Mohd. Zafar Seikh vs. The State Of Madhya Pradesh

Held

The Court allowed the bail application. Having regard to the total amount of Rs. 1,36,620/- (Rs. 55,680 + Rs. 80,940) involved concerning the applicant and the nature of the evidence on record regarding his involvement, the Court was inclined to release the applicant on bail. The applicant was directed to be released on furnishing a personal bond of Rs. 15,000/- with one solvent surety to the satisfaction of the trial court. He is required to appear regularly before the trial court during the trial and abide by all conditions under Section 480(3) of the Bharatiya Nagarik Suraksha Sanhita, 2023. The order is effective until the end of the trial, subject to compliance with bail conditions. The Court did not expressly leave any issue undecided, as the decision was based on the merits of the bail application.

Facts

The applicant, Mohd. Zafar Seikh, proprietor of M/s Anam Traders and Amber Coal Depot, is in custody since July 2, 2025, in connection with Crime No. 102/2025 registered at P.S.-EOW, Bhopal, for offences including criminal conspiracy and cheating. The prosecution alleges that a co-accused, Vinod Sahai, proprietor of M/s Maa Narmada Traders and M/s Namami Traders, claimed input tax credit (ITC) of Rs. 55,680/- and Rs. 80,940/- by showing fake sales and purchases of coal between their respective firms. The applicant argues that his firm's invoices and e-way bills are not alleged to be fake, that he paid GST on his purchases, and that he is not liable if the other firm did not pay GST and claimed ITC. He also stated he cooperated with the investigation and is unaware if certain other firms involved were bogus.

Key Issues

1. Whether the applicant is liable for the alleged fraudulent claim of Input Tax Credit (ITC) by a co-accused, despite the applicant's firm's transactions not being alleged as fake or forged, and the applicant having paid GST on his purchases? (Question of law and fact, turning on principles of vicarious liability and the scope of Section 120-B of the IPC and GST provisions related to ITC). Petitioner's Arguments: The applicant's counsel argued that there are no allegations of fake or forged e-way bills/invoices pertaining to the applicant's firms. It was further contended that the applicant paid GST on his purchases and is not liable if the co-accused's firm did not pay GST and claimed ITC. The applicant cooperated with the investigation and is unaware of the genuineness of other involved firms. Reliance was placed on the applicant's custody period and the filing of the charge sheet. Revenue's Arguments: The State's counsel opposed the bail application, stating that the primary accused, Vinod Kumar Sahai, constituted fake firms. It was argued that the applicant transacted with firms that did not exist, and the GST department's inquiry found these firms to be non-existent, leading to a theft of ITC amounting to Rs. 55,680/- and Rs. 77,228/-. The allegations against the applicant and 14 others are with respect to Section 120-B of the IPC.