GST Fraud Kingpin Denied Bail; Advocate Gets Relief After 8 Months in Jail

Get the full picture - access the original judgement of the court order here

Case Name

Rajesh and Another vs. State of Haryana

High Court of Punjab and Haryana at Chandigarh

Case No.: CRM-M-40312-2019, CRM-M-250-2020, CRM-M-5051-2020

Date of Decision: 25 February 2020

Coram: Hon’ble Mr. Justice Gurvinder Singh Gill

Key Takeaways

1. Scale of Fraud: The GST fraud involved 18 bogus firms transacting with 421 industries in Panipat, with a total revenue loss assessed at approximately ₹80 crores.

2. Digital Evidence is Powerful: The court relied heavily on the fact that Rajesh Mittal’s own email IDs and phone numbers were used to register the bogus firms — a very strong piece of incriminating digital evidence.

3. Double Jeopardy Argument Rejected: The petitioners argued they were already being prosecuted under Section 122 of the GST Act and were granted bail there. The court clarified that IPC prosecution can run simultaneously with GST Act proceedings — they are not mutually exclusive.

4. Professional Role Matters: Satnarain, being an Advocate who only helped with firm registration and charged a nominal fee, was treated differently from the main accused. The court found no evidence he was a beneficiary of the fraud.

5. Enormity of Scam = No Bail: The court explicitly cited the colossal loss to the State exchequer as a key reason to deny bail to the main accused.

6. Observations Not Final: The court clarified that none of its observations shall be treated as an expression on the merits of the main case — meaning the accused still get a fair trial.

Issue

The central legal questions were:

• Should the accused persons (Rajesh Mittal, Inder Partap Singh, Manish, and Satnarain) be granted regular bail in a case involving large-scale GST fraud through bogus firms?
• Can a person be prosecuted under both the IPC (for cheating and forgery) and Section 122 of the GST Act simultaneously, or does that amount to double jeopardy?

Facts

The Tip-Off (4 June 2019):

On 4 June 2019, ASI Vinod Kumar received secret information that Rajesh Mittal, Inder Partap Singh, and Manish were running a racket of creating bogus firms to evade GST. They were reportedly moving around in an i-20 car (HR-06AJ-2474) near the grain market T-point in Panipat.

The Arrest and Recovery:

Police apprehended the accused and recovered the following from the car:

• Laptops
• Cheque Books
• Fake stamps of ETO (Excise & Taxation Officer)
• Fake rubber stamps of DTC
• Files of bogus firms

The Racket Uncovered:

During investigation, the police unravelled the entire scheme:

• Rajesh Mittal was identified as the kingpin
• He used the name of M/s Lalit Trading Company (which was actually out of business) to issue bogus bills
• These bogus bills were issued in favour of 18 fake firms for fictitious yarn transactions
• These 18 firms were registered using ordinary people like rickshaw pullers — not actual businessmen
• The 18 firms then issued bills to 421 industries in Panipat
• The Panipat industries used these fake bills to show false expenditure and claim GST input credit
• Money transferred to the bogus firms was immediately withdrawn and returned to the industries, minus a commission
• The total GST revenue loss was assessed at ₹80 crores

The Digital Trail:

In a majority of the 18 bogus firms, Rajesh Mittal’s own email ID (rkmittal2011@gmail.com, rkmittal2011rk@gmail.com) and phone numbers (9050007238) were found registered on the GST portal and E-way Bill portal.

Satnarain’s Role:

Satnarain, an Advocate, was allegedly hired by Rajesh Mittal to help with the registration/incorporation of the firms. His phone number (8607870002) appeared in the GST portal records of at least some firms.

Arguments

Petitioners’ Arguments (Defence Side):

1. False Implication: The petitioners claimed they had been falsely implicated and there was no convincing evidence that Rajesh Mittal was the kingpin or that he had associated the other accused.

2. Satnarain’s Professional Role: Satnarain’s counsel argued he was merely an Advocate who provided professional consultancy for firm registration, charged a nominal fee, and was not part of the scam.

3. Double Jeopardy: The petitioners argued this was a case of double jeopardy — they were already being prosecuted under Section 122 of the GST Act and had been granted bail in those proceedings. They argued they should not face a second prosecution under the IPC for the same acts.

State’s Arguments (Prosecution Side):

1. Strong Physical Evidence: The recovery of bogus stamps, rubber stamps, cheque books, and laptops with incriminating data clearly pointed to the guilt of the accused.

2. Digital Evidence: Rajesh Mittal’s own email IDs and phone numbers were used in registering the majority of the 18 bogus firms — a clear indicator of his central role.

3. Dual Prosecution is Valid: The State argued that Section 122 of the GST Act proceedings (aimed at recovering evaded tax) can run simultaneously with IPC prosecution for cheating and forgery. They are not the same proceedings.

4. Unexplained Bank Transactions:

• In M/s Ansh Hospitality (Manish’s firm): ₹1,21,17,230 was withdrawn and ₹1,21,21,881 was deposited between 23.1.2019 and 30.6.2019 — with no justification provided by Manish’s counsel.
• In M/s Shree Bala Ji Wooltax (Inder Partap Singh’s firm): Huge banking transactions were found, but the firm was not actually in business.

Key Legal Precedents & Provisions

The judgment references the following legal provisions (note: no separate case law precedents were cited by the court in this judgment):

Sections 419/420 IPC

Cheating by personation / Cheating

Sections 467/468/471 IPC

Forgery of valuable security / Forgery for cheating / Using forged documents

Section 120-B IPC

Criminal conspiracy

Section 259 IPC

Possession of counterfeit government stamps

Section 122 of the GST Act

Penalty for certain offences under GST — the court clarified its purpose is mainly to secure realization of evaded tax, and it does not bar IPC prosecution

Important Note: The court did not cite any prior case law precedents in this judgment. The decision was based purely on the facts, evidence, and the applicable statutory provisions.

Judgment

The court found clear complicity of these three accused based on:

• Rajesh Mittal’s email IDs and phone numbers used in registering bogus firms
• Unexplained massive bank transactions in Manish’s and Inder Partap Singh’s firms
• The firms were confirmed to be non-functional, yet received and immediately returned huge sums
• The enormity of the scam (₹80 crores loss to State exchequer) weighed heavily against bail

The court dismissed their bail petitions.

Bail GRANTED — Satnarain:

The court took a more lenient view of Satnarain because:

• He is an Advocate by profession
• He appeared to have only rendered professional services for firm incorporation
• There was no evidence he was a beneficiary beyond his professional fee
• He had already been in jail for about 8 months — further detention would serve no useful purpose

He was ordered to be released on regular bail upon furnishing bail bonds/surety bonds to the satisfaction of the learned trial Court/Chief Judicial Magistrate/Duty Magistrate concerned.

Important Clarification by the Court:

“None of the observations made above shall be construed to be an expression on merits of the main case.”

This means the court’s bail observations do not prejudge the guilt or innocence of any accused — the trial will proceed on its own merits.

FAQs

Q1: Why were three accused denied bail but one was granted bail?

The court distinguished between the active participants in the fraud (Rajesh, Manish, Inder Partap Singh) who had direct financial involvement and digital footprints, versus Satnarain, who was a professional (Advocate) rendering registration services. There was no evidence Satnarain profited beyond his fee.

Q2: What is the significance of Rajesh Mittal’s email ID and phone number being found on the GST portal?

This was the smoking gun in the case. When you register a firm on the GST portal, you use your contact details. Finding Rajesh Mittal’s personal email and phone number across multiple “bogus” firms — which were supposedly owned by rickshaw pullers and ordinary people — directly proved his control over those firms.

Q3: Can someone be prosecuted under both the GST Act and the IPC for the same act?

Yes, according to this court. Section 122 of the GST Act is primarily aimed at recovering evaded tax (a civil/regulatory remedy), while the IPC provisions (cheating, forgery, criminal conspiracy) address the criminal conduct. Both can proceed simultaneously and it does not amount to double jeopardy.

Q4: What was the total financial scale of this fraud?

The GST revenue loss was assessed at approximately ₹80 crores. The scheme involved 18 bogus firms transacting with 421 industries in Panipat.

Q5: Does this judgment mean the accused are guilty?

No. The court explicitly clarified that its observations are only for the purpose of deciding bail and shall not be treated as a finding on the merits of the case. The accused will still get a full trial.

Q6: What happens next for the accused who were denied bail?

They remain in judicial custody and will face trial for offences under Sections 419, 420, 467, 468, 471, 120-B, and 259 of the IPC. They can approach higher courts or apply for bail again if circumstances change.

1. This order shall dispose of the above mentioned three petitions filed on

behalf of Rajesh, Inder Partap Singh, Manish and Satnarain seeking grant of

regular bail in a case registered against them vide FIR No.571 dated

4.6.2019 under Sections 419/420/467/468/471/120-B/259 IPC registered at

Police Station Chandni Bagh, District Panipat.

2. The FIR in question was lodged at the instance of ASI Vinod Kumar wherein

it has been alleged that on 4.6.2019 when he along with other police officials was present near grain market bridge for the purpose of patrolling, then a secret information was received to the effect that Rajesh Mittal, Inder Partap Singh and Manish make bogus firms and by transacting with bigger firms, they are getting huge amounts of money deposited in the account numbers of the said fake bogus firms so as to save GST and are thus causing huge loss to the State Exchequer on account of loss of revenue. The information was further to the effect that the said accused were moving about in a 'i-20' car bearing registration No.HR-06AJ-2474 along with laptops and were waiting for someone near T-point railway line grain market.

3. Pursuant to receipt of aforesaid information, the police swung into action and was able to apprehend the aforesaid accused Rajesh Mittal, Inder Pratap Singh and Manish. From the search of the car, the following articles were also recovered :-

(i) Laptops;

(ii) Cheque Books;

(iii) Fake stamps of ETO;

(iv) Fake rubber-stamps of DTC;

(v) Files of bogus firms.

4. The aforesaid articles as well as the car in question was taken into

possession. The car in question was found to be registered in the name of

Vipul Jindal, who happens to be 'jija' (brother-in-law) of Rajesh Mittal.

During the course of investigation, the police was able to unearth the entire racket of evasion of GST. It was found that Rajesh Mittal was the kingpin who issued bogus bills purported to have been issued by one M/s Lalit Trading Company, which was infact out of business. Such bogus bills were issued in favour of 18 firms in respect of bogus transaction of sale of yarn.

The said 18 firms had been got incorporated/registered by associating

persons of the status of rickshaw pullers etc. and were not actually

businessmen.

5. It was further found that in the bills issued by M/s Lalit Trading Company in favour of the said 18 bogus firms (non-functional firms), GST was also shown to have been charged.

6. During investigation, it further surfaced that the said 18 non-functional firms further issued bills in favour of 421 different industries based in Panipat and the said industries in Panipat in order to reflect expenditure in respect of their manufacturing processes and in order to lend credibility to their so called purchase of yarn made banking transactions in favour of said 18 firms and the amount so transferred through banking transactions used to be withdrawn from the bank accounts of the said firms and given back to those industries while retaining some percentage. Thus, in this manner, the industries of Panipat without actually incurring expenditure, used to reflect expenditure in their accounts and thus, also used to evade payment of a substantial amount of GST on the premises that the initial supplier i.e. M/s Lalit Trading Company had already charged the GST. The mastermind of this entire racket was found to be Rajesh Mittal who used the name of the

firm M/s Lalit Trading Company for the issuance of bogus bills in favour of

18 firms created and registered by him with the help of some ordinary

persons (non-businessmen) for the purpose of showing transactions and the

said 18 firms further reflected transactions with 421 industries of Panipat.

The loss of revenue in terms of GST was assessed at about 80 crores.

7. Learned counsel for the petitioners have submitted that they have falsely

been implicated in the present case and that there is no convincing evidence

to show that the petitioner Rajesh Mittal was indeed the kingpin or the brain behind the entire scam or that he had associated the other accused including Manish and Inder Pratap Singh by getting their firms registered with the help of Satnarain so as to cause loss to the State revenue.

8. Learned counsel for the petitioner-Satnarain has submitted that he is an

Advocate by profession and that his services had been hired by Rajesh

Mittal for the purpose of getting some firms registered and he had rendered

professional consultancy and assistance in the matter of incorporation/

registration of firms and had charged some nominal professional fee and

thus cannot be said to be part and parcel of the alleged scam of evasion of

GST.

9. The learned counsel for the petitioners have further submitted that it is a case of double jeopardy wherein the petitioners are also being prosecuted

under Section 122 of GST Act wherein they have already been granted bail.

10. Opposing the petition, learned State counsel has submitted that although the present case is a case based on secret information but the factum of recovery of bogus stamps, rubber stamps, cheque books and laptop containing

incriminating data clearly points towards the guilt of the accused. The

learned State counsel has further submitted that the evidence collected

during investigation shows that the bogus 18 firms in question have been got

registered by the main accused Rajesh Mittal wherein in case of many of the

firms, his own mail-ID or phone number had been used. It has further been

submitted that apart from providing his own mail-ID and phone number, he

has been using a few other phone numbers and some mail-IDs as well.

11. The learned State counsel has submitted that as far as the proceedings under Section 122 of GST Act are concerned, the same can continue in addition to the prosecution under provisions of IPC and that in the case of Rajesh and Inder Partap Singh, they have been granted conditional bail only while Manish has been granted absolute bail. It has further been submitted that the purpose of Section 122 of GST Act is mainly to secure realization of tax which has been evaded and that in addition to proceedings under Section 122 of GST Act, the accused can be prosecuted for offences under Indian Penal Code if it is found that the accused have committed any cheating or forgery, as had been done in the present case.

12. I have considered rival submissions addressed before this Court. From t he information collected by the police, the following information pertaining to 18 firms got incorporated/registered by the kingpin Rajesh Mittal apart from the firm M/s Lalit Trading Company, can be discerned :-

Sr. No Trade Name Owner Name (i)Mobile No. at GST Portal &

(ii)Mobile No. at Eway Bill Portal

(i) Email ID-at GST Portal &

(ii) Email ID-at Eway Bill Portal

Taxable Value Total Tax 1 M/s Soni Textiles

Sonia D/o Sabira

(i) 8607870002 (Sat Narayan)

(ii) 8607870002

(i) panipat34@ gmail.com

(ii) panipat34@ gmail.com

43,30,16,964 3,28,32,271

2 M/s Sri Rameshwaram International

Sangeet S/o Sabira

(i) 9050007237(Sumit) 9992000974 (Inder)

(ii) 9992000974

(i)rkmittal2011@ gmail.com

(ii)rkmittal2011rk @gmail.com

42,55,49,615 3,04,30,178

3. M/s Shree Balaji Wooltex

Inder Pratap Singh S/o Ramesh Chander

(i) 9050007237 (Sumit) 9034697683

(ii) 9034697683

(i)panipat34@ gmail.com

rkmittal20 11rk@ gmail.com

(ii) rkmittal20 11rk @ gmail.com

32,05,51,590 2,24,46,239

4. M/s Radha Kanheya Export

Sumit S/o Raghunath Tiwari

(i) 9050007237 9050007238

(Rajesh Mittal)

(ii) 9050007238

(i) rkmittal2011@ gmail.com

(ii) rkmittal2011@ gmail.com

40,43,46,448 3,07,79,207

5. M/s Sidhi Vinayak Textiles

Amit Kumar Tiwari S/o Raghunath

(i) 9050007237 9053330888 (Inder)

(ii) 9053330888

(i) rkmittal2011rk@ gmail.com

(ii)rkmittal2011rk @gmail.com

2,95,88,22,070 16,86,65,367

6. M/s Lalit Trading Company

Deepak Palaria S/o Ashok Kumar Palaria

(i) 9896100400 9416016769

(ii) 8708220742

(i)pardeepdawar@g mail.com

(ii)shreeradha.spint ex @ gmail.com

4,60,84,13,746 26,65,71,793

7. M/s Shree Bankey Bihari Enterprises

Vipul Jindal S/o Ramvilas

(i) 8607870002 (Sat Narayan) 8199002006 (Vipul Jindal)

(ii) 8199002006 (Vipul Jindal)

(i) panipat34@ gmail.com

vipuljindal 1983@gmai.com

(ii)vipuljindal1983 @ gmai.com

21,53,38,142 1,60,68,079

8. M/s Manish WoolTax

Shailendra Pratap Singh s/o Ramesh Chandra

(i) 9050007237 (Sumit)

(ii) 9050007237

(i) panipat34@ gmail.com

rkmittal20 11rk@ gmail.com

(ii) rkmittal20 11rk @ gmail.com

55,69,98,601 4,10,97,204

9. M/s Geeta Yarns

Gita D/o Mahaveer Singh

(i) 9992000974 (Inder)

(ii) 9992000974

(i) panipat34@ gmail.com

rkmittal20 11rk@ gmail.com

(ii) rkmittal20 11rk @ gmail.com

24,98,67,516 1,67,59,021

10. M/s R.K. Internationals

Rajiv S/o Inder Singh

(i) 9050007237 (Sumit)

(ii) 9050007237

(i) ravindersaini92@ gmail.com

rkmittal20 11rk@g mail.com

38,16,06,949 3,24,65,091

(ii)rkmittal2011rk @ gmail.com

11. M/s Shree Bala Sundari Wooltex

Parveen S/o Prem

(i) 9992000974 (Inder)

(ii) 9992000974

(i) vs567544@ gmail.com

(ii) vs567544@ gmail.com

19,48,11,000 1,64,57,375

12. M/s Shree Hari Krishna Textiles

Shanti Devi D/o Hukam Chand

(i) 9992000974 (Inder)

(ii) 9992000974

(i) vs567544@gmail.com

(ii) vs567544@gmail.com

9,37,49,984 84,06,738

13. M/s Maa Karni Yarns

Ranjit Singh s/o Devi Singh

(i) 9812231939 (Ranjit)

(ii) 9812231939

(i)maakarniyarns.mka@gmail.com

(ii)maakarniyarns.mka@gmail.com

25,81,42,595 1,94,78,017

14. M/s Ridhi Sidhi Overseas

Shama Rani D/o Som Nath

(i) 8813064073 9992000974

(ii) 9992000974

(i)ravindersaini92 @gmail.com

rkmittal20 11rk@gmail.com

(ii) rkmittal20 11rk@gmail.com

55,80,76,904 3,77,14,022

15. M/s Shree Ganesh Textiles

Shama Rani D/o Som Nath

(i) 8930213110

(ii) 8930213110

(i)ravindersaini92@ gmail.com

(ii)ravindersaini92@ gmail.com

27,18,59,699 2,59,02,907

16. M/s Bala Sundri Textiles

Amit Kumar S/o Karmvir Singh

(i) 9992000974 (Inder)

(ii) 9992000974

(i) panipat34@ gmail.com

rkmittal20 11rk@gmail.com

(ii) rkmittal20 11rk@gmail.com

46,74,65,654 3,15,75,414

17. M/s Ansh Hospitality

Manish Kumar S/o Mahender Singh

(i) 9773520234 9992232605

(ii) 9992232605

(i) advocatesushil89 @gmail.com

manishkandholpnp@gmail.com

(ii) manishkandholpnp@gmail.com

18. M/s Nirmala International

Nirmala D/o Ghan Sham

(i) 9050007237

(ii) 9876360892

(i) panipat34@gmail.com

(ii) rkmittal20 11rk@gmail.com

5,06,23,060 36,41,793

13. The aforesaid particulars would reflect that Rajesh Mittal has played an

pivotal role in the entire scam for the purpose of incorporating 18 different firms wherein in a majority of the firms, his e-mail ID or phone number had been used. During the course of investigation, the police has been able to collect evidence to the effect that bank transactions of withdrawal of 1,21,17,230/- was made in the account of M/s Ansh Hospitality between 23.1.2019 and 30.6.2019 and an amount of ` 1,21,21,881/- was deposited and for which the learned counsel representing Manish, owner of the said firm, could not furnish any justification as to on what count the said huge payments had been received and as to what articles had been supplied by him against the said payment. Similarly, during investigation, it was found that bank transactions of huge amount had been effected in the account of M/s Shree Bala Ji Wooltax. The learned counsel for the petitioner-Inder Partap Singh, owner of M/s Shree Bala Ji Wooltax, could not furnish any justifiable explanation as to on what count the said payment has been received, as the said firm was not found to be actually into business. The learned State counsel has informed that during investigation this fact had been confirmed that the aforesaid firms were not into business and that the amounts so received in their bank accounts had been withdrawn immediately and had infact gone back to the industries which had made the said banking transactions.

14. In view of the aforesaid discussion, the complicity of the kingpin Rajesh Mittal and also of Manish, owner of M/s Ansh Hospitality and of petitioner Inder Partap Singh, owner of M/s Shree Bala Ji Wooltax, is clearly evident. Keeping in view the enormity of the scam and the colossal loss caused to the State exchequer, which has lost GST, this Court does not find any ground for grant of bail. The petitions on their behalf, as such, are dismissed. As far as the petitioner Satnarain is concerned, it is not disputed that he is an Advocate by profession. It appears that he had rendered his professional services and assistance for the purpose of incorporation of the firms. At this stage, it cannot be said that he had joined hands with Rajesh Mittal or was beneficiary of any amount other than his professinal fee. In any case, since he has already been behind bars since the last about 8 months, his further detention will not serve any useful purpose. The petition on his behalf, as such, is accepted and the petitioner-Satnarain is ordered to be released on regular bail on his furnishing bail bonds/surety bonds to the satisfaction of learned trial Court/Chief Judicial Magistrate/Duty Magistrate concerned.

15. It is, however, clarified that none of the observations made above shall be construed to be an expression on merits of the main case.

(Gurvinder Singh Gill)

Judge

25.2.2020