Regular Bail Granted in GST Evasion Case as Investigation Is Complete and Offence Is Magistrate-Triable

By | September 15, 2026
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Regular Bail Granted in GST Evasion Case as Investigation Is Complete and Offence Is Magistrate-Triable

Regular Bail Granted in GST Evasion Case as Investigation Is Complete and Offence Is Magistrate-Triable
Issue
Whether petitioners accused of running a sham entity network to evade GST of ~₹156 crores are entitled to regular bail under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023 / Section 69 read with Section 132 of the CGST Act, 2017, after completing four months in custody with the investigation concluded.
Facts
  • Allegations & Revenue Loss: DGGI, Chandigarh registered an FIR alleging that a network supplied online money-gaming services via sham entities to suppress receipts and evade GST, causing an estimated revenue loss of ~₹156 crores.
  • Modus Operandi: Collections were routed through payment gateways and layered bank accounts, while tax returns declared only commission income. Associated entities were non-existent and operated using dummy directors.
  • Role of Petitioners: The petitioners managed the central nodal payout company and a linked firm involved in the network.
  • Status of Custody & Trial: The petitioners had been in custody for about four months, the investigation had concluded, and the trial had not yet commenced, with early completion being unlikely.
  • Nature of Offence: The alleged offences under Section 132 carry a maximum punishment of up to five years imprisonment and are triable by a Magistrate.
Decision
  • The court observed that further detention would serve no useful purpose since the investigation was complete and the evidence was primarily documentary in nature.
  • Given that the key witnesses were official personnel, the risk of tampering with evidence or influencing witnesses was negligible.
  • The petitions were allowed, and regular bail was granted to the petitioners subject to specified conditions.
  • Decided in favor of the assessee/accused.
Key Takeaways
  • Pre-Trial Custody Is Not Punitive: In offences punishable with up to five years imprisonment and triable by a Magistrate, prolonged pre-trial detention cannot be justified once the investigation is complete.
  • Documentary Nature of GST Cases: Where the evidence relies primarily on financial records and official witnesses, courts lean toward granting bail as the risk of evidence tampering is minimal.
  • Parity and Proportionality in Tax Offences: Merely high quantum of alleged tax evasion (~₹156 crores) does not bar regular bail if procedural safeguards and conditions ensure the accused’s presence during trial.
HIGH COURT OF HIGH COURT
Navinder Singh Saiidev
v.
Directorate General of Gst Intelligence, Chandigarh
Ms. SHALINI SINGH NAGPAL, J.
CRM-M-35651 of 2026 (O & M)
SEPTEMBER  7, 2026
Gaurav Chopra, Gautam Dull, Sr. Advs., Ms. Radhika Mehta, Rehan Gupta, Ruchir Bhatia, Rishabh Pandey, Deepak Sharma, Ms. Darika Sikka and Gurjinder Singh Thind, Advs. for the Petitioner. Naman Jain, Sr. Standing Counsel and Udit Jain, Adv. for the Respondent.
ORDER
1. Both petitions under Section 483 of Bharatiya Nagarik Suraksha Sanhita, 2023 seek regular bail in case FIR No. Int/Intl/414/2026-Group D, o/o ADG, DGGI-ZU Chandigarh dated 01.05.2026 under Sections 132(1)(A) read with Section 132(5) of the CGST Act, 2017 and Section 20(XV) of the Integrated Goods and Services Tax Act, 2017, punishable under Section 132(1)(I) of the Act. Both are first petitions for regular bails.
2. The case, as set up by the Directorate General of GST Intelligence, Chandigarh is that both petitioners were involved in large scale organized and multi-layered scheme involving clandestine supply of online money-gaming services, including real-money card games such as Teen Patti and Rummy, through a network of sham/dummy companies, with the clear object of suppressing actual taxable receipts and evading payment of GST. The transactions were rooted through payment gateways, bank accounts and entities which were either non-genuine or created for facilitating the illegal arrangement. The taxable receipts were grossly suppressed in the GST returns, causing substantial loss of revenue to the Government. It is alleged that Manish Kumar Aggarwal was the was the CEO of M/s. Dhanik Traders (OPC) Private Limited, the Central nodal payment hub for the entire scheme, in which hundreds of crores were routed. Narinder Singh Sahdev was the Director of M/s. Dhanik Traders (OPC) Private Limited and Proprietor of M/s Vansh Enterprises. Both of them directed their Chartered Accountants to file GST returns of all the firms declaring only commission and not the actual gaming receipts. M/s. Dhanik Traders was the Central Nodal/payout account for the entire network and its associated website was set up as a e-commerce portal, but no products were ever sold through it and the actual business was pay-in and payout for online gaming. A web of multiple companies-registered as skill-based gaming or ecommerce operators-served as pay-in entities receiving gaming deposits through payment gateway M/s. Airpay Services Pvt. Ltd. All the companies in the network were found to be non-existent or non-functional at their registered principal places of business. The directors were dummy directors and the actual management, banking operations and compliances were handled entirely by both petitioners. Evasion of GST was approximately Rs. 156 crores.
3. Learned counsel for the petitioners submit that entire case of the department was based on documents which were already seized by the investigating agency. The whatsapp chats and disclosure statements of coaccused had weak evidentiary character and could not be relied upon. Evidence sought to be led against the petitioners included digital records and there was no chance of the petitioners to tamper with the same. Relying upon Sanjay Chandra v. CBI (2012) 1 SCC 40 it was argued that gravity of the charge was to be determined by maximum sentence prescribed by the Statute, which was only 05 years. There was no likelihood of flight or tampering with the evidence and no necessity for detaining the petitioners behind bars. Investigation against the petitioners was complete and further pre-trial detention of the petitioners would serve no purpose. Petitioners had always been co-operating during investigation. Both petitioners who were in custody for the last 04 months, deserved to be enlarged on regular bail.
4. Learned counsels for the respondents have opposed the prayer for regular bail submitting that petitioners meticulously planned and executed scheme of tax frauds involving deliberate suppression of supply, creation of a web of non-existent or non-functional companies, systematic under-reporting in GST returns and active concealment of true nature of transactions. Grant of bail to the petitioners would undermine the administration of tax laws. Loss of revenue to the Government was about 156 crores and substantial documentary, digital and financial documents were collected against the petitioners indicating their complicity. Both petitioners had central and primary role and considering the gravity of the offences, the pivotal role of the petitioners and the largescale tax evasion racket involving multiple sham/dummy entities, petitioners did not deserve concession of bail. In support of his submissions, he referred to DGGSIT (HQS) v. Gameskraft
9. Undisputedly, investigation against the petitioners stands concluded. Petitioners are in custody w.e.f. 01.05.2026 i.e. for the last 04 months and 02 days. The offences under Sections 132(1)(A) read with Section 132(5) of the CGST Act, 2017 and Section 20(XV) of the Integrated Goods and Services Tax Act, 2017, for which the petitioners have been arrested, punishable with maximum imprisonment of 05 years, are triable by the Court of Magistrate. Undeniably, the evidence proposed to be led is documentary in nature and the witnesses sought to be produced are official ones. As such, the chances of petitioners influencing the witnesses or tampering with evidence are negligible. Petitioners have roots in the society. Trial is yet to commence and conclusion thereof by an early date, does not appear to be a possibility. Further detention of the petitioners would not serve any useful purpose. Therefore, without commenting on merits of the case, both petitions are allowed. Petitioners are ordered to be released on regular bail subject to their furnishing adequate bail and surety bonds to the satisfaction of trial Court/Duty Magistrate and further subject to following conditions:
1. The petitioners will not tamper with the evidence during the trial.
2. The petitioners shall surrender their passport and will not leave the country without the permission of the Trial Court.
3. The petitioners will not change their residence without prior intimation to the Department and the trial Court.
4. The petitioners will not influence the prosecution witnesses.
5. The petitioners will furnish an undertaking by way of their affidavit(s) before the trial Court that they will appear on each and every date fixed, unless their presence is exempted by a specific order of the Court.
6. The petitioners shall not commit an offence similar to the one involved in this, which they are accused of, or for commission of which they are suspected of.
7. The petitioners shall not directly or indirectly coerce, induce, threaten or promise to any person acquainted with the facts of the case so as to dissuade him/ her from disclosing such facts to the Court or to any police officer or tamper with the evidence in any manner.
8. The petitioners shall not in any manner misuse their liberty.
9. Any infraction shall entail in withdrawal of the benefit granted by this Court.
10. Learned trial Court would, however, be at liberty to impose any other condition as may be deemed fit.
11. In case, the petitioners, fail to abide by the conditions, the respondent-department may seek cancellation of their bail.
12. Pending CRM(s), if any, also stand disposed of.
13. A photocopy of this order be placed on the file of other connected case.