Amit Mehra Vs Union of India (Punjab and Haryana High Court)
Summary: The Punjab and Haryana High Court dismissed Amit Mehra’s petition seeking regular bail in Case No. 442 of 2025 and File No. DGGI/INT/INTL/442/2025-RU-DGGI-SML dated 01.05.2025, arising from alleged offences under Section 132(1)(b) of the Central Goods and Services Tax Act, 2017, punishable under Section 132(1)(i) of the CGST Act and Section 20(xv) of the IGST Act, 2017.
According to the prosecution case, secret information was received concerning M/s Mefro Organic Limited and its alleged availment of input tax credit on goods-less invoices procured from four firms. Searches of M/s Mefro Organic Limited and the alleged supplier firms found the four firms to be non-existent. Directors and employees of M/s Mefro Organic Limited allegedly disclosed that the invoices were procured with the aid of Amit Mehra, proprietor of one of the four firms, M/s Kavish Overseas.
Searches were thereafter conducted at the residences of Amit Mehra and his accountant, Bunty Malhotra. Mobile phones, laptops, cheque books of numerous bank accounts and stamps were recovered. After summons, Amit Mehra appeared before the DGGI on 01.05.2025 and, according to the prosecution, made a statement recorded between 01-02.05.2025 admitting operation of four bogus firms, issuance of fake e-way bills, charging 1-2% commission and identifying nine additional bogus firms. The investigation at that stage found an alleged ITC fraud of Rs. 32 crore relating to the four firms, and Amit Mehra was arrested on 02.05.2025 under Section 69(1) of the CGST Act, 2017.
The investigation subsequently alleged that Amit Mehra was operating 44 bogus firms, through which goods-less invoices of Rs. 2,106 crores were generated, facilitating fake ITC of Rs. 315.13 crores. The petitioner disputed the alleged linkage with beneficiary firms and issuance of invoices or e-way bills, questioned the absence of IP-address and corroborative digital-trail investigation, contended that the recovered laptop records did not relate to his business, and pointed out that alleged beneficiaries had not been arrested or made part of the investigation. It was also submitted that the electronic and physical records were already with the investigating agency and that further custody was unnecessary.
The Union of India, through DGGI, opposed bail, asserting that the record showed Amit Mehra to be the mastermind behind a large-scale fake-ITC fraud involving 44 bogus firms. The prosecution relied upon WhatsApp chats, bank-account transactions, alleged diversion of funds to the petitioner or his family, and statements of end-availers admitting availment of fake ITC through Amit Mehra with commissions ranging from 6% to 12%. It submitted that investigation remained ongoing to trace accomplices through the financial trail and that release could enable the petitioner to influence beneficiaries and other accomplices.
The Court considered the allegations serious and noted the alleged involvement of 44 non-existent/proxy firms and the huge amount involved. It observed that the petitioner’s defence contentions were questions of fact to be decided by the Trial Court after evidence from both sides. Relying on the Supreme Court’s decision in Y.S. Jagan Mohan Reddy v. Central Bureau of Investigation, the Court reiterated that economic offences involving deep-rooted conspiracies and huge loss of public funds require a different and stringent approach in bail matters.
The Court therefore declined to favour the petitioner’s assertions and dismissed the petition. It expressly clarified that its observations were not an opinion on the merits and directed the Court below to proceed on its own merits so that the trial would not be prejudiced.
Cases Discussed
- Y.S. Jagan Mohan Reddy v. Central Bureau of Investigation [2013(3) RCR(Criminal) 108; 2013(7) SCC 439]
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT
1. The present petition has been filed seeking regular bail to the petitioners in Case No.442 of 2025 and File No.DGGI/INT/INTL/442/2025-RU-DGGI-SML dt. 01.05.2025 for offences under Section 132(1)(b) of the Central Goods and Services Tax Act, 2017 and punishable under Section 132(1)(i) of the Goods & Services Tax Act, 2017 and Section 20 (xv) of IGST Act, 2017.
2. As per the prosecution case, secret information was received regarding a firm named M/s Mefro Organic Limited, that it was availing ITC (Input Tax Credit) on the basis of goods-less invoices procured from 4 firms. Consequently, search was conducted in the premises of M/s Mefro Organic Limited as well as alleged supplier firms. During investigation, these 4 firms were found to be non-existent; further, the Directors and employees of M/s Mefro Organic Limited revealed that these good-less invoices were procured with the aid of Sh. Amit Mehra (present petitioner-accused), who was the proprietor of one of the four non-existent firms, named M/s Kavish Overseas, which was providing the good-less invoices to M/s Mefro Organic Limited. Accordingly, a search was conducted in two premises – residence of Sh. Amit Mehra, and residence of his accountant, Mr. Bunty Malhotra. During these searches, 1 mobile phone and laptop were recovered from Mr. Bunty Malhotra (allegedly given to him by Sh. Amit Mehra), 1 mobile phone and 1 laptop was recovered from Sh. Amit Mehra, as well as cheque books of numerous banks accounts with different banks, along with some stamps. In consequence of summons issued to petitioner -accused Sh. Amit Mehra, he appeared before the DGGI on 01.05.2025, and he made a statement, recorded between 01-02.05.2025, wherein he admitted to operating four bogus firms, and also issuing fake e-way bills; he also admitted to charging 1-2% commission on each of such transaction, and also named 9 additional bogus firms that dealt similarly in issuing of fake invoices. As per investigation at that point, a fraud of Rs. 32 crore in ITC was found pertaining to the four bogus firms. Accordingly, Sh. Amit Mehra was arrested on 02.05.2025 under Section 69(1) of the CGST Act, 2017. In the later course of the investigation, that the petitioner-accused was infact operating 44 bogus firms, with goods-less invoices generated to the tune of Rs. 2,106 crores, thereby facilitating fake Input Tax Credit worth Rs.315.13 Crores.
3. Learned Counsel for the petitioner-accused Sh. Amit Mehra contended that there is no evidence to link the present petitioner to the beneficiary firms, nor any evidence to prove issuance of invoices of e-way bills by the petitioner. No investigation regarding the IP Address, or to trace any corroborative digital trail has been conducted by the Investigation Authority. Although both Sh. Amit Mehra and his accountant Mr. Bunty Malhotra were detained, but only the present petitioner Sh. Amit Mehra was arrested; and the documents and other records contained in the laptop recovered from Mr. Bunty Malhotra did not pertain to the business of the present petitioner, but to some other client of accountant Mr. Bunty Malhotra. The alleged invoices have not been issued by the present petitioner Sh. Amit Mehra, as he is not the proprietor of the firms concerned. Beneficiaries of the alleged goods-less invoices have not been arrested or made part of the investigation. All the electronic and physical records of the alleged transactions and invoices are already in the custody of the Investigation Agency, and further detention of the present petitioner will not serve any fruitful purpose, and the petitioner has clean antecedents. Hence, prayed for grant of concession of regular bail to the petitioner.
4. Learned counsel for the Respondent – Union of India, through Directorate General of GST Intelligence (DGGI), vehemently opposed the prayer of the petitioner to be granted regular bail. Ld. Counsel submitted that there is compelling evidence in record collected from the investigation so far, to show that the present petitioner is the master-mind behind a large-scale fraud involving the Input Tax Credit through creation of as many as 44 bogus firms, generating good-less receipts, and causing a huge loss of hundreds of crores to the public-exchequer. The statement made by the petitioner-accused has been corroborated by WhatsApp Chats. Present-petitioner was the de-facto owner of the firms from which goods-less invoices were issued. Transactions worth hundreds of crores were routed in multiple banks accounts held by the petitioner in names of fake firms, and were either withdrawn in cash or diverted to petitioner’s or his family’s personal accounts. During investigation, several firms, who were end-availers, admitted to availing fake ITCs through Sh. Amit Mehra, with commissions ranging between 6% to 12%; on the basis of these admissions, partial recoveries were made. The investigation is still on-going with respect to tracing accomplices through the financial trail, and if petitioner-accused is set free, he may influence the beneficiaries as well as other accomplices involved in the network of bogus invoicing. Hence, prayed for dismissal of the bail application.
5. Heard.
6. As per the facts and circumstances of the present case, as well as the arguments advanced by the Ld. Counsel for the parties, the present petitioner-accused is alleged to have set-up as many as 44 non-existent / proxy firms, thereby causing great loss to the public exchequer running into hundreds of crores rupees by passing on the benefit of fake Input Tax Credits through goods-less invoices. The allegations against the present petitioner are serious, and the alleged amount involved so far, as per the investigation is huge, i.e. Rs. 315.3 crores. Contentions of the petitioner raised in his defence are question of fact, which are to be decided by the Trial Court after collecting evidence from both the parties. Taking into consideration the huge amount involved, and on account of the present case being one dealing with economic offence, which constitute a class apart from ordinary offences, and invites far more stringent view while granting the concession of bail, in view of decision of the Hon’ble Supreme Court in Y.S. Jagan Mohan Reddy v. Central Bureau of Investigation [2013(3) RCR(Criminal) 108; 2013(7) SCC 439]:
“Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country.”
7. Hence, this Court does not find favour with the petitioner’s assertions. Therefore, the instant petition is dismissed.
8. Nothing observed herein shall be construed to be an opinion on the merits of the case. The learned Court below is directed to proceed with the matter on its own merits, lest it may prejudice the trial.
