Facts of the Case

Vikram Garg, proprietor of M/s Emm Vee Trading Company, sought regular bail after being denied bail by the trial court, in a case registered under Section 132 of the Haryana GST Act, 2017 and Central GST Act, 2017, read with Section 20 of the IGST Act, 2017. The prosecution alleged that examination of the firm's returns for FY 2018-19 and 2019-20 revealed abnormal turnover fluctuations; the firm was registered at a residential address with no genuine business activity observed there, and e-way bills showing a turnover of about Rs. 85.8 crore were found to involve vehicles whose owners denied any association with the firm. The tax involved on invoices of Rs. 88 crore taxable value, where no actual supply of goods occurred, was assessed at approximately Rs. 5.57 crore, and a demand notice of Rs. 13.96 crore was raised under Section 74. Garg was arrested from Meerut on 29.10.2020.

Issues Involved

  1. Whether the petitioner was entitled to regular bail given his stated limited role as an intermediary and the amount of alleged evasion.
  2. Whether further custodial interrogation was necessary given that a complaint had already been filed.

Petitioner's Arguments

  • The petitioner was neither the originator nor the ultimate beneficiary of the fake invoices; actual evasion occurred at the buyers' end, who were not implicated.
  • A complaint had already been filed before the competent court, so further custodial interrogation was unnecessary.
  • As per Section 132 of the GST Act, an offence involving wrongly availed/passed-on ITC up to Rs. 5 crore is bailable; the petitioner's role was that of an intermediary who abetted at most.
  • The proper procedure for tax demand under Sections 73–74 of the GST Act had not been followed, and no scrutiny/audit of returns had been conducted.
  • The petitioner had already lost his livelihood due to prolonged incarceration and was the sole breadwinner of his family, with clean antecedents and a fixed abode.

Respondent's Arguments

  • No detailed opposing submissions from the tax authority are extensively reproduced in the extracted order beyond the case facts and demand figures noted by the Court.

Court Order / Findings

  • The Court, without commenting on the merits of the case, held that no useful purpose would be served by further incarcerating the petitioner.
  • The petitioner was ordered released on regular bail, subject to furnishing bail and surety bonds to the satisfaction of the trial court.
  • The prosecution was given liberty to seek cancellation of bail if the petitioner is found involved in any offence while on bail; the order expressly clarified that its observations would not affect the merits of the case and the trial court should proceed uninfluenced by it.

Important Clarification

This is a bail order, not a verdict on the underlying tax fraud allegations. The Court explicitly declined to comment on the merits of the fake-invoice/ITC-fraud case; the trial on the Section 132 charges, and the correctness of the Section 74 demand, remain to be decided separately.

Sections Involved

  • Central Goods and Services Tax Act, 2017 — Section 132 (offences and prosecution), Sections 73–74 (demand and recovery)
  • Haryana Goods and Services Tax Act, 2017
  • Integrated Goods and Services Tax Act, 2017 — Section 20

Decision – In Favour of

Disposed of in favour of the Petitioner to the limited extent of granting regular bail; no finding was recorded on the tax evasion/fake invoice allegations themselves.

Case Details

  • Court: High Court of Punjab and Haryana at Chandigarh
  • Case No.: CRM-M-11033-2021 (O&M)
  • Neutral Citation: 2023:PHHC:114804
  • Coram: Hon'ble Mr. Justice Arun Monga
  • Date of Decision: 31.08.2023

Link to Download the Order

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