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Bail Granted Amid Allegations of Paper Transactions & Fake ITC Claims

Case Law Details

TaxGuru Citation
2025 taxguru.in 11759
Case Name
Deepak Goyal Vs Inspector (Anti-Evasion) CGST Commissionerate (Punjab and Haryana High Court)
Date of Judgement/Order
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Deepak Goyal Vs Inspector (Anti-Evasion) CGST Commissionerate (Punjab and Haryana High Court)

The Punjab and Haryana High Court addressed a petition filed under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023, seeking regular bail for the petitioner in a complaint lodged under Section 13a2(1)(b)(c) of the Central Goods and Services Tax (CGST) Act, 2017. The complaint, filed by the CGST Commissionerate, Ludhiana, alleged that the petitioner was involved in availing and passing ineligible Input Tax Credit (ITC) through firms M/s New Vasan Electric Company and M/s Shiv Enterprises. The investigation revealed that the suppliers of these firms had their GST registrations cancelled suo-motu, rendering the ITC claimed as fraudulent. M/s Shiv Enterprises declared an additional business address identical to M/s New Vasan Electric Company’s principal place of business, and both firms used the same mobile numbers to obtain OTPs for filing GST returns. No genuine business activity was found at Shiv Enterprises’ principal place of business, and many suppliers were found to be non-existent or untraceable. The supplier chains ended abruptly with “NIL” supplies, indicating circular transactions with no actual goods movement.

A search operation on June 3, 2025, revealed that both firms had availed and passed ineligible ITC totaling Rs. 28.08 crore. The operator of Shiv Enterprises and the proprietor of New Vasan Electric Company were arrested on June 4, 2025. Further investigation showed that M/s Goel Electric Company, a proprietorship of the petitioner’s father, had availed ITC of Rs. 6.09 crore from the two firms between financial years 2019-20 and 2024-25. The petitioner was found to be managing Goel Electric Company’s affairs since 1999. No substantial business records such as invoices or E-way bills were maintained at the firm, and the petitioner admitted to adjusting ITC based on invoices where no goods were delivered, violating Section 16(2) of the CGST Act. He was arrested on July 3, 2025. Applications for bail before the Chief Judicial Magistrate and the Additional Sessions Judge, Ludhiana, were dismissed.

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Author Info

CA Sandeep Kanoi
Qualification: CA in Job / Business
Company: Taxguru Consultancy
Location: Mumbai, Maharashtra
Articles Published: 20,887

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