment based on the amount involved and whether the invocation of IPC sections alongside GST provisions is permissible. (Petitioner's contention: Various High Courts have held that if the amount exceeds Rs. 5 Crores, the maximum punishment is five years, and there is no embargo on considering bail applications under the GST Act. The applicant's counsel argued that the practice of GST authorities resorting to IPC offences is not approved by High Courts and some complaints have been quashed. Reliance was placed on Akram Pasha v. Senior Intelligence Officer, Sharat Babu Digumarti v. Government of NCT of Delhi, Deepak Singhal v. Union of India, Sushil Kumar Singla v. State of UT Chandigarh, and Shalini Singhal v. State of MP, arguing that the applicant should be released on bail as GST is a self-contained code. Revenue's contention: Offences are serious in nature under Section 131 of the GST Act. Investigation is ongoing, and further interrogation may reveal more scams. The fraudulent amount might increase, jeopardizing national interest, and a prima facie case is made out against the applicant, warranting a serious view and denial of bail.)