Facts of the Case

The case arises from allegations of large-scale GST evasion involving ₹218 crores. The respondent, Manish Goyal, proprietor of M/s Radiant Traders, was accused of engaging in fraudulent transactions relating to the manufacture and export of smoking mixtures.

Investigations revealed that consignments exported through another entity were intercepted and tested, showing the product to be spurious and unfit for human consumption. Further inquiries indicated that no actual business activity, machinery, or goods were found at the registered premises of M/s Radiant Traders.

The respondent was arrested under Section 132 of the CGST Act. Although bail was initially granted by the Sessions Court, it was later cancelled due to alleged non-compliance with investigation summons, leading to the present petitions before the High Court.

Issues Involved

  1. Whether cancellation of bail was justified due to alleged non-cooperation in investigation.
  2. Whether the gravity of economic offence warranted continued custody.
  3. Whether statements recorded under Section 70 CGST Act can be relied upon as evidence.
  4. Whether the respondent had a primary role in the alleged GST fraud. 

Petitioner’s Arguments (DGGI)

  • The respondent was involved in a serious economic offence involving GST evasion of ₹218 crores.
  • The business model adopted was economically unviable, indicating fraudulent intent.
  • The seized goods were found to be spurious and not fit for consumption.
  • Statements under Section 70 CGST Act are admissible as evidence under Section 136.
  • The respondent failed to comply with bail conditions by not appearing on multiple summons.
  • Custodial interrogation was necessary to uncover the broader conspiracy.

Respondent’s Arguments (Manish Goyal)

  • The laboratory report was inconclusive and could not establish misuse of raw materials.
  • One defective consignment cannot imply all consignments were fraudulent.
  • Bail was rightly granted and no grounds existed for cancellation.
  • The case was still at a pre-charge sheet stage.
  • Non-appearance was minimal and justified due to illness; overall cooperation was maintained. 

Court’s Findings / Order

  • The Court observed that prima facie, the respondent appeared to be acting under the directions of the main आरोपी (co-accused), Chirag Goel.
  • Evidence indicated that actual control of the firm lay with another व्यक्ति, reducing the respondent’s direct culpability.
  • The respondent had already spent time in custody and no further custodial interrogation was shown to be necessary.
  • Non-appearance on one or two occasions was held insufficient to justify cancellation of bail.
  • The cancellation order passed by the Sessions Court was termed harsh and was set aside.
  • Bail granted earlier was restored with strict compliance conditions.

Important Clarifications by the Court

  • Bail cannot be cancelled mechanically for minor non-compliance.
  • Economic offences, though serious, must still satisfy principles governing bail cancellation.
  • Observations made are limited to bail adjudication and shall not affect trial merits.
  • Authorities must provide reasonable notice (minimum 48 hours) for appearance pursuant to summons.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/ABL19012024CRLMM8812023_160622.pdf 

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.