Case Reference
Directorate General of GST Intelligence v. Manish Goyal,
Delhi High Court,
CRL.M.C. 881/2023 & CRL.M.C. 6801/2023,
Offences alleged under Section 132(1)(b) & (c) of the CGST Act, 2017,
Category of dispute: GST – Prosecution / Bail / Cancellation of Bail,
Judgment dated 19 January 2024
Facts
The Directorate General of GST Intelligence initiated investigation against M/s Radiant Traders, a proprietary concern in whose name large-scale procurement of cigarettes and export of “smoking mixtures” was shown. One export consignment intercepted at Mundra Port was tested by CRCL, Kandla, which opined that the product was spurious and unfit for human consumption (paras 3.2–3.3).
Searches at the registered and earlier business premises revealed absence of any manufacturing activity, plant, machinery, or stock. Statement of the respondent was recorded under Section 70 of the CGST Act, and he was arrested on 25 November 2022 for alleged fraudulent availment and utilisation of ITC involving transactions aggregating over ₹218 crores (paras 3.4–3.7).
Regular bail granted by the Sessions Court on 21 December 2022 was subsequently cancelled on 15 September 2023 on the ground that the accused had not joined investigation on certain dates, leading to cross-petitions before the High Court (paras 1–5).
Questions before the Court
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Whether cancellation of bail was justified solely on the ground of delayed or single-instance non-appearance pursuant to summons issued by DGGI.
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Whether the material on record prima facie established the respondent as the real beneficiary and controlling mind behind the alleged GST fraud so as to warrant custodial incarceration.
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Whether statements recorded under Section 70 of the CGST Act, read with surrounding circumstances, justified continued detention or cancellation of bail (paras 6–8).
Observations
The Court undertook a prima facie evaluation of statements recorded during investigation, including that of the respondent and other co-accused. It noted that the respondent had stated that no manufacturing activity was carried out by him and that his documents had been used by the main accused, Chirag Goel, who effectively controlled the firm (paras 10–11).
Crucially, suppliers themselves identified Chirag Goel as the person dealing with them on behalf of M/s Radiant Traders, reinforcing the inference that the respondent was acting merely at the behest of the principal accused and was not involved in day-to-day operations (paras 12–13).
The Court further observed that the respondent had already undergone nearly one month of custody and that the DGGI did not assert any present requirement for further custodial interrogation. On the issue of cancellation of bail, the Court emphasised that bail once granted cannot be cancelled mechanically and that isolated or minor defaults in appearance, particularly when substantially explained and followed by subsequent cooperation, do not meet the threshold for cancellation (paras 14–16).
Judgment
The Delhi High Court dismissed the petition filed by DGGI seeking cancellation of bail and allowed the petition filed by the respondent. The order cancelling bail was set aside, and the original bail granted on 21 December 2022 was restored.
While confirming bail, the Court cautioned the respondent to strictly comply with summons in future and granted liberty to DGGI to seek cancellation in the event of continued or deliberate non-cooperation, subject to issuance of reasonable notice (paras 16–19). The Court clarified that observations were confined solely to the issue of bail and would not prejudice the merits of prosecution (paras 20–21).
Cases Referred – Summary Table
| Case | Court | Principle laid down |
|---|---|---|
| Tofan Singh v. State of Tamil Nadu (2021) 4 SCC 1 | Supreme Court of India | Statements recorded by officers with police-like powers require careful scrutiny; admissibility depends on statutory framework |
Between the Fine Lines – Practical Takeaway
This decision reinforces that in GST prosecution matters, bail cancellation cannot be used as a punitive tool for procedural lapses unless non-cooperation is wilful, persistent, and prejudicial to investigation. Where material suggests the accused is a mere name-lender or employee acting under directions of a principal offender, courts will be slow to deny liberty, particularly once custodial interrogation is complete.
Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”
