No Perversity in Trial Court’s Order: Delhi HC Refuses to Recall Bail in ₹831 Crore alleged GST Evasion Case [Read Order]

In a recent ruling, the Delhi High Court refused to recall the bail granted in the alleged Goods and Services Tax (GST) evasion of Rs. 831.72 crore case, holding that there was no illegality or perversity in the trial court’s decision to grant bail.

The CGST Department, Delhi West, filed a petition under Section 482 of the Code of Criminal Procedure challenging the order passed by the Chief Metropolitan Magistrate by which bail was granted to Vishal Goyal for offences under Section 132 of the CGST Act.

The case arose from a search conducted on 1 January 2021 at an unregistered gutka manufacturing unit in Rohini, Delhi. During the search, officers found multiple gutka pouch-making machines in operation, a large number of labourers working at the premises and finished gutka pouches branded as “Suhana Pasand” and “SHK.” No statutory records or invoices were found and goods, documents, and electronic devices were seized.

During the investigation, statements of labourers and other persons were recorded. In his statement recorded, Vishal Goyal admitted involvement in the manufacture and supply of gutka and acknowledged that such activity was illegal.

Based on seized goods and estimated production capacity, the department alleged GST evasion of approximately Rs. 831.72 crore over 16 months. Vishal Goyal was arrested on 16 February 2021 and remanded to judicial custody and bail was granted after about 29 days.

Before the High Court, the department’s counsel argued that the offence was a serious economic offence involving large-scale tax evasion and clandestine activity. They also argued that the trial court failed to appreciate the gravity of the offence, the respondent’s central role in the illegal activity and the risk of tampering with evidence.

They also argued that the alleged evasion involved a huge revenue loss and that bail had been granted at an early stage of investigation.

The respondent’s counsel argued that the bail order was well-reasoned and based on relevant considerations. They argued that the alleged tax evasion figure was speculative and based on assumptions.

Justice Neena Bansal Krishna observed that there is a clear distinction between cancellation of bail due to supervening circumstances and recall of a bail order on the ground that it was illegally or arbitrarily passed. The court observed that the trial court had considered relevant factors such as the nature of allegations, period of custody, stage of investigation and the material collected by the department.

The court pointed out that prolonged incarceration cannot be justified solely based on alleged tax evasion figures when the computation was based on assumptions and the evidence was largely documentary.

The court also explained that there was no material on record to show misuse of bail. The court held that the bail order did not suffer from illegality, perversity, or arbitrariness and dismissed the petition filed by the CGSTDepartment.

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