Court Grants Bail in Massive GST Scam Despite Serious?Allegations

Gaurav Singhal vs. UOI [TS-347-HC(ALL)-2024-GST]

Brief Facts:

In a comprehensive investigation, authorities unearthed a vast network of 3,100 sham companies fabricated by the accused, including Gaurav Singhal. Upon closer examination, 2,528 unique firms emerged, implicated in the issuance of counterfeit GST invoices that amounted to a staggering ?2645.29 crores. These fictitious entities facilitated the transfer of Input Tax Credit (ITC) to 6,492 companies across the country. An in-depth analysis of 114 such companies revealed that 22 were actively engaged in fraudulent ITC transactions totaling ?14.65 crores. None of these firms existed at their registered addresses, leading to a confirmed tally of fake ITC worth ?163.50 crores and an availed ITC of ?174.46 crores.

Gaurav Singhal stood accused as the principal conspirator, orchestrating this elaborate scheme, facing charges under Section 132(1)(b), 132(1)(c), 132(1)(f), 132(1)(I) and Section 132(1)(i) of CGST Act 2017. The petitioner submitted that no concrete evidence was retrieved linking the petitioner to the Conspiracy and the Respondent's case resting solely on witness statements. They further argued that Singhal had not been assessed for any GST liability, nor had any penalties or taxes been determined against him, emphasizing that the alleged offenses were compoundable and carried a maximum sentence of five years’ imprisonment.

Issue:

The pivotal question was whether Gaurav Singhal deserved bail during the trial, given the gravity of the charges and the case’s specific context?

Ruling of the Court:

The court weighed the offense’s severity, the associated penalties, and the absence of any incriminating devices linking Singhal to the creation of the fake firms. Considering the substantial time Singhal had already served in detention, the court, without prejudicing the case’s merits, granted bail. Singhal was ordered to post a personal bond and two substantial sureties, with stringent conditions to prevent evidence tampering, witness intimidation, and to ensure court appearances and abstention from similar criminal conduct. The court stipulated that violation of these terms would warrant a revocation of bail by the prosecution.

Cretum Advisory Comments:

The judiciary’s decision to grant bail seems judicious and fair, acknowledging the absence of direct evidence against Singhal and the considerable duration of his pre-trial incarceration. Despite the serious nature of the allegations, the stringent bail conditions imposed serve to adequately safeguard against potential risks, embodying the legal principle of presumption of innocence while acknowledging the Legal Right of Bail which is considered a touchstone and epitome for every accused person in absence of Direct Evidence linking the accused to the offence.

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