In a scathing indictment of investigative practices under the goods and services tax (GST) regime, the Punjab and Haryana High Court (HC) has granted bail to two accused in a Rs107 crore fake billing and input tax credit scam, criticising the directorate general of GST intelligence (DGGI) for prioritising arrests over prosecutions.
Justice Harpreet Singh Brar, while allowing regular bail to petitioners Manish Kumar and Amit Kumar Goyal, observed that since the rollout of GST on 1 July 2017, only one conviction has been secured in the states of Punjab, Haryana and the Union territory (UT) of Chandigarh. The court described this as 'symptomatic of a systemic problem' within GST enforcement.
“The involvement of the criminal justice system in cases pertaining to the CGST Act seemingly begins at the stage of arrest and ends when bail is secured,” noted justice Brar. “Allowing such tendencies to go unchecked would raise serious doubts about the efficacy of investigation, which naturally weakens the faith of the public in the justice dispensation mechanism.
"Nowhere during the thorough investigation process did the respondent even remotely hint at any non-cooperation on the part of the petitioners. Further, it remains unclear as to why the arrest process has not been initiated against the co-accused against whom the investigation is pending. If the same is for want of sufficient material to satisfy the standards for grant of authorisation under Section 69 CGST Act, the respondent must explain the delay in investigation as well efficacy thereof," the bench says.
The case stems from a complaint alleging that the two brothers created 27 bogus firms, used fake identities, and issued forged GST invoices worth Rs700 crore, unlawfully availing input tax credit of around Rs107 crore. The case is based on evidence including suspicious bank withdrawals, fake registrations, and the use of falsified documents.
The HC, however, found that despite the petitioners being in custody for over nine months, there had been 'no substantial progress in the trial' which has been stuck at the pre-charge evidence stage for six months.
“Much to the concern of this Court, the empirical data makes it abundantly clear that securing a conviction and concluding the trial is not a matter of priority for the respondent as all its energy is devoted towards curtailing liberty of the prospective accused,” the bench stated.
Analysing affidavits submitted by officials from eight DGGI zones and state taxation departments, the court concluded that arrests are often made without serving prior notices under Sections 73 and 74 of the CGST Act, while cases where notices are served do not see arrests.
Justice Brar noted, “The CGST Act is clear in its mandate and does not leave scope for ambiguity for the respondent to justify the conduct of its officials… In practice, the respondent is seen carrying out abrupt arrests, driven by some inexplicable urgency rather than necessity.”
The court emphasised that the right to a speedy trial under Article 21 of the Constitution is a fundamental right, adding that prolonged legal battles cause 'irreparable harm to the psychological well-being and reputation of the accused'.
Rejecting the DGGI’s argument that bail should be denied since investigation against a co-accused was still ongoing, the court held that “This Court has no hesitation in holding that an accused in a complaint under section 132 of the CGST Act cannot be denied the concession of bail solely on the ground that investigation remains pending qua a co-accused.”
The judge pointed out that the evidence was largely documentary and electronic, already in the possession of the authorities, and all prosecution witnesses were government officials—eliminating any real risk of tampering.
The Court also quoted multiple judgements from the Supreme Court, including Vineet Jain vs Union of India and Sanjay Chandra vs CBI, to underscore that bail cannot be denied merely due to the gravity of charges if trials are likely to be delayed indefinitely.
“Investigating agencies are equipped with sufficient powers… but their prerogative cannot supersede fundamental rights of the accused,” the Court added.
The HC granted regular bail to both petitioners with conditions such as the deposit of passports, cooperation during trial and a prohibition on the disposal of assets.
(CRM-M-8675-2025(O&M) Date: 28 July 2025)
