The New Delhi Patiala House Court has rejected the bail application of an accused in alleged involvement in a massive GST fraud amounting to ₹1,285 crore.
The case came to light when Vishal Pal Singh, Commissioner of Customs at IGI Airport, received intelligence that the proprietorship of the accused was engaged in trading iPhones, including those of foreign origin.
Acting on this information, a search was conducted on October 24, 2024, at the business premises. The accused failed to produce the necessary documents for the stock, leading to the seizure of goods.
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During the investigation, statements from the accused revealed that the company dealt in both Indian and foreign-origin Apple phones.
He disclosed that travelling passengers supplied him with foreign-origin mobile phones. Examination of ledgers from the company’s laptop showed total sales from 2018-19 to 2024-25 amounting to ₹12,84,54,31,007. However, the GST portal reflected a significantly lower turnover—₹1,00,92,469 for M/s Arora Communication and ₹21,16,05,811 for M/s Cellphone Badlo.
When questioned about the discrepancies, the accused admitted that the excess amount pertained to “kachha sale” (cash sales) on which GST was not paid. He acknowledged that he had reported only a marginal amount of sales in GST returns, with most transactions conducted in cash.
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The estimated GST evasion is approximately ₹200 crore on the suppressed sales value. The accused was found to be involved in the sale and purchase of goods without invoices, leading to tax evasion exceeding ₹5 crore.
In result, the accused was sent to judicial custody for 14 days by the Patiala House Court to prevent any potential interference with the investigation, including influencing witnesses or tampering with evidence.
The accused filed a bail application under Section 480 of the Bhartiya Nagrik Suraksha Sanhita, 2023. He argued that he has been in judicial custody since October 23, 2024, and is the sole breadwinner for his family, which includes his wife, minor child, and mother. Focusing on his lack of prior criminal records, he portrayed himself as a law-abiding businessman and a reputable member of society with stable residence in Delhi, reducing the risk of absconding.
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He contended that although the alleged offence is cognizable and non-bailable under Section 132(5) of the Central Goods and Services Tax Act, pre-trial detention is unnecessary and excessive. He expressed willingness to cooperate with the authorities and highlighted that the investigation is primarily based on documentary evidence. Therefore, he argued that keeping him detained would serve no fruitful purpose, especially since both the investigation and trial are expected to be time-consuming.
After considering the arguments, the Patiala House Court dismissed the bail application. The court took note of the gravity and seriousness of the allegations, including the substantial tax evasion estimated at ₹216 crore. It was noted by the court that the investigation is at an initial stage and expressed concerns that the accused might tamper with evidence.
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Although mindful of the principle that pre-trial detention is generally discouraged, considering the facts and circumstances of the case, the serious nature of the alleged offence, and the potential risk of evidence tampering, the court was not inclined to grant bail.
As the investigation and trial progresses, the denial of bail has a preventive impact for businesses engaging in unlawful practices to evade taxes.
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