Facts of the Case

Shamim Akhtar sought regular bail before the Punjab and Haryana High Court in Complaint No. 210 of 2021, registered by the Directorate General of GST Intelligence, Gurugram, for offences under Section 132(1)(A) and (I) of the Central Goods and Services Tax Act, 2017. He had been in custody since 26.04.2022.

The department's case was that the petitioner's firm, M/s Saba Chemicals Wood Products, Yamuna Nagar, used subsidised agricultural-grade urea (allegedly supplied by one Manoj Kumar) in manufacturing resin, and then sold that resin in cash without issuing tax invoices, thereby evading GST estimated at Rs. 22,30,51,232. The petitioner argued that neither cash nor urea had actually been recovered from him, that his arrest was premature since tax adjudication had not even started, and that the entire case rested on the statement of Manoj Kumar, who had not even been cited as a prosecution witness; that co-accused had also secured bail.

Issues Involved

  1. Whether the petitioner, accused of evading over Rs. 22 crore in GST through unaccounted cash sales of resin made from diverted subsidised urea, was entitled to regular bail.

Petitioner's Arguments

  • The petitioner argued that no cash or urea was actually recovered from him, that his arrest violated statutory safeguards under the CGST Act since tax adjudication had not commenced, that the case rested solely on an uncited witness's statement, and that the department's calculation of tax evasion (based on an assumed urea-to-resin conversion ratio) was unsubstantiated.
  • He pointed out that he had been in custody since 26.04.2022 for offences triable by a Magistrate, with a maximum punishment of five years depending on the evasion quantum, and that a co-accused had already been granted bail.

Respondent's Arguments

  • The department argued that the agricultural-grade urea was in fact used by the petitioner to manufacture resin, which was then sold without tax invoices, causing the exchequer a loss of Rs. 22,30,51,232, though it did not dispute that the maximum punishment under the CGST Act for the alleged offence was five years.

Court Order / Findings

  • The Court noted the offence was triable by a Magistrate with a maximum sentence of five years (subject to the quantum of evasion), that trial was still at the pre-charge evidence stage, and that conclusion of trial was unlikely in the near future.
  • It held further incarceration would serve no useful purpose and allowed the bail petition, directing release on furnishing bonds to the trial court's satisfaction.
  • The Court expressly clarified that its observations were not to be construed as an expression of opinion on the merits of the case.

Important Clarification

The GST evasion figure of over Rs. 22 crore, and the theory of urea-to-resin conversion used to compute it, remain unverified allegations at this stage — the bail order neither confirms nor rejects them, deciding the case purely on custody duration, offence classification, and trial pace.

Sections Involved

  • Central Goods and Services Tax Act, 2017 – Section 132(1)(A) and (I)
  • Code of Criminal Procedure, 1973 (regular bail provisions)

Decision – In Favour of

Decided in favour of the petitioner, Shamim Akhtar, who was granted regular bail; the Court expressly declined to express any opinion on the merits of the GST evasion allegations.

Case Details

  • Court: High Court of Punjab and Haryana at Chandigarh
  • Case No.: CRM-M-33946-2022 (O&M)
  • Neutral Citation: 2023:PHHC:066070
  • Coram: Hon'ble Mrs. Justice Manjari Nehru Kaul
  • Date of Order: 08.05.2023

Link to Download the Order

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