Bail Refused Due to Ongoing Probe Into Large-Scale GST Fraud with Bogus Firm Network

Narendra Choudhary Vs Union of India (Rajasthan High Court)

The Rajasthan High Court considered a bail application filed under Section 483 BNSS by an accused who had been arrested on 13 August 2025 in connection with offences under Sections 132(1)(A),(F),(G),(H) and (L) of the CGST Act, punishable under Sections 132(1)(I) and (IV) read with Section 132(5). The applicant had been in judicial custody for about three and a half months. His counsel argued that the case involved allegations of GST evasion for which a charge-sheet had already been filed and recovery made. It was submitted that the applicant had no criminal antecedents, the offences were triable by a Magistrate, and were compoundable under the CGST framework. The applicant was stated to be the sole breadwinner of his family. Counsel also submitted that the co-accused allegedly deemed the mastermind had not yet been arrested, suggesting arbitrary conduct by the authorities. It was argued that a show-cause notice under Section 73 could take up to five years and trial would take considerable time. Reliance was placed on decisions of the Supreme Court and a coordinate bench to support the request for bail.

Opposing the application, counsel for the DGGI submitted that the allegations pertained to a serious and organized white-collar offence involving the creation of around 13 bogus firms in the names of poor labourers to facilitate fraudulent clearances of marble across India using e-way bills. It was stated that GST registrations were obtained in names of such individuals to enable clandestine removal of goods and filing of returns either not done or done belatedly. One person allegedly charged ₹55,000 per bogus firm. Intelligence inputs from the Delhi R&D team led to searches, during which the applicant allegedly tampered with evidence by partially destroying a document. The department submitted that the investigation was ongoing, both in relation to the exact valuation of tax evasion and in identifying the remaining co-accused. While the preliminary estimate was about ₹10 crore, the investigation had already indicated evasion of around ₹40 crore, with the possibility of the amount increasing significantly as valuation progressed. It was argued that granting bail would impede investigation, risk revenue interests, and affect efforts to uncover the wider conspiracy. A series of Supreme Court judgments were cited to support the contention that economic offences require a stringent approach.