₹2645 Crore GST Scam: HC Grants Bail as Co-Accused with Bigger Role Already Released

Gurmeet Singh Batra @ Sahil Vs Union of India (Allahabad High Court)

Summary: In the case of Gurmeet Singh Batra @ Sahil vs. Union of India, the Allahabad High Court granted bail to the accused involved in a ₹2645.29 crore GST fraud case. The Directorate General of GST Intelligence (DGGI) uncovered a large-scale scam involving the creation of 3100 fake firms, which passed on fraudulent Input Tax Credit (ITC) without actual supply of goods or services. Out of these, 2528 firms were identified, with 22 firms found non-existent. The scam spanned multiple states, and investigations revealed the involvement of several individuals, including the accused, in setting up shell firms and issuing bogus invoices. Despite the gravity of the offense, the court granted bail to Gurmeet Singh, considering the lack of direct evidence linking him to the creation of fake firms and the fact that a co-accused, who had a more significant role, had already been granted bail. The court imposed strict conditions on the accused, including the surrender of his passport and non-indulgence in similar offenses. The bail was granted based on these conditions and the absence of sufficient evidence proving direct involvement in the scam.

Introduction: The Hon’ble Allahabad High Court in the case that the other accused with more serious role in commission of of Gurmeet Singh Batra @Sahil v. UOI [Criminal Misc. Bail Application No. 20538 Of 2024 dated August 07, 2024] released the accused on bail inter-lalia on the ground crime has already been released on bail.

Facts:

Gurmeet Singh Batra @Sahil (“the Applicant”) filed a bail application seeking bail in relation to case registered against the Applicant/Accused under Section 132 of Central Goods and Services Tax Act, 2017 (“the CGST Act”).

The case was registered against the Applicant based on the information received by the officers of Revenue Department (“the Respondent”) wherein it has been alleged that the Applicant along with other accused are involved in issuance of bogus bill and creation of fake firms without any supply of goods and services have been busted by the Noida Police. Subsequently, Applicant along with other accused were arrested and their statement was recorded during judicial custody. Thereafter, the Respondent filed a criminal complaint against the Applicant and other accused alleging that the Applicant has actively assisted the other accused in commission of the Crime.

The Applicant contended that nothing was recovered on the Applicant and the complaint was registered against the Applicant solely based on the confession of the other Accused. Also, no device has been recovered from the Applicant in order to establish the fact that Applicant has created the fake mother firm and has passed the ITC.

Held:

The Hon’ble Allahabad High Court in the case of Criminal Misc. Bail Application No. 20538 of 2024 held that considering the nature of the offence, punishment, material and evidence available on record and the fact that other co-accused with more serious role in commission of crime has been released on bail by the said bench of this Hon’ble Coordinate Bench, the Applicant is entitled to be released on bail.

Our Comments:

It is pertinent note that the divergent view has been taken by the Hon’ble Supreme Court in the case of Tarun Kumar v. Assistant Director, Directorate of Enforcement [SLP (Crl.) No. 9431 of 2023 dated November 20, 2023] wherein it was held that benefit of bail cannot be granted merely on the basis that the benefit of bail has been granted to the co-accused as it is important to take into consideration the role of the individual accused in commission of crime at the time of granting of bail.

FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT

1. This bail application has been filed by the applicant – Gurmeet Singh Batra @ Sahil seeking bail in Case No. 22362 of 2023 under Sections 132(1)(b), 132(1)(c), 132(1)(f), 132(1)(1) and 132(1)(i) of C.G.S.T. Act, 2017, D.G.G.I. Ghaziabad Unit.

2. Brief facts of the case, as culled out from the record, are that the officers of D.G.G.I., Meerut Zonal Unit received an information that a racket indulged in creation of 3100 fake firms and issuance of bogus bills and invoices without any supply of goods and services had been busted by NOIDA police on 31.5.2023 and F.I.Rs. as case no. 203 of 2023 and 248 of 2023 were lodged which culminated into charge sheet. The analysis of data/ information, as shared by the NOIDA police, revealed that accused persons had created fake 3100 mother firms (2528 firms on removing duplicate entries) and passed on fake GST of Rs. 2645.29 crores. Since the matter was relating to the tax evasion it was took-up by the D.G.G.I. and it was found subsequently that from 2528 mother firms Input Tax Credit (ITC) was passed on to 6492 firms (which are called Level 1 firms) on all India basis. Out of the aforesaid 2528 firms, 114 mother firms falling under the jurisdiction of DGGI, Meerut Zonal Unit, were taken for investigation. On analysis of the data relating to the 114 mother firms aforesaid, a total number of 22 mother firms were, prima facie, found involved in passing on fraudulent Input Tax Credit (ITC)to the tune of Rs. 14.65 crores till date but all 22 mother firms during inspection were found non-existent. It was also revealed from investigation that 25 Level-1 recipients were non-existent at their principal place of business and had passed on fake ITC to the tune of Rs. 148.85 crores and a total fake ITC confirmed as on date was Rs. 163.50 crores. The present applicant alongwith some accused persons was arrested by the NOIDA police and their statements under Section 17 of C.G.S.T. Act were recorded during the period of judicial remand which further disclosed their respective roles and involvement in creation of fake firms and issuing and receiving bogus invoices without supply of goods / services.

3. A criminal complaint was filed by the Senior Intelligence Officer, Directorate General of GST Intelligence, Regional Unit, Ghaziabad before the competent Court under Sections 132(1)(b)(c) (f) and (1) of the C.G.S. T. Act, 2017 punishable under clause (1) of Section 132(1) of the C.G.S.T. Act. The names of Yasin Shaikh, Deepak Murjani, Gaurav Singhal, Arjit Goyal, Anchit Goyal and Pradeep Goyal came to surface as masterminds who committed the offences under Section 132(1)(b)(c)(f) of the C.G.S.T. Act, 2017 whereas Vinita Mujrani and Gurmeet Singh Batra, the present applicant, were found to be the persons who had actively assisted the above persons in commission of the crime.

4. Heard Shri Vivek Singh, learned counsel for the applicant, learned counsel for the D.G.G.I. and perused the record.

5. It is submitted by learned counsel for the applicant that nothing was recovered from the possession of the present applicant and on the basis of alleged confession made by the accused persons only, present complaint was filed against the applicant and four others. It is also submitted that the source by which these non-existent companies were registered and ITC was passed, is unknown till now. There is no device to establish that present applicant created fake mother firms and passed the ITC. It is also submitted that no liability of G.S.T. has been assessed till now.

6. It is further submitted that till date penalty or taxes have not been ascertained as per the mandate of the said Act. It is also submitted that offences, as alleged, are punishable up-to five years imprisonment and are compoundable. It is further submitted that no notice for recovery of G.S.T. has been issued against the applicant and he has been illegally arrested. The applicant has no criminal history to his credit. He has been in jail since 19.07.2023. It is also submitted that in case the applicant is released on bail, he will not misuse the liberty and is ready to cooperate in the trial. Lastly, it is submitted that co-accused Gaurav Singhal having a role more serious than that of the present accused / applicant has been granted bail by the coordinate Bench of this Court on 29.5.2024 vide Criminal Misc. Bail Application No. 16786 of 2024.

7. Per contra, learned counsel appearing for the D.G.G.I. vehemently opposed the prayer for bail and contended that the applicant operates a racket for evading the Input Tax Credit by creating fake firms. There is a confessional statement of the accused/ applicant recorded by the authorities which is relevant in order to trace out any device by using which shell firms were created. In case, applicant is released on bail he will again indulge in similar activities and may misuse the liberty of bail.

8. I have considered the rival submissions made by the learned counsel for the parties and have gone through the entire record carefully.

9. Having regard to the entire facts and circumstances of the case, the nature of the offence, the punishment and the material available on record and none availability of any device by using which fake firms are said to be created and the fact that co-accused Gaurav Singhal having more serious role has been released on bail by the coordinate Bench of this Court, and without expressing any opinion on the merits of the case, the Court is of the view that the applicant has made out a case for bail. The bail application is allowed.

10. Let the aforesaid applicant be released on bail on furnishing a personal bond and two heavy sureties each in the like amount to the satisfaction of the court concerned subject to following conditions:

(i) The applicant will not tamper with the evidence during the trial.

(ii) The applicant will not pressurize/ intimidate the prosecution witness.

(iii) The applicant will appear before the trial court on the date fixed, unless personal presence is exempted.

(iv) The applicant shall not commit an offence similar to the offence of which he is accused, or suspected, of the commission of which he is suspected.

(v) The applicant shall not directly or indirectly make any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the Court or to any police officer or tamper with the evidence.

(vi). The applicant shall not indulge in any criminal and anti­social activity.

(vii) The applicant shall surrender his passport, if any, to the concerned Trial Court forthwith and shall not leave the country without previous permission of the Court.

11. In case of breach of any of the above conditions, the prosecution shall be at liberty to move bail cancellation application before this Court.

12. It is made clear that the submissions / observations made in this order are only for deciding the bail application. The trial Court while deciding the matter finally shall not be influenced with the same.

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