Rattan Kumar Garg v. Directorate General Of Gst Intelligence
S. No.235
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH **** CRM-M-56606 of 2025 Date of Decision:12.01.2026 Rattan Kumar Garg .....Petitioner Vs.
Directorate General of GST Intelligence .....Respondent CORAM:- HON'BLE MR. JUSTICE YASHVIR SINGH RATHOR Present:- Mr. Anand Chhibbar, Senior Advocate with Ms. Swati Vashisth, Advocate and Mr. Utkarsh Khatana, Advocate for the petitioner.
Mr. Anish Babbar, Advocate for the respondent. **** Yashvir Singh Rathor, J. (Oral) 1.
This is first petition filed under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023 for grant of regular bail to the petitioner during the pendency of trial/ investigation, in offence under Sections 132(1)(B), 132(1)(C) read with 132(5) of Central Goods and Services Act, 2017 punishable under Sections 132(1)(I) of the CGST Act, 2017 read with Section 20(XV) of the IGST Act, 2017. 2.
Allegations against the petitioner are that information was gathered that M/s Steel N Steel (GSTIN: 03AGOPG9408N2ZZ), is proprietary firm which is engaged in availing and passing on of fraudulent ITC. The registered address/principal place of business of the firm is "Khasra No. 41/6/2, Khata No. 242/401, Dera Bassi Road, Next to Beebows Industrial Equipments, Village Saidpura, Dera Bassi Industrial Area, SAS Nagar, Punjab-140507". Investigation was initiated to ascertain the genuineness of the firm and its business. During investigation, it had come to the light that as per GSTR2A of M/s Steel N Steel for the period Oct-24 to Mar-25, the taxpayer has received ITC from two major suppliers i.e. M/s Singh Traders and M/s Ram Enterprises. It further came to light that M/s Singh Traders and M/s Ram Enterprises have a common supplier i.e. M/s Kumar Industries (GSTIN 07CRMPK0580JIZI) Prop Kapil Kumar. They have received ITC of Rs.5.07 Cr and Rs.3.77 Cr from M/s Kumar Industries.
3.
However, it was found from GSTR-2A of M/s Kumar Industries that there is no inward supply. It appears that M/s Kumar Industries has passed on Fake ITC to the above mentioned L1 Suppliers, who have further passed it on to M/s Steel N Steel, totalling to Rs.7.46 Crores. Further, it is stated that on e-way bill analysis of purchases made by M/s Steel N Steel, it has been observed that in 296 out of 375 e-way bills from M/s Singh Traders and M/s Ram Enterprises, there is no movement at all and in some cases, two wheelers were used in the transportation of goods, wherein the approx. weight of the goods transported was much higher than the load capacity of the vehicles, which is practically impossible. Some vehicle details were also found to be not available. It is further stated that during voluntary statement dated 06.08.
2025, the applicant admitted the fact of availment of Fraudulent ITC. Inspections were carried out at principal place of business of M/s Kumar Industries, M/s Singh Traders and M/s Ram Enterprises and all of them were found to be non-existent. It is stated that investigations revealed that applicant Rattan Kumar Garg is the key person in the case of availment of Input Tax Credit to the tune of Rs. 7.46 Crores by his firm M/s Steel N Steel and same was availed by using the said firm. The modus operandi adopted by accused was to avail Input Credit Tax under the cover of Fake Invoices, whereas the disputed invoices were received by the accused firm without goods. Using the said firm, accused had passed on fraudulent Input Tax Credit to the tune of Rs.6.20 Crores to the multiple recipients/beneficiaries.
It is stated that accused is involved in availment of fraudulent ITC without actual receipt of goods/services with taxable value amounting to Rs.41.48 Crores and ITC amounting to Rs. 7.46 Crore. Further, he is also involved in making bogus supplies having taxable value of Rs. 34.48 Crores and ITC amounting to Rs.6.20 Crore approx. Since, the tax involved is more than Rs. 5 Crores, it falls under clause (b) and (c) of sub-section (1) of Section 132, which is a cognizable and nonbailable offence and punishable with imprisonment for a term which may extend to five years and with fine. Petitioner was arrested on 06.08.2025. The bail applications moved by him before Chief Judicial Magistrate, Chandigarh and learned Sessions Judge, UT, Chandigarh have been rejected.
4.
Learned counsel for the petitioner contends that the petitioner has been arrested on 06.08.2025 on the ground that M/s Steel N Steel is controlled and operated by petitioner and firm has received invoices without actual supply of goods which is a cognizable and non-bailable offence under Sections 132(1)(B), 132(1)(C) read with Section 132(5) of CGST Act, 2017 and he has been arrested for involvement in availing ITC on bogus invoices without supply of goods issued by M/s Singh Traders as well as M/s Ram Enterprises to the tune of Rs.7.46 crores. Learned counsel contended that complaint has already been instituted before the Area Magistrate. The offence of evasion of input tax credit upto Rs.5 crore is bailable. All the documents including electronic records have already been taken into possession by the department.
The offences in question are Magisterial Trial. The trial is certainly going to take a sufficiently long time to conclude. The petitioner is in custody since 06.08.2025 and since the trial will take a long time to conclude, his further detention is not required and he may be released on bail. In support of his contentions, learned Senior Counsel has cited 2025:PHHC:084887 - Manoj Gupta Vs. Union of India and others, judgment dated 28.04.2025 passed by Hon'ble Supreme Court in SLP (Criminal) No.4349 of 2025 titled Vineet Jain Vs. Union of India and 2025:PHHC:097148 - Manish Kumar Vs. Directorate General Goods and Services Tax Intelligence, Zonal Unit, Ludhiana.
5.
On the other hand, learned counsel for the respondent has opposed the bail and argued that the petitioner has evaded tax liability of huge amount of money by availing false ITC and has caused huge loss to the government exchequer. The allegations against the petitioner are serious in nature and he is actively involved in the commission of the said crime. In case, he is released on bail, he might influence the beneficiaries and other accomplices involved in the racket of fake invoices and he is thus not entitled to be released on bail.
6.
Before proceeding further, the relevant observations of the Hon'ble Supreme Court in Vineet Jain's case (supra) are reproduced as under:- "Leave granted.
Heard the learned counsel appearing for the appellant and the learned Additional Solicitor General appearing for the respondent-Union of India. The offences alleged against the appellant are under Clauses (c), (f) and (h) of Section 132(1) of the Central Goods and Services Tax Act, 2017. The maximum sentence is of 5 years with fine. A charge-sheet has been filed. The appellant is in custody for a period of almost 7 months. The case is triable by a Court of a Judicial Magistrate. The sentence is limited and in any case, the prosecution is based on documentary evidence. There are no antecedents. We are surprised to note that in a case like this, the appellant has been denied the benefit of bail at all levels, including the High Court and ultimately, he was forced to approach this Court.
These are the cases where in normal course, before the Trial Courts, the accused should get bail unless there are some extra ordinary circumstances. By setting aside the impugned order dated 24th January, 2025 of the High Court of Judicature for Rajasthan, Bench at Jaipur, we grant bail to the appellant. The appellant shall be immediately produced before the Trial Court and the Trial Court shall enlarge him on bail on appropriate terms and conditions till the conclusion of the trial. The appeal is accordingly allowed."
7.
A perusal of the afore-said order shows that the Hon'ble Supreme Court observed that the maximum punishment prescribed for the said offence is five years. Charge-sheet/ complaint has already been filed and appellant was in custody for seven months and the offence in question is triable by the Court of a Magistrate. The prosecution case is based upon documentary evidence which have already been collected and in such circumstances, the benefit of bail should be extended in favour of the accused. In the present case also, petitioner has allegedly claimed false input tax credit to the tune of Rs.7.46 crores. Maximum punishment prescribed for the said offence is five years and the offence upto evasion of input tax credit to the tune of Rs.5 crore is bailable.
All the documents have already been taken into possession from the petitioner and case against him is based on documentary evidence. There is no history of past involvement of petitioner in any such similar case. The offences in question are Magisterial Trial.
served by detaining the petitioner in custody anymore and he deserves to be released on bail.
8.
Having regard to the aforesaid factual position, but without commenting anything upon the merits of the case, the petition is allowed and the petitioner is ordered to be released on bail on his furnishing bail bond and surety bond to the satisfaction of learned Trial Court/Duty Magistrate concerned, on usual terms and conditions
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