Case Reference
Paritosh Kumar Singh @ Diwakar Choudhary & Ors. v. Senior Intelligence Officer, DGGI
High Court of Chhattisgarh, Bilaspur
MCRC No. 8060 of 2022
Judgment dated: 07.12.2022 (reserved on 18.11.2022)
Relevant Section: Section 132(1)(b), (c) of the CGST Act, 2017; Section 439 CrPC
Category of Dispute: Bail in GST Offence (ITC fraud)
Facts (Paras 2–3)
The Directorate General of GST Intelligence initiated investigation based on intelligence inputs that several fake firms were floated across Chhattisgarh, Jharkhand, Madhya Pradesh, West Bengal and Maharashtra. These entities allegedly generated bogus invoices and availed illegal input tax credit, causing a loss of about ₹258 crore to the exchequer between FY 2018-19 to 2020-21. The applicants were arrested on 25.01.2021, and a complaint was filed before the Magistrate on 25.03.2021. Their first bail plea was rejected on 13.08.2021. In the second bail application, applicants argued that there was no direct evidence linking them to fraudulent ITC, charges had not been framed despite almost two years of detention, and delay in trial justified release.
Questions before Court
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Whether prolonged custody of the applicants, pending trial for alleged GST fraud under Section 132, justified denial of bail?
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Whether absence of framing of charges despite 23 months of custody and completion of investigation warranted bail on grounds of liberty?
Observations (Paras 6–9)
The Court observed that although the allegation of ₹258 crore fraudulent ITC is grave, applicants had already spent nearly 23 months in custody, while the maximum punishment under Section 132 is five years with no prescribed minimum. Investigation against applicants was complete, and the complaint had been filed. Most witnesses listed were government officials, minimizing risk of tampering.
The Court relied on Supreme Court precedents:
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Sandeep Goyal v. Union of India – economic offences are serious, but custody is unnecessary once investigation is complete and charge sheet filed.
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Paresh Nathalal Chauhan v. State of Gujarat – detention beyond 25 months when maximum sentence is five years is excessive; bail granted.
Applying the same reasoning, the Court found indefinite detention disproportionate.
Judgment (Paras 9–10)
The High Court allowed the second bail application. Applicants were directed to be released on regular bail on furnishing a personal bond of ₹1,00,000 with a local surety each, subject to conditions:
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They must appear before trial court regularly unless exempted.
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They must not tamper with witnesses.
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If involved in similar offences in future, State may seek cancellation of bail.
Table of Cases Referred
| Case | Court | Citation | Ratio / Verdict |
|---|---|---|---|
| Sandeep Goyal v. Union of India | Supreme Court | SLP (Crl) No. 1803/2020, decided 17.04.2020 | Even in economic offences, once investigation is complete and charge sheet filed, continued custody not necessary; bail can be granted with conditions. |
| Paresh Nathalal Chauhan v. State of Gujarat | Supreme Court | Criminal Appeal Nos. 164-165/2022, decided 01.02.2022 | Detention of 25 months when max sentence is five years is unjustified; bail granted as prolonged custody violates personal liberty. |
Between Fine Lines
This judgment underscores that while GST fraud cases involving fake invoices and ITC evasion are treated as economic offences of high gravity, indefinite pre-trial detention is not acceptable. Once investigation is complete and charges filed, courts lean towards granting bail if custody has already consumed a significant portion of the maximum sentence. For businesses and professionals, this reflects the judiciary’s balance between safeguarding revenue and upholding constitutional liberty.
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