Facts of the Case

The petitioner sought regular bail in connection with FIR No. 8 dated 05.01.2019, registered at Police Station Kanina, District Mahendergarh, under Sections 420, 467, 468, 471 and 120-B IPC and Section 132(1)(B)(C) of the Haryana Goods and Services Tax Act, 2017.

According to the prosecution, the petitioner and co-accused Parveen Kumar got a firm, M/s Poonam Industries, registered in the name of Smt. Poonam, wife of Sanjay, resident of Village Nimoth, District Rewari. The prosecution alleged that the firm commenced business with effect from 27.04.2018 after obtaining registration from the Central Authorities fraudulently.

The firm allegedly filed returns showing “NIL” turnover from April to September 2018, but subsequently declared turnover of ₹22,83,37,565 in October 2018 and ₹2,40,64,01,917 in November 2018. Sales were shown to 18 firms identified in the FIR. During inquiry, those firms were allegedly found to be non-existent and fake, and the transactions disclosed in GST returns were alleged to be merely paper transactions.

The prosecution further alleged that the petitioner, in his disclosure statement, stated that he and co-accused Parveen Kumar obtained documents from Smt. Poonam and got M/s Poonam Industries registered. A bank account in Poonam’s name was allegedly opened with Canara Bank, Kanina, and the signed cheque book, SIM and related material were handed over to co-accused Anupam Singla.

It was further alleged that Anupam Singla paid ₹2,50,000 to them, of which the petitioner’s share was ₹1,25,000, and that ₹20,000 was recovered from the petitioner and taken into police possession through a recovery memo. The prosecution treated Anupam Singla as the main accused who allegedly defrauded the Government Department of crores of rupees by creating fake firms, while asserting that the petitioner was associated with and facilitated the alleged fraud.

Issues Involved

The principal issues before the High Court were:

  1. Whether the petitioner was entitled to regular bail despite allegations that he facilitated registration of a fake GST firm, opening of a bank account and procurement of signed cheques used in the alleged fraud.
  2. Whether the petitioner’s alleged role was secondary to that of the main accused, Anupam Singla.
  3. Whether continued detention was justified after the petitioner had remained in custody for more than two years and three months.
  4. Whether the petitioner’s alleged involvement in five other identical cases justified denial of bail.
  5. Whether further incarceration would serve any useful purpose when the petitioner could not be regarded as the main accused.

Petitioner’s Arguments

The petitioner contended that he had merely been used as a pawn by the co-accused and that Anupam Singla was the main accused, the person who allegedly committed the entire fraud and the real beneficiary thereof.

It was argued that, even if the allegations were accepted as correct, the role attributed to the petitioner was limited to collecting documents such as Aadhaar Card and PAN Card from Poonam for registration of M/s Poonam Industries and opening a bank account. The signed cheque book was thereafter allegedly handed over to Anupam Singla, who was described as the main accused.

The petitioner further submitted that he had already remained behind bars for a substantial period exceeding two years and three months and therefore deserved the concession of regular bail.

Respondent’s Arguments

The State opposed the bail petition and contended that the petitioner had played an instrumental role in facilitating the alleged fraud. According to the State, the petitioner was involved in getting M/s Poonam Industries registered, opening the bank account and obtaining signed cheques from Poonam, thereby clearly demonstrating his complicity.

The State further submitted that the petitioner was involved in five other identical cases, which, according to the prosecution, indicated that he was a seasoned criminal and therefore did not deserve regular bail.

Court Order / Findings

The High Court considered the rival submissions and expressly refrained from commenting on the merits of the case.

The Court noted two material circumstances:

  • the petitioner had remained in custody for a substantial period of more than two years and three months; and
  • the petitioner could not be said to be the main accused.

On this basis, the High Court held that the petitioner’s further detention would not serve any useful purpose. Consequently, the petition was accepted and the petitioner was ordered to be released on regular bail, subject to furnishing bail bonds and surety bonds to the satisfaction of the concerned Trial Court, Chief Judicial Magistrate or Duty Magistrate.

Important Clarification

The order is a regular bail decision and not a final adjudication on guilt or innocence. The High Court specifically granted relief without commenting on the merits of the case. Therefore, the order should not be interpreted as a finding that the alleged GST transactions were genuine, that the firms were not fake, or that the petitioner had been exonerated from the alleged offences.

The significant clarification emerging from the order is that, in a serious alleged GST fraud involving fake firms and paper transactions, the Court may still consider the length of pre-trial custody and the comparative role of the accused while deciding regular bail. In the present case, despite the State’s allegation of involvement in five other identical cases, the Court considered the petitioner’s custody exceeding two years and three months and the fact that he was not regarded as the main accused sufficient to conclude that further detention would serve no useful purpose.

Sections Involved

Section 132(1)(B), Haryana Goods and Services Tax Act, 2017 – Relevant to specified punishable conduct concerning issuance of invoices or bills without supply of goods or services or both, in the statutory context of the provision.

Section 132(1)(C), Haryana Goods and Services Tax Act, 2017 – Relevant to specified punishable conduct concerning availment of input tax credit using invoices or bills referred to in the statutory provision.

Section 420 IPC – Cheating and dishonestly inducing delivery of property.

Section 467 IPC – Forgery of valuable security, will, etc.

Section 468 IPC – Forgery for the purpose of cheating.

Section 471 IPC – Using as genuine a forged document or electronic record.

Section 120-B IPC – Criminal conspiracy.

Section 201 IPC – Causing disappearance of evidence of offence or giving false information to screen an offender; this provision was also referred to in the prosecution narrative recorded in the order.

Link to download the order -https://www.mytaxexpert.co.in/uploads/1783313802_1000compressed.pdf

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