Bail was granted where accused was employee in the company which was involved in bogus transactions.

Case Title: Sanchit Gupta v. Union of India

Court Name: High Court of Allahabad

Petition Number: Criminal Misc. Bail Application No. 15755 of 2021

Category of Dispute: Bail in GST Offence

Date of Judgment: 19 August 2021

Relevant Sections: Section 132(1)(b), 132(6), 70, 74, and 83 of the CGST Act, 2017

Takeaway: Employee held for employer’s GST fraud while principal accused remains untouched

Facts of the Case

[Para 3–5]

1. Sanchit Gupta, an employee of M/s. Shree Shyam Ji Traders, Delhi, was arrested in relation to fraudulent Input Tax Credit (ITC) worth ₹4.76 crores allegedly availed by his employer from two Delhi-based firms.
2. His employer, Archit Agrawal (proprietor of M/s. Shree Shyam Ji Traders), was neither arrested nor made an accused despite being the principal beneficiary.
3. The Department allegedly enhanced the ITC fraud amount to ₹5.19 crores to render the offence non-bailable.
4. Sanchit Gupta was summoned under Section 70 of the CGST Act and arrested post-statement without any proceedings initiated under Section 74 or order under Section 83 for attachment.
5. The applicant had no criminal history and had already been in custody for over 7 months as of the hearing date.

Question(s) in Consideration

[Para 2, 7]

• Whether the applicant, merely an employee with no direct benefit, should be granted bail considering the absence of proceedings under Sections 74 and 83 and prolonged pre-trial detention.

Observation of Court

[Para 7]

1. The Court considered the nature of the offence, severity of punishment (maximum of 3 years), nature of evidence, and constitutional safeguards under Article 21.
2. It relied upon Dataram Singh v. State of U.P., (2018) 3 SCC 22, emphasizing the importance of bail as a rule and jail as an exception.
3. It observed that the Additional Director General’s sanction under Section 132(6) appeared to lack proper application of mind.
4. It noted that no proceedings had yet commenced under Sections 74 or 83 against the principal firm.

Judgment of the Court

[Para 8–14]

• Bail was granted to Sanchit Gupta on furnishing a personal bond and two sureties. Conditions included cooperation with trial, non-tampering with evidence, and abstaining from illegal activity.
• Observations made were limited to bail consideration and would not affect trial proceedings.

Between Fine Lines

• The High Court granted bail acknowledging that the employee had been in custody over 7 months, while the primary accused remained untouched.
• It reaffirmed that criminal liability cannot be attributed merely by employment association without proper proceedings.
• Enhanced ITC quantum for making offence non-bailable was viewed cautiously.
• Article 21 safeguards and Supreme Court jurisprudence on bail were central to the verdict.
• The decision reinforces procedural fairness and cautious application of arrest powers under the CGST Act.

Summary of Referred Cases