Case Title, Court & Petition
Union of India (through Pr. ADG, DGGI, Jaipur Zonal Unit) v. Lovkesh Kumar
High Court of Judicature for Rajasthan, Bench at Jaipur
S.B. Criminal Bail Cancellation Application No. 110/2024
Order dated 10.02.2025 (Reserved on 29.01.2025)
Relevant Provisions: Section 132(1)(c), 132(1)(f), 132(5), 122 CGST Act, 2017; Section 69 CGST Act; Section 483(3) BNSS 2023
Category of Dispute: Bail in GST evasion / Input Tax Credit fraud
Facts of the Case (Paras 1–6)
The respondent, Lovkesh Kumar, was granted bail by the Additional Sessions Judge, Jaipur, in a GST evasion case. He was alleged to have availed fake ITC of ₹9.42 crores through non-existent firms, in collusion with co-accused Gautam Garg. During searches, incriminating WhatsApp chats, raw slips, pre-signed cheque books, and admissions under Section 70 CGST Act were found, revealing that the respondent and his associates generated fake invoices without supply of goods.
The trial court granted bail on the reasoning that:
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Lovkesh Kumar was not proprietor of M/s Gurbax Rai Praveen Kumar (actually in name of Sushil Kumar).
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He had deposited ₹65 lakhs, reducing his liability below ₹5 crores, making the case “bailable”.
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Another co-accused had been granted bail earlier.
The Union of India challenged the order, arguing that the trial court wrongly treated the case as bailable, ignored Section 132 CGST Act, and overlooked material evidence.
Questions for Consideration
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Whether deposit of partial liability can reduce the gravity of offence under Section 132 CGST Act?
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Whether only proprietors/directors of the firm are prosecutable, or any person “causing to commit” fraud is liable?
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Whether trial court erred in ignoring electronic evidence and statements under Section 70 CGST Act while granting bail?
Court’s Observations (Paras 7–19)
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Deposit of liability irrelevant: The Court held that under Section 132, prosecution is for fraudulent availment of ITC, and part payment does not erase the offence (Para 15).
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Section 132 vs. Section 122: Section 122 only prescribes penalty, while Section 132 provides for punishment including imprisonment. The trial court erred by conflating the two (Paras 12–16).
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Amendment of 2020: The legislature introduced the words “causes to commit” in Section 132 to cover persons enabling fraud behind the curtains. Thus, liability is not restricted to proprietors/directors alone (Para 12).
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Statements under Section 70 valid evidence: Since GST officers are not “police officers” under the Evidence Act, statements recorded are admissible and can be relied upon (Para 14).
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Economic offences need stricter view: Referring to SC precedents, Court noted that ITC fraud of ₹8.59 crores is a grave economic offence, class apart, and trial court failed to appreciate this (Para 11).
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Evidence on record: WhatsApp chats, seized documents, and admissions prima facie showed direct involvement of Lovkesh Kumar in fake invoicing (Paras 10–13, 18).
Judgment (Paras 20–21)
The High Court held that the trial court committed serious error in granting bail. Fraudulent availment of ITC of ₹8.59 crores is a cognizable and non-bailable offence under Section 132(1)(c), 132(5) CGST Act. The bail order dated 05.04.2024 was set aside.
Bail of Lovkesh Kumar was cancelled, and he was directed to surrender before the trial court by 07.03.2024.
Table: Cases Referred
| Case | Court | Verdict / Principle Relied |
|---|---|---|
| Y.S. Jagmohan Reddy v. CBI (2013) 7 SCC 439 | SC | While granting bail, Court must consider nature of accusation, evidence, severity of punishment, and societal impact. |
| Union of India v. Ashish Agarwal (2023) 1 SCC 617 | SC | Relied by petitioner, but HC held facts distinguishable. |
| Issardas Daulat Ram v. Union of India (1961) | SC | Discussed, but not directly applicable. |
| Peeyush Kumar Jain v. Union of India (2022 SCC OnLine All 592) | Allahabad HC | Cited on bail in GST cases; distinguished. |
| Satender Kumar Antil v. CBI (2022) 10 SCC 51 | SC | Laid down bail guidelines; held not applicable to present facts. |
Between Fine Lines
This ruling clarifies that depositing part of GST liability does not dilute criminal liability under Section 132 CGST Act. Economic offences like fake ITC fraud are to be treated as serious, non-bailable crimes. Anyone who “causes to commit” such fraud, not just the proprietor, can face prosecution. For businesses, it underscores that behind-the-scene actors in fake billing rackets cannot escape liability, and courts will adopt a strict approach in bail matters involving tax fraud.
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.”
