Directorate General of GST Intelligence Vs Rakesh Kumar Goyal (Delhi High Court)
Delhi High Court has dismissed a petition filed by the Directorate General of GST Intelligence (DGGI) seeking to recall the bail granted to Rakesh Kumar Goyal, an accused in a multi-crore Goods and Services Tax (GST) evasion case. The DGGI had challenged the December 23, 2020 order of the Chief Metropolitan Magistrate (CMM) which granted bail to Goyal, citing alleged non-cooperation and a lack of change in circumstances since previous bail rejections.
The case involves allegations against Goyal for offenses punishable under Section 132(1)(c) of the Central Goods and Services Tax Act, 2017, related to the fraudulent availment of Input Tax Credit (ITC) and subsequent refund claims on Integrated Goods and Services Tax (IGST) for export of goods. Investigations by DGGI officers revealed that four companies—M/s Aastha Apparels Pvt. Ltd., M/s JBB Apparels Pvt. Ltd., M/s JBN Apparels Pvt. Ltd., and M/s Nautilus Metal Craft Pvt. Ltd.—allegedly engaged in fraudulent ITC claims using invoices from non-existent or fictitious firms. These companies were reportedly owned or controlled by Goyal.
DGGI’s Grounds for Challenging Bail
The DGGI presented four primary grounds for challenging the bail order:
- No Change in Circumstances: The DGGI argued that the CMM granted bail on Goyal’s third application despite previous rejections by the ACMM on October 26, 2020, and the ASJ on November 17, 2020, without any significant change in circumstances. The petitioner cited Shahzad Hasan Khan vs. Ishtiaq Hasan Khan and another (1987 AIR (SC) 1613) and State of Maharashtra vs. Captain Buddhikota Subha Rao (1989 AIR (SC) 2292), which emphasized judicial propriety and that a similar prayer should not be granted without a change in the factual situation after rejection.
- Non-Cooperation in Investigation: The DGGI contended that Goyal and his accomplices consistently failed to cooperate with investigations, including disobeying summons and not providing crucial Tally Data. This alleged non-cooperation reportedly hindered ongoing investigations against other associated companies.
- Lack of Parity with Co-accused: The DGGI argued against parity with co-accused Vikas Chowdhary, who was granted bail on March 23, 2020. The petitioner asserted that Goyal’s involvement in the fraudulent availment of ITC and IGST refund was significantly higher (approximately Rs. 61.02 crores). Furthermore, Chowdhary had cooperated with the investigation and offered to reverse ITC, unlike Goyal, who was described as a habitual offender involved in multiple tax evasion and fraud cases, including those under the Customs Act, 1962, and by the Directorate of Revenue Intelligence (DRI). Judicial precedents like Neera Yadav vs. State of UP and Anr. (Crl. Appeal No. 1272/2015) and Ajay Sagar and Anr. vs. DRI (2009 (3) JCC 1726) were referenced.
- Beneficiary of Evasion: The DGGI claimed that Goyal was a direct beneficiary of the fraudulent scheme, wherein his companies engaged in circular trading to pass on ITC without actual GST payment. This, according to the petitioner, constituted an economic offense committed with “cool calculation and deliberate design with an eye on personal profit,” echoing observations from State of Gujarat vs. Mohanlal Jitamalji Porwal (1987) 2 SCC 364.
Respondent’s Defense and Court’s Observations
In response, Goyal argued that the DGGI’s grounds were baseless. He highlighted a significant change in circumstances: the filing of the complaint (chargesheet) on December 4, 2020, prior to the bail grant. He referenced Laxman Irappa Hatti and Suresh vs State of Maharashtra (2004 CRILJ 3802), which noted that while investigation continuity is crucial before chargesheet filing, the approach changes once a chargesheet is filed, shifting focus to whether continued custody is necessary. Goyal asserted full compliance with summons and maintained that the parity ground was applicable to him. He also stated that his previous detention order under COFEPOSA was quashed by the High Court of Punjab & Haryana, and he had filed a complaint against IRS officers for harassment.
