Facts of the Case

Petitioners Manjit Kumar and Hardeep Singh sought anticipatory bail (CRM-M-5343-2022), apprehending arrest pursuant to summons under Section 70 of the Central Goods and Services Tax Act, 2017 in an investigation into a bogus-billing and fake Input Tax Credit racket run by one Baljinder Singh @ Bunty, against whom a complaint under Section 132(1)(b), (c), (f) and (i) of the CGST Act had been filed. In a connected petition, CRM-M-44640-2021, they sought transfer of the investigation to the CBI/CVC, describing themselves as whistle-blowers who had exposed Baljinder Singh's misdeeds. The CGST Department's status reports, however, revealed that both petitioners had themselves floated fake firms and, per GSTR-3B data, had availed fraudulent ITC running into crores of rupees on bogus invoices, without any actual movement of goods.

Issues Involved

  1. Whether the petitioners, facing summons under Section 70 of the CGST Act, 2017 in a fake-ITC investigation, were entitled to anticipatory bail.
  2. Whether the petitioners' claim to be "whistle-blowers" against co-accused Baljinder Singh insulated them from arrest and prosecution.
  3. Whether the investigation into the fake-ITC racket ought to be transferred to the CBI/CVC.

Petitioner's Arguments

  • The petitioners claimed to be genuine whistle-blowers who had exposed the bogus-billing racket run by Baljinder Singh @ Bunty to the CBI and the Central Vigilance Commission.
  • They contended Baljinder Singh was the mastermind of a fraud exceeding Rs.100 crore, committed in collusion with CGST officials, and had secured default bail under Section 167(2) Cr.P.C. because the department failed to file a complaint within 60 days.
  • Since other accused were being arrested, the petitioners apprehended arrest and, being whistle-blowers, sought protection rather than coercive action.
  • They sought transfer of the investigation to the CBI/CVC, alleging departmental collusion with Baljinder Singh.

Respondent's Arguments

  • The CGST Department's status report stated that the petitioners had deliberately concealed that they were active partners of Baljinder Singh, not disinterested whistle-blowers.
  • Both petitioners, on being summoned under Section 70, confessed to floating fake firms and availing and passing fake ITC without any actual supply of goods.
  • Per GSTR-3B returns, Manjit Kumar's firms issued fake invoices worth Rs.80.46 crore and availed fraudulent ITC of Rs.7.72 crore; Hardeep Singh's firms issued fake invoices worth Rs.75.15 crore and availed fraudulent ITC of Rs.7.11 crore.
  • The department submitted the petitioners were "fake whistle-blowers" using complaints to the CBI/CVC to divert attention from their own culpability.

Court Order/Findings

  • The Court held that in both petitions, the petitioners had deliberately concealed their status as active partners of Baljinder Singh and as creators of the four firms used to pass fake ITC.
  • This deliberate concealment was found fatal to the whistle-blower claim, the Court noting that under Section 5(6) of the Whistle Blowers Protection Act, 2014, a complaint can be dismissed where the complainant has concealed facts or misled the authority.
  • Relying on the department's status reports, GSTR-3B data and the petitioners' own confessional statements under Section 70, the Court found a strong prima facie case of fraudulent ITC availment exceeding Rs.7 crore against each petitioner.
  • CRM-M-5343-2022 for anticipatory bail was dismissed; CRM-M-44640-2021 seeking transfer of investigation was also dismissed, with costs of Rs.1,00,000 payable to the Bar Association's Advocates' Welfare Fund.

Important Clarification

  • A person under investigation cannot invoke a parallel complaint against a co-accused to claim "whistle-blower" status and thereby seek anticipatory bail or transfer of investigation, where the person's own role in the alleged fraud stands concealed.
  • Confessional statements recorded under Section 70 of the CGST Act, corroborated by GSTR-3B return data showing fake invoicing without corresponding movement of goods, can found a strong prima facie case against an applicant seeking anticipatory bail.
  • Concealment of material facts before a constitutional court, or before statutory bodies such as the CVC, can itself be a ground to reject relief and impose costs.

Sections Involved

  • Section 70, CGST Act, 2017 – power to summon persons to give evidence and produce documents in an inquiry.
  • Section 132(1)(b), (c), (f) and (i), CGST Act, 2017 – punishes issuance of invoices without supply of goods and fraudulent availment/passing on of input tax credit.
  • Section 69(1), CGST Act, 2017 – power of the Commissioner to authorise arrest.
  • Section 167(2), Code of Criminal Procedure, 1973 – default bail where investigation is not completed within the prescribed period.
  • Section 5(6), Whistle Blowers Protection Act, 2014 – dismissal of complaints found to be false or made with concealment of facts.

Decision – In Favour of

Department/Revenue. Both the anticipatory bail petition and the investigation-transfer petition were dismissed, the latter with costs, on findings that the petitioners had concealed their own role as beneficiaries of the fake ITC racket.

Related Case Laws

No related case laws are available on this site at present for cross-reference on this specific point.

Case Details

  • Court: High Court of Punjab and Haryana at Chandigarh
  • Case No.: CRM-M-5343-2022 (with connected CRM-M-44640-2021)
  • Coram: Hon'ble Mr. Justice Arvind Singh Sangwan
  • Date of Decision: March 15, 2022
  • Parties: Manjit Kumar and another vs Superintendent of CGST Commissioner and others (CRM-M-5343-2022); Manjit Kumar and others vs Union of India and others (CRM-M-44640-2021)

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