Case Law Details
DGGI Vs Het Ram Sharma (Patiala House Courts, Delhi)
New Delhi: Patiala House Courts in Delhi has granted anticipatory bail to Het Ram Sharma, a director of M/s Rajnandini Metal Limited, in connection with an alleged ₹75 crore fake GST Input Tax Credit (ITC) fraud case. The decision comes after an application seeking pre-arrest bail was filed by Sharma, who had been under investigation by the Directorate General of GST Intelligence (DGGI) for allegedly orchestrating a scheme to claim ineligible ITC through a network of intermediary firms.
Sharma’s legal team argued that he is a law-abiding citizen and an indigenous entrepreneur, fully cooperating with the ongoing investigation. They highlighted that DGGI officers had visited his factory and residence on February 14, 2025, and he had subsequently appeared at their office for questioning, providing a statement on February 15, 2025. The defense contended that the applicant’s liberty was endangered due to the apprehension of coercive action under Section 69 of the CGST Act, 2017, despite his willingness to cooperate. It was also pointed out that the maximum punishment for the alleged offenses was up to five years, and the evidence primarily appeared to be documentary. Reference was made to the Supreme Court’s judgment in Gurbakash Singh Sibbia and others v. State of Punjab (1980) 2 SCC 565, which established the maintainability of anticipatory bail applications. Additionally, the defense cited Radhika Aggarwal v. Union of India and others (2005 INSC), suggesting that anticipatory bail is permissible even at the summons stage by the GST Department. Other judicial precedents cited by the applicant included Rajnandini Metal Ltd Vs Union of India and others, Tarun Jain Vs Directorate General of GST Intelligence DGGI, Kishan Murari Gupta Vs State of UP, Hardeep Singh Banga Vs State of Uttar Pradesh, Neha Agarwal Anrs Vs Superintendent Anti-Evasion CGST, Mumbai Central, Nishant Garg, Director Vs Union of India and others, Abdul Shaji Vs Commissioner of Central Tax and Central Excise (Kochi) and anr., Paresh Anubhai Mawani Vs Superintendent (Central Tax) and anr., Smt. Prathipati Pulla Rao, and others Vs State of Andhra Pradesh, Surekha Vs State of Gujrat, Ramesh Chandra Mehta Vs State of West Bengal, Shree Parvati Metals Vs Union of India and Another, Arvind Kejriwal Vs Central Bureau of Investigation, and Sanjay Chandra Vs Central Bureau of Investigation.
The DGGI, in its reply, alleged that Sharma, as a director of M/s Rajnandini Metal Limited, orchestrated a fraudulent scheme to avail approximately ₹75 crore in ineligible ITC. This was purportedly achieved through three intermediary firms—M/s Ashirwad Metal Traders, M/s Sh. Mahaveer Metal, and M/s Balaji Metal Trader—which were allegedly created solely to facilitate the illegal circulation of copper scrap without proper invoicing. The modus operandi, according to the DGGI, involved generating fake invoices to claim fraudulent ITC, which was then passed on to M/s Rajnandini Metal Limited. The department asserted that these intermediary firms were merely “paper firms” with no legitimate business operations, existing solely for tax evasion. Digital and human evidence, the DGGI claimed, confirmed a premeditated effort to defraud the exchequer. The prosecution contended that Sharma had not fully cooperated with the investigation, despite having appeared once, and that his conduct disentitled him to discretionary relief. The department cited precedents including SFIO Vs Aditya Sarda, YS Jagan Mohan Reddy Vs CBI, SFIO VS Nittn Johari, Tarun Kuamr Vs Asst. Director Directorate of Enforcement, Manik Madhukar Sarve Vs Vitthal Damuji Meher, and Sushant Muttreja Vs SFIO.
After reviewing the contentions and evidence, the court noted that Sharma had indeed appeared before the department and provided a statement on February 15, 2025, answering numerous questions and providing details about the company’s operations. The court observed that the DGGI did not dispute the veracity of the information provided by Sharma during his examination. While the department argued that Sharma had not fully cooperated, the court found that his apprehension of arrest was not unfounded, given that similar allegations of GST evasion had led to the arrest of co-accused individuals. The court emphasized that while the maximum punishment for an offense is not the sole criterion for granting anticipatory bail, it is an important indicator of the legislative intent regarding the seriousness of the offense. Citing Vineet Jain Vs Union of India (SLP (Criminal) No. 4349/2025), the court highlighted that in cases primarily involving documentary evidence, bail should generally be granted unless extraordinary circumstances exist, which were not demonstrated by the prosecution in this instance. The court found no evidence to suggest that Sharma might flee or tamper with evidence.
Consequently, the court directed that Het Ram Sharma be granted bail if the department concludes that his arrest is required under Section 69 of the GST Act. The bail was granted subject to furnishing a bail bond of ₹2,00,000 with one surety of the like amount, who must be a blood relative of the applicant. Additional conditions include that Sharma must appear before the Investigating Officer/Department as and when directed, not leave the country without prior intimation to the trial court, not tamper with evidence, and not delete data from his mobile phone for the preceding six months. The court clarified that its observations did not constitute an opinion on the merits of the case.
FULL TEXT OF THE JUDGMENT/ORDER OF PATIALA HOUSE COURTS, DELHI
1. This order shall dispose of an application seeking anticipatory bail filed on behalf of applicants/accused Het Ram Sharma in the present matter.
CONTENTIONS IN APPLICATION:-
2. It is contended in the application that applicant/accused is a law abiding citizen of India and is an indigenous entrepreneur. That applicant is working as Director of one Company M/s Rajnandini Metal Limited and is registered with the jurisdictional GST Department having GST Code No. 06AAECR6889HIZU. That in connection with the present case, the officers of Directorate General of GST Intelligence has visited the factory premises as well as residence premises of the applicant on 14.2.2025 and conducted very lengthy and thorough investigation from the applicant. That on 14.02.2025 the officers of Directorate General of GST Intelligence brought the applicant to their office at Dwarka, New Delhi for further investigation. That applicant apprehends coercive action under the garb of the provisions of Section 69 of the CGST Act 2017 whereas the applicant is duty bound to render full cooperation and assistance in the ongoing investigation. That vide order dated 28.3.2025, Ld. Additional Judge, Faridabad was pleased to return the said application for anticipatory bail with the liberty to the applicant to file it before the competent court of law at Delhi.
2.1. It is further contended that present application for grant of anticipatory bail is maintainable in terms of judgment rendered by Hon’ble Supreme Court of India in case titled as Sh. Gurbakash Singh Sibbia and other s Vs State of Punjab (1980) 2 SCC 565. That applicant is not involved in any such offence as alleged, the applicant has not caused any loss to the State Exchequer as the company has been regularly filing GST returns on time with regard to purchase made by the above said company. That applicant is ready to join the investigation and cooperate with the investigating officer concerned. That applicant has already joined the investigation on dated 14.02.2025 and have tendered/recorded his statement before the investigating officer of Directorate General of GST Intelligence.
2.2. That applicant apprehends his liberty is endangered as the applicant is quite innocent person and has never committed any alleged offence in any manner whatsoever. That officers of Directorate General of GST Intelligence has set the criminal law into motion by concealing and maneuvering the facts with great subtlety and the applicant has been made scapegoat of the circumstances. That Directorate General of GST Intelligence has instituted the present case not only to extort the applicant but also the same is devised to tighten the loose around him. That applicant is a permanent resident of Faridabad and has fixed abode with the absolutely clean antecedents. That applicant is an Income Tax assessee/payee, thus, there is no likelihood of his absconding from the clutches of law. That applicant undertakes to appear before the concerned officer and participate in the enquiry/investigation as and when directed by the authorities. That applicant undertakes not to tamper with any evidence or influence any witness. That no useful prupose would be served by the incarceration of the applicant. Hence, present application.
REPLY OF DEPARTMENT
3. Notice of this application was issued to Department/DGGI and detailed written reply was filed. It is contended that the applicant, in his capacity as a Director of M/s Rajnandini Metal Limited, orchestrated a fraudulent scheme to avail ineligible Input Tax Credit amounting to approximately Rs. 75 crore and this was achieved through a network of three intermediary firms- M/s Ashirwad Metal Traders, M/s Sh. Mahaveer Metal and M/s Balaji Metal Trader. That these firms were created solely to facilitate the illegal circulation of copper scrap sourced from the local market without proper invoicing. The modus operandi involved the generation of fake invoices by these intermediary firms without any actual supply of goods. These invoices were then to claim fraudulent ITC, which was subsequently passed on M/s Rajnandini Metal Limited.
3.1. That investigation further revealed that these above firms were mere paper firms with no legitimate business operations, existing only for the purpose of tax evasion. That digital and human evidence collected by the Department has confirmed that the entire operation was a premediated and structured effort to defraud the exchequer. That on-going investigation s made in evident that the petitioner has been involved in various fraudulent activities. Other contentions have been denied submitting that present application be dismissed.
SUBMISSIONS
4. It is argued on behalf of applicant that they had joined the investigation and gave his statement. It is submitted that they had approached the court at Faridabad and upon finding the said court does not have jurisdiction, present application has been filed. It is submitted that in the wake of recent decision of Hon’ble Supreme Court of India in the case titled as Radhika Aggarwal Vs Union of India and others reported 2005 INSC, present application is maintainable even at the time of issuance of summons by Department of GST. It is submitted that the offence with the commission of which allegations are levelled against applicant are such wherein maximum punishment up to five years. It is submitted that applicant is not shying away from the investigation or is concealing himself and has taken recourse of law for seeking redressal. It is submitted that applicant shall join the investigation as and when required. It is submitted that applicant is ready to abide by any other conditions laid by this court. It is submitted that application be allowed. Reliance is placed upon judgment titled as Rajnandini Metal Ltd Vs Union of India and others, High Court of Punjab and Haryana CWP 2661/2021, Tarun Jain Vs Directorate General of GST Intelligence DGGI, 2021, scc Online Del 5733, Kishan Murari Gupta Vs State of UP, 2023, scc Online All 5326, Hardeep Singh Banga Vs State of Uttar Pradesh, SCC Online All 2117, Neha Agarwal Anrs Vs Superintendent Anti-Evasion CGST, Mumbai Central, 2023, 113 GSTR 102, Nishant Garg, Director Vs Union of India and others, Bail application No 9233/2021, Abdul Shaji Vs Commissioner of Central Tax and Central Excise (Kochi) and anr. Bail application No. 220/2021, Paresh Anubhai Mawani Vs Superintendent (Central Tax) and anr. Criminal Appeal 2602/2023, Smt. Prathipati Pulla Rao, and others Vs State of Andhra Pradesh, Criminal Petition No. 1448/2024, Surekha Vs State of Gujrat, 2024, SCC Online SC 4748, Ramesh Chandra Mehta Vs State of West Bengal, 1969 2 SCR 461, Shree Parvati Metals Vs Union of India and Another, D.B Central/Excise Appeal No. 62/2016, Radhika Agarwal Vs Union of India and Anothers, Criminal Peition No. 336/2018, Sushila Aggarwal And Others Vs State of NCT of Delhi and Another SCC Online SC 98, Manish Sisodia Vs Directorate of Enforcement, 2024 SCC Online SC 1920, Arvind Kejriwal Vs Central Bureau of Investigation, Criminal Appal No. 3816/2024 and Sanjay Chandra Vs Central Bureau of Investigation, 2012, SCC-40.
5. On behalf of State/Department, it is contended that in the investigation of present case, names of three firms have been cropped up. It is submitted that opinion is yet to be formed whether accused be arrested or not. It is submitted that based on this, there is no real apprehension to applicant for his arrest. It is submitted that if the applicant cooperate in the investigation, it will be a consideration. It is submitted that applicant Het Ram is eventual beneficiary in the present case. It is submitted that applicant is evading the process of law as he is not appeared even after 4/5 summons were issued. The conduct of applicant is such disentitle him to discretionary relief. It is submitted that the quantum of punishment is not the criteria for adjudicating the application seeking anticipatory bail. It is submitted that interrogation of applicant is required. It is submitted that present bail should be dismissed. Reliance is placed upon judgment titled as SFIO Vs Aditya Sarda, Manu/SC/0479/2025, YS Jagan Mohan Reddy Vs CBI, Manu/SC/0487/2013, SFIO VS Nittn Johari, Manu/sc/1453/2015, Tarun Kuamr Vs Asst. Director Directorate of Enforcement Manu/1243/2023, Manik Madhukar Sarve Vs Vitthal Damuji Meher , 2024 INSC 636 and Sushant Muttreja Vs SFIO Manu//DE//9164/2024.
FINDINGS/DISCUSSION
6. Having heard the contentions of both the parties and perused the record which include the case file produced before this court for perusal of same, it emerges that the applicant has appeared before Department and his statement was recorded on 15.02.2025. On that day, about 16 questions were put to applicant. Applicant was confronted with the statement of co accused Dharamender Kumar and co accused Gopal, both of whom have already been arrested in the present matter. Applicant has explained that the orders for purchase are looked into by one Ms. Kavita. Applicant has given details in respect of the company and aspects such as finished goods and their selling prices etc. It is not the case of Department that applicant has not answered the question truthfully or whatever information given by applicant is incorrect. In the reply to the application and in oral contention, it has been stressed that applicant has not joined the investigation but no submissions were made qua the fact that applicant was examined on 15.2.2025. It shows that applicant is not shying away from joining the investigation but apprehending his arerst, he informed the court.
6.1. The case file of also include arrest memo and the reason for the arrest of co-accused who have been arrested till date. One of the reason for arrest is evasion of GST exceeding five hundred lakh. The similar kind of allegations are levelled against applicant that he is involved in evasion of GST. Therefore, it cannot be said that the apprehension of applicant is unfounded. Though, it has been said on behalf of Department of GST that till date, they have not decided on the aspect if or not applicant is to be arrested, however, the fact that the allegation of GST evasion against applicant is multifold than the allegations of evasion of GST against applicant who have already been arrested, decision of Department regarding arrest of applicant seems to be a matter of time.
6.2. It was argued on behalf of Department that the maximum punishment in the matter cannot be criteria to admit or deny applicant relief of anticipatory bail. The contentions are partially correct as maximum punishment of a person cannot be the sole criteria but it is an important indicator regarding the legislative intent about seriousness and heinous nature of offence. The evidence in the present matter seems primarily to be documentary in nature and in this regard, the recent case titled as Vineet Jain Vs Union of India, SLP (Criminal) No. 4349/2025 has held that in such cases, in normal course the applicant should get bail unless there are some extraordinary circumstances. Nothing could be pointed out to show extra ordinary circumstance in the factual matrix of the case.
6.3. The conduct of accused was assailed and it was argued that applicant is not entire for discretionary relief but the record of Department reflects otherwise that applicant did appear before Department and gave answers, veracity of which is not disputed till arguments in this matter. No apprehension has been expressed that applicant might flee from the course of justice and even if such apprehension exist, no concrete material placed on record to buttress this contention. Therefore, arguments on behalf of Department cannot be accepted for denying the relief sought by applicant.
7. Hence, it is directed that applicant shall be admitted in bail in case Department reaches a conclusion in terms of section 69 of GST Act that applicant is required to be arrested, subject to furnishing bail bond of Rs. 2,00,000/- with one surety of like amount who shall be blood relation of applicant and further subject to following conditions:-
1. The applicant person shall appear before IO/Department as and when directed to appear;
2. The applicant shall not leave country without prior intimation to Ld. Trial court. Authorities concerned be informed in this regard.
3. The applicant shall not tamper with evidence;
4. The applicant shall not delete the data from his mobile for about last six months.
Nothing expressed herein above shall tantamount to an expression of opinion on the merits of the case.
With these observations, the application u/s 482 BNSS, 2023 moved on behalf of applicant/accused person, namely, Het Ram stands disposed of accordingly.
Copy of this order be given dasti to the applicant/accused.
Announced in open court.
Author Bio
