GST ITC Scam: Allahabad HC grants Bail to Masterminds Including Accountant as Trial Remains Pending [Read Order]

The bail applications were moved by Sanjeev Dixit alias Sanjeev Kumar, Rohit Mishra, and Viprendra Kumar Upadhyay alias Vikash, all accused in a scam unearthed by the Directorate General of GST Intelligence ( DGGI ), Kanpur.

According to the complaint, Sanjeev Dixit was identified as the key operator behind a nexus of bogus entities M/s Bharat Traders, M/s Shri Amarnath Enterprises, and M/s Gopal Enterprises allegedly created using fraudulent documents to claim input tax credits on scrap transactions that never actually occurred.

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The investigations by the DGGI revealed that these firms, on paper, procured scrap from unregistered local suppliers in Kanpur and supplied it further to entities in Punjab, issuing fake invoices and e-way bills without any genuine movement of goods.

Viprendra Kumar Upadhyay, functioning as the accountant, was accused of filing fake GST returns, generating fraudulent invoices, and maintaining accounts on the directions of Sanjeev Dixit. Rohit Mishra, listed as the proprietor of M/s Shri Amarnath Enterprises, allegedly operated as a dummy, receiving a fixed monthly amount to lend legitimacy to the paper transactions.

Mr. Akhilesh Mishra, counsel appearing for the applicant Viprendra Kumar Upadhyay, submitted that as per the complaint itself, his client was merely working as an accountant responsible for filing GST returns for various firms.

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He argued that this fact alone is insufficient to implicate the applicant in the alleged offence, especially when the invoices purportedly evidencing purchases or supplies do not directly establish any involvement of the applicant or other accused persons in actual fraudulent transactions. He therefore prayed that the applicant be granted bail.

During searches, the DGGI recovered multiple rubber stamps, blank invoices, and digital devices indicating manipulation of GST documents. The department alleged that wrongful ITC worth over ₹37 crore was availed by these fake firms and that further fake credits amounting to around ₹50 crore were passed on to other entities, causing significant revenue loss to the exchequer.

Opposing the bail, the Union of India argued that the offences are grave, pointing out the masterminds were directly operating multiple bogus firms.

However, the High Court noted that while the allegations are serious, the core of the prosecution’s case rests largely on confessional statements and certain documentary recoveries, the evidentiary value of which will be tested only during trial.

The Court observed that despite the detailed tabulation of firms and transactions in the complaint, key persons like the so-called proprietors of these fake firms had not been properly interrogated or added as accused, and that the investigation into the bank accounts managing the alleged fraudulent transactions appeared incomplete. The applicants have already been in judicial custody for nearly seven months, and the charges are yet to be framed, with trial proceedings not having commenced.

The bench of Justice Manoj Bajaj came to the opinion that extended imprisonment would be futile while the trial continues in perpetuity as the charges are triable by a magistrate with a maximum sentence of five years and the material witnesses are mainly official witnesses who are not really at risk of being influenced.

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Accordingly, the Allahabad High Court ordered the release of Sanjeev Dixit, Rohit Mishra, and Viprendra Kumar Upadhyay on regular bail, subject to conditions imposed by the trial court.

The High Court noted that while the allegations are serious, the core of the prosecution’s case rests largely on confessional statements and certain documentary recoveries, the evidentiary value of which will be tested only during trial.

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