Bail Denied in Fake Firms GST Evasion Case

Case Details: Narendra Choudhary vs. Union of India - [2026] 182 taxmann.com 641 (Rajasthan)

Judiciary and Counsel Details

Sameer Jain, J.
Prem Sukh Choudhary for the Applicant.
Akshay Bhardwaj, Mrs Asmita Sharma, G.K. Sudhakar, Asst. Director, Mahesh Kumar, SIO & Hemant Kumar Tanwar, IO for the Respondent.

Facts of the Case

The accused-applicant was taken into custody pursuant to proceedings initiated by the Directorate General of GST Intelligence (DGGI) in connection with allegations of organised GST evasion in the marble trade, involving the creation and operation of multiple bogus firms, fraudulent generation of e-way bills, clandestine clearance of goods, and coordination with co-accused. It was submitted on behalf of the applicant that continued custody exceeding three and a half months was unwarranted since a charge-sheet had been filed, there were no criminal antecedents, the alleged offences were triable by a Magistrate and compoundable, and one co-accused was already in custody while the alleged mastermind remained unapprehended. The DGGI opposed the bail application, contending that the applicant had played an active role in setting up about thirteen fake entities, facilitating large-scale tax evasion through non-filing of returns and clandestine removals, and attempting to destroy documents recovered during search proceedings. It was further contended that the investigation was ongoing, and the quantum of alleged evasion continued to increase as the investigation progressed, and that custodial release could adversely affect the investigation. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the allegations disclosed a large-scale and structured GST fraud with serious revenue implications. It held that the magnitude of alleged evasion had escalated and that the investigation was still at a crucial stage, with key conspirators yet to be apprehended. The Court held that the release of the applicant could impede tracing of proceeds and securing of revenue, particularly in view of the allegation relating to the attempted destruction of evidence. It further held that the precedents relied upon by the applicant were distinguishable and that economic offences warranted stricter scrutiny, and, finding prima facie material indicating an active role of the applicant, declined enlargement on bail and dismissed the application.

List of Cases Referred to

Vineet Jain v. Union of India [2025] 174 taxmann.com 139/99 GSTL 129 (SC) (para 3)
Mohit Vijay v. Union of India [2020] 116 taxmann.com 892/38 GSTL 433 (Rajasthan) (para 3)
Rajesh Ranjan Yadav v. CBI (2007) 1 SCC 70 (para 6)
SFIO v. Nittin Johari [2019] 9 SCC 165 (para 6)
Nimmagadda Prasad v. CBI [2013] 7 SCC 466 (para 6)
State of Gujarat v. Mohanlal Jitamalji Porwal 1987 taxmann.com 612/[1987] 29 ELT 483 (SC) (para 6)
Y.S. Jaganmohan Reddy v. CBI [2013] 7 SCC 439 (para 6)
State of Tamil Nadu v. R.Vasanthi Stanley [2016] 1 SCC 376 (para 6)
Virupakshappa Gauda v. State of Karnataka [2017] 5 SCC 406 (para 6)
Surjeet Singh Chabra v. Union of India 1996 taxmann.com 71/[1997] 89 ELT 646 (SC) (para 6)
Tarun Kumar v. Asstt. Director Enforcement Directorate [SLP Criminal Appeal No. 9431 of 2023, dated 20-11-2023] (para 6)
Naresh J. Sukhwani v. Union of India 1995 (4) Suppl.SCC 663 (para 6)
Radhika Agarwal v. Union of India [2025] 171 taxmann.com 832/[2025] 95 GSTL 225 (SC) (para 6).