GST Fraud Accused Denied Bail Despite Co-Accused Getting Relief from Supreme Court

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Case Name

Sandeep Goyal v. Union of India

Court Name: High Court of Judicature for Rajasthan, Bench at Jaipur

Case No.: Criminal Miscellaneous III Bail Application No. 1521/2020

Decided on: 05th February 2020

Before: Hon’ble Mrs. Justice Sabina

Key Takeaways

1. Scale of Fraud Matters: The court took very seriously the fact that 555 fake firms were created across multiple states to evade GST, with fraud amounting to ₹74 Crores (and still being investigated).

2. Co-accused Getting Bail Doesn’t Automatically Help You: Just because your co-accused got bail doesn’t mean you’ll get it too. The court looks at the individual circumstances of each accused.

3. Personal Circumstances Matter in Bail Decisions: Himani Munjal was granted bail by the Supreme Court primarily because she was a woman with a young child — not because of the merits of the case.

4. Ongoing Investigation is a Red Flag: The fact that the investigation was still continuing (with 4 more fake firms discovered in January 2020 alone) weighed heavily against granting bail.

5. Serious GST Offences Under Section 132: The case involves offences under Sections 132(1)(b)©(d)(f)(i) and (i) read with Sub-section 5 of the Central Goods and Service Tax Act, 2017 — which are serious non-bailable offences.

Issue

Should Sandeep Goyal be granted regular bail, given that his co-accused Himani Munjal was granted bail by the Supreme Court, and he has been in custody for about one and a half years?

In simple terms: Does the fact that a co-accused got bail, combined with the time already spent in custody, justify granting bail to the petitioner? The court said NO.

Facts

• Who is Sandeep Goyal? He’s a 35-year-old man from Abohar, Punjab, who was lodged in Central Jail, Jaipur at the time of this petition.

• What was he accused of? He and his co-accused allegedly created 555 fake firms across different states of India and used these firms to issue fake invoices, thereby evading GST input taxes. The total fraud discovered was ₹74 Crores.

• The FIR: The case was registered as FIR No. 15/2018 at Police Station DGGI, GST, Jaipur, Rajasthan.

• Previous Bail Attempt: Sandeep had filed a bail petition earlier, but it was dismissed — partly because his co-accused Himani Munjal’s bail had also been dismissed by the same court.

• Change in Circumstances: Himani Munjal was then granted bail by the Apex Court (Supreme Court) on 27.01.2020, which prompted Sandeep to file this fresh bail application.

• New Developments: Even during the pendency of this case, 4 more fake firms were discovered in January 2020, with additional fraud of about ₹6.5 Crores.

• Custody Period: By the time of this petition, Sandeep had been in custody for about one and a half years.

Arguments

Petitioner’s Arguments (Sandeep Goyal’s Side):

1. Parity with Co-Accused: His co-accused Himani Munjal was granted bail by the Supreme Court on 27.01.2020, so he should also be entitled to bail on the same grounds.

2. Long Custody Period: He had already been in custody for about one and a half years, which is significant.

3. Maximum Sentence: The maximum sentence that could be awarded in this case is five years, and he had already served a substantial portion of that time.

Respondent’s Arguments (Union of India’s Side):

1. Massive Fraud: The case involves a huge fraud — 555 fake firms created, with total fraud of ₹74 Crores.

2. Ongoing Investigation: The investigation was still continuing, and new fake firms were being discovered even in January 2020 (4 new firms, ₹6.5 Crores additional fraud).

3. Different Footing from Himani Munjal: Himani Munjal was granted bail by the Supreme Court because she is a woman with a young child — personal humanitarian grounds — not on the merits of the case. Sandeep’s situation is different.

4. Multi-State Operation: Fake firms were created in different states across the country, showing the organized and widespread nature of the fraud.

Key Legal Precedents

The judgment in this case is quite brief and does not explicitly cite any specific case law precedents by name. However, the following statutory provisions were referenced:

Section 439, Code of Criminal Procedure, 1973

The provision under which the bail application was filed — deals with the power of the High Court or Sessions Court to grant bail.

Sections 132(1)(b)©(d)(f)(i) and (i) read with Sub-section 5 of the Central Goods and Service Tax Act, 2017

The offences for which Sandeep Goyal was charged — these relate to serious GST offences including issuance of fake invoices, fraudulent input tax credit claims, and other forms of GST evasion.

What does Section 132 of CGST Act say? 

In simple terms, Section 132 deals with punishment for certain offences under GST law, including issuing invoices without actual supply of goods/services, fraudulently availing input tax credit, and committing fraud. The offences under Section 132(1) can attract imprisonment of up to 5 years along with a fine, depending on the amount of tax evaded.

Judgment

1. Himani Munjal’s bail was on personal grounds, not legal merit: The Supreme Court granted her bail because she is a woman with a young child and her custody period was considered. These are personal/humanitarian factors that don’t apply to Sandeep.

2. Seriousness of Allegations: The scale of the alleged fraud — 555 fake firms, ₹74 Crores, multi-state operations — was too serious to overlook.

3. Different Footing: The court clearly stated that “the case of the petitioner can be said to be on different footing” from that of Himani Munjal.

4. No Ground Made Out: The court concluded that “keeping in view the seriousness of the allegations leveled against the petitioner, no ground for grant of bail to him is made out.”

Result: The petition was dismissed.

FAQs

Q1: Why was Sandeep Goyal denied bail even though his co-accused got bail?

Great question! Himani Munjal (the co-accused) was granted bail by the Supreme Court primarily because she is a woman with a young child — these are personal humanitarian grounds. Sandeep doesn’t share these circumstances, so the court treated his case differently.

Q2: What exactly did Sandeep Goyal allegedly do?

He and his co-accused allegedly created 555 fake firms across different states, issued fake invoices, and used these to fraudulently claim GST input tax credits, causing a loss of ₹74 Crores to the government.

Q3: How long had Sandeep been in jail at the time of this petition?

He had been in custody for about one and a half years when this petition was filed in February 2020.

Q4: What is the maximum punishment he could face?

The maximum sentence in this case is five years imprisonment, as per the offences charged under Section 132 of the CGST Act, 2017.

Q5: Can Sandeep apply for bail again?

Yes, generally speaking, if there is a change in circumstances (e.g., completion of investigation, new legal developments), he could approach the court again with a fresh bail application. However, this judgment doesn’t specifically address future applications.

Q6: What are the offences under Section 132 of the CGST Act?

Section 132 of the Central Goods and Service Tax Act, 2017 deals with punishment for offences like issuing fake invoices, fraudulently claiming input tax credit, and evading GST. The specific sub-sections charged here — 132(1)(b)©(d)(f)(i) — cover various forms of GST fraud.

Q7: Who represented the parties?

• For Petitioner (Sandeep Goyal): Mr. Anil Kumar Upman & Mr. Narendra Kumar Pareek
• For Respondent (Union of India): Mr. Siddharth Ranka

Petitioner has filed this petition under Section 439 Code of Criminal Procedure, 1973 seeking regular bail in F.I.R. No.15/2018, registered at Police Station DGGI, GST, Jaipur, Rajasthan for offence under Sections 132(1)(b)(c)(d)(f)(i) and (i) read with Section Sub-section 5 of the Central Goods and Service Tax Act, 2017.

Learned counsel for the petitioner has submitted that earlier bail petition filed by the petitioner was dismissed as bail petition filed by co-accused Himani Munjal had been dismissed by this court. However, now Himani Munjal has been granted bail by the Apex Court vide order dated 27.01.2020. Hence, the petitioner was also entitled to be granted bail. Petitioner is also in custody for about one and a half years and maximum period of sentence that can be awarded in the present case is five years.

Learned counsel for the Union of India has opposed the petition and has submitted that the present case involves huge fraud. Till now, it has been discovered during investigation that the petitioner and his co-accused had created 555 fake firms and while doing so, in all, they have committed fraud to the tune of Rupees Seventy Four Crores. He has further submitted that four fake firms were discovered in the month of January, 2020 and the fraud committed by the accused while misusing the said firms comes to about Rupees Six and a half Crores. Investigation in this regard still continuing.

In the present case, prosecution case is that the petitioner and his co-accused by creating fake firms, have issued invoices involving tax amount of more than Rupees Seventy Four Crores.

The firms were misused for evading GST input taxes by the

accused. Fake firms had been created in different States of the

country. Although, co-accused Himani Munjal has been granted

bail by the Apex Court, but it appears that she has been granted

bail on account of the fact that she is a lady and has a young child

to lookafter. Her custody period was also taken into consideration.

Thus, the case of the petitioner can be said to be on different

footing.

Keeping in view the seriousness of the allegations leveled

against the petitioner, no ground for grant of bail to him is made

out.

Dismissed.

(SABINA),J