Recently, in a significant ruling, the Punjab and Haryana High Court granted regular bail to petitioners Amit Kumar Goyal and Manish Kumar in a case alleging tax fraud under the Central Goods and Services Tax Act, 2017 (CGST Act). The decision grappled with pivotal issues concerning the denial of bail due to ongoing investigations against a co-accused, while affirming the inviolability of the right to a speedy trial under Article 21 of the Constitution of India. The case centered on accusations of defrauding the state exchequer of Rs. 107 crore through the establishment of 27 fictitious firms and fraudulent input tax credit claims under Sections 132(1)(b) and 132(1)(c) of the CGST Act.
The case stemmed from allegations that brothers Amit Kumar Goyal and Manish Kumar executed a large-scale cash withdrawal scheme involving Rs. 4,938.63 crore, flagged in a Suspicious Transaction Report by the Financial Investigation Unit. Amit Kumar Goyal was specifically accused of withdrawing Rs. 262.4 crore through eight bank accounts linked to shell firms created for fraudulent GST billing. Search operations led to the seizure of multiple IDs, cheque books, ATM cards, stamps, and electronic devices. In his voluntary statement, Amit admitted that the firms conducted no actual business and that he shared his commission with Manish.
The petitioners sought bail under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023, citing their prolonged detention since October 2024, and the lack of significant progress in the trial as a violation of their fundamental rights. They contended that the investigation concerning them was complete, with the final report under Section 173 of the Code of Criminal Procedure, 1973 (now Section 193 BNSS), already filed. The respondent, the Directorate General of Goods and Services Tax Intelligence (DGGI), opposed the bail, citing the ongoing investigation against a co-accused and the risk of evidence tampering.
The Court meticulously examined the procedural and substantive aspects of the case, focusing on the legal propriety of denying bail due to a pending investigation against a co-accused. Justice Harpreet Singh Brar held that "an accused in a complaint under Section 132 of the CGT Act cannot be denied the concession of bail, solely on the ground that investigation remains pending qua a co-accused."
The Court noted that the petitioners had been in custody for 9 months and 18 days, with the trial stalled at the pre-charge evidence stage for six months, adjourned eight times since March 2025. The Bench expressed concern over the respondent’s failure to pursue trials with urgency, and observed, "it is against objective standards of reason and justice to deny bail to those accused against whom final report has been presented merely on the ground that the investigation is under progress qua a co-accused. Nothing has been brought to the fore to suggest that the release of the petitioners would derail the investigation; therefore, this cannot be used as a reason to keep them under custody indefinitely."
Further, the Court addressed the nature of the evidence, which was predominantly documentary and electronic, already in the possession of the investigating agency. With all prosecution witnesses being DGGI officials, the bench found no credible risk of tampering or influencing, thereby weakening the respondent’s objections to bail. The Bench also criticized the respondent’s pattern of prioritizing arrests over timely trial conclusions, noting that only one conviction had been secured in Punjab, Haryana, and Chandigarh since the GST regime’s inception in 2017.
The Court stressed the systemic lapses in the enforcement of the CGST Act, particularly criticising the prosecuting agencies inclination to prioritise arrest over the timely completion of trial. While emphasising the constitutional mandate under Article 21, the Court observed that “the prolonged legal battle not only infringes upon the right to speedy trial as enshrined under Article 21 of the Constitution of India but also causes irreparable harm to the psychological well-being as well as the reputation of the accused.” It cautioned that criminal law machinery must not operate in a manner that undermines due process, and called for a calibrated approach that balances the imperative to curb economic offences with the obligation to safeguard the fundamental rights of the accused.
In conclusion, while granting bail to Amit Kumar Goyal and Manish Kumar, the Court directed them to furnish personal and surety bonds, with conditions ensuring their participation in the trial.
Case Title: Manish Kumar vs. Directorate General, Goods & Service Tax Intelligence, Zonal Unit, Ludhiana
Case No.: CRM-M-8675-2025(O&M)
Coram: Justice Harpreet Singh Brar
Advocate for Petitioner: Sr. Adv. Vinod Ghai, Advs. Kashish Sahnia, Arnav Ghai, Muskaan Gupta, Muskan Chauhan
Advocate for Respondent: Senior Panel Counsel Sharmila Sharma, Senior Standing Counsels Sunish Bindlish, Pridhi Sandhu, Public Prosecutor Manish Bansal, Addl. P.P. Alankrit Bharadwaj
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