GST Fraud Committed using ID of CA: Delhi HC Grants Bail to Accused After 8 Months’ Custody with Strict Conditions [Read Order]

Justice Anup Jairam Bhambhani observed that the accused had been in custody for nearly eight months, while charges were yet to be framed and the trial was yet to commence. The chargesheet stated as many as 23 prosecution witnesses, indicating a protracted trial process.

Additionally, the Court noted that the petitioner’s son and co-accused, Akshay Gupta, remains absconding and has been declared a proclaimed offender. In view of these factors, the Court was persuaded to grant bail, considering that the trial is likely to take considerable time.

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The background facts is that an FIR was registered by the Economic Offences Wing (EOW), Delhi, in September 2021, under Sections 419, 420, 467, 468, 471, and 120-B of the Indian Penal Code against the accused Shashi Kant Gupta.

The prosecution alleged that Shashi Kant Gupta, along with his absconding son Akshay Gupta, orchestrated a criminal conspiracy to fraudulently obtain GST registration certificates for bogus firms, including "Madhu Enterprises." This was allegedly done by using forged documents such as rent agreements, partnership deeds, and electricity bills.

According to the chargesheet, the accused impersonated a Chartered Accountant by using his PAN card and photograph to secure the GST registration. They further opened bank accounts in the names of these non-existent entities and routed fake transactions exceeding ₹14.8 crore between July and November 2019. The case revealed a direct misuse of the CA’s identity and digital credentials, pointing to serious violations of financial and cyber laws.

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The prosecution submitted that just one of these entities, Madhu Enterprises, had a GST liability of over ₹6.5 crore. Moreover, the investigators believed the accused could be liable for much higher tax evasion through multiple such fictitious setups.

Despite the gravity of the allegations, the Court noted that no incriminating material was recovered from Gupta during the custodial interrogation. The prosecution primarily relied on statements from former employees of the accused, without concrete documentary evidence tying him directly to the criminal acts.

Senior Advocate Kirti Uppal, appearing for the petitioner, argued that the chargesheet lacked substantial proof and the accusations rested solely on testimonial evidence. It was further pointed out that Gupta had earlier cooperated with the investigation and had submitted several documents to demonstrate his innocence. However, after his anticipatory bail was denied in October 2023, he was arrested in April 2024 and remained in custody since then.

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Justice Bhambhani observed that trial in such cases, especially with 23 prosecution witnesses, is likely to take a long time. He also referred to the Supreme Court decision in Sanjay Chandra v. CBI (2012), reiterating that mere seriousness of an offence should not be a ground for prolonged pre-trial incarceration, particularly when the evidence is not yet conclusively established.

Accordingly, the High Court granted bail to the accused subject to stringent conditions. He was directed to furnish a personal bond of ₹5 lakhs with one surety from a family member, surrender his passport, keep his contact number active, and avoid tampering with evidence or contacting witnesses. Additionally, he was barred from opening or closing any bank accounts or business entities without informing the Investigating Officer 15 days in advance.

The Court also noted that nothing in its order should be construed as an opinion on the merits of the case, which would be adjudicated during the course of the trial.

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