Case note summarizing the judgment in Manish Kumar vs Directorate General, Goods & Service Tax Intelligence, Zonal Unit, Ludhiana, decided by the Punjab & Haryana High Court on 28.07.2025:
Case Note: Manish Kumar vs DGGI, Zonal Unit, Ludhiana
Court: Punjab and Haryana High Court
Coram: Hon’ble Mr. Justice Harpreet Singh Brar
Date of Decision: 28.07.2025
Neutral Citation: 2025:PHHC:097148
Case Nos.: CRM-M-8675-2025 (Manish Kumar) and CRM-M-14956-2025 (Amit Kumar Goyal)
Facts
- Based on a Suspicious Transaction Report (STR), it was revealed that two brothers, Manish Kumar and Amit Kumar Goyal, had withdrawn a total of ₹717.42 crore in cash from various bank accounts.
- They were allegedly involved in creating 27 fake firms to issue forged GST invoices worth ₹700 crore and claimed ₹107 crore of input tax credit (ITC) fraudulently.
- A search was conducted on 08.10.2024 under Section 67(2) of the CGST Act, which led to the seizure of multiple incriminating documents and electronic devices.
- Manish Kumar was arrested on 09.10.2024 under Sections 132(1)(b) and (c) of the CGST Act.
Petitioners’ Contentions
- No show cause notices under Section 73/74 of the CGST Act were issued prior to initiating prosecution under Section 132.
- Arrest authorisation was issued mechanically without proper reasoning.
- The petitioner has already spent over 9 months in custody while trial has not progressed beyond the pre-charge evidence stage.
- The evidence is mostly documentary/electronic, already in possession of the prosecution.
- Cited CBIC Circulars and Supreme Court precedents emphasizing procedural fairness.
Respondent’s Arguments (DGGI)
- The petitioners orchestrated a serious tax fraud, defrauding the state exchequer.
- Investigation is ongoing for co-accused, hence bail could lead to evidence tampering or witness intimidation.
- Cited several judgments supporting stricter scrutiny for economic offences.
Issues for Consideration
- Whether bail can be denied merely because investigation is pending against a co-accused.
- Whether there has been a procedural lapse in arrest and prosecution under the CGST Act without prior issuance of notice under Sections 73/74.
Court’s Observations
- Noted a systemic delay in GST-related prosecutions with only one conviction since 2017 across Punjab, Haryana, and Chandigarh.
- CGST Act allows arrest only with clear reasons and material; such actions must be justified, not mechanical.
- Bail must be considered individually for each accused. Manish Kumar has no criminal antecedents and has cooperated with the investigation.
- Final investigation report (under Section 193 BNSS) already filed, and no possibility of tampering as the evidence is documentary/electronic in nature.
- Cited Radhika Aggarwal v. UOI and Sanjay Chandra v. CBI, emphasizing the right to speedy trial under Article 21 of the Constitution.
Decision
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The High Court allowed the bail petitions of Manish Kumar and Amit Kumar Goyal.
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Bail was granted with conditions, including:
- Deposit of passports;
- Cooperation during the trial;
- No tampering with evidence or influencing witnesses;
- No disposal of properties or business assets under investigation.
Significance
This judgment reinforces the principles of:
- Right to liberty under Article 21;
- Fair procedure under criminal law, even in tax fraud cases;
- Bail as the norm, not an exception, especially when trial is delayed and the investigation is complete;
- The need for prosecuting agencies to align their methods with legal and constitutional mandates, especially in economic offences.