Rs 107-crore GST fraud case: Punjab and Haryana HC grants bail to accused, slams prosecution for focusing only on arrests

Indian Express

2 days ago

The Punjab and Haryana High Court on July 28 granted regular bail to Manish Kumar, accused of defrauding the State Exchequer of Rs 107 crore in a 2024 case involving fraudulent Input Tax Credit (ITC) claims through fake GST invoices and shell firms.
In a sharp indictment of the prosecuting agencies under the Goods and Services Tax (GST) regime, Justice Harpreet Singh Brar questioned their priorities, noting that despite repeated arrests, trials were rarely concluded.
Manish Kumar and his brother Amit Kumar Goyal were accused of creating 27 fake firms and generating invoices amounting to Rs 700 crore, leading to fraudulent ITC claims worth Rs 107 crore.
The court noted that the final investigation report had already been filed against the petitioners, and the case had been pending pre-charge evidence for the past six months.
While opposing the bail, the prosecution argued that the investigation was still ongoing against another co-accused and expressed apprehensions about the possibility of destroying evidence and influencing witnesses. The court rejected these concerns and observed that the evidence was documentary and electronic, and all prosecution witnesses were officials of the Directorate General of GST Intelligence (DGGI).
Justice Brar said, 'It remains unclear as to why the arrest process has not been initiated against the co-accused qua whom an investigation is pending… While the possibility of evidence tampering has been flagged, the entire case is based on documentary and electronic evidence, which are already available… and all of the prosecution witnesses are officials of the respondent.'
Calling it unreasonable to keep the petitioners in custody merely because another accused was under investigation, the court noted that 'nothing has been brought to the fore to suggest that the release of the petitioners would derail the investigation; therefore, this cannot be used as a reason to keep them under custody indefinitely.'
In an earlier hearing, the court had directed top tax officers across Punjab, Haryana, and the Union Territory of Chandigarh to furnish data on Goods and Services Tax (GST)-related complaints, arrests, and trials. The analysis of the submitted data revealed a disturbing trend.
'Since [GST's] commencement, only a solitary conviction has been made in the States of Punjab, Haryana and Union Territory of Chandigarh put together… arrests are in fact made without prior notice, while in cases where notice is served, arrests are not being made,' the court observed.
Justice Brar flagged systemic issues in how the Central Goods and Services Tax (CGST) law is being implemented.
'Of late, it has been observed that 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… The slow-paced trials and departure from procedure under Sections 73 and 74 are symptomatic of a systemic problem,' the court observed.
He said that allowing such practices to go unchecked would 'raise serious doubts about the efficacy of investigation' and ultimately erode public confidence in the justice system.