Accountant Alleged to Be Mastermind Behind Fake ITC Network Granted Bail Post Charge Sheet Filing

By | September 23, 2026
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Accountant Alleged to Be Mastermind Behind Fake ITC Network Granted Bail Post Charge Sheet Filing

Issue

Whether an accountant accused of being the operational brain behind a multi-layered fake Input Tax Credit (ITC) network is entitled to bail under Section 69 read with Section 132 of the CGST Act after the completion of investigation and filing of the charge sheet.

Facts

  • Fraud Investigation: GST Intelligence uncovered an organized multi-layered network of entities involved in generating, issuing, and availing fraudulent/inadmissible ITC without any underlying physical supply of goods or services.
  • Role of Accountant: Investigation identified the petitioner—acting in his professional capacity as an accountant—as the key operational brain and mastermind behind orchestrating and issuing fake tax invoices.
  • Arrest & Custody: The petitioner was arrested pursuant to powers under Section 69 read with Section 132 of the CGST Act.
  • Bail Plea: The petitioner filed a bail petition contending that the investigation was complete, the charge sheet had been filed, further incarceration served no purpose, and there was no risk of tampering with evidence.

Decision

  • Grant of Bail: Taking into account the facts and circumstances, including the completion of investigation and filing of the charge sheet, the Court exercised its discretion to enlarge the petitioner on bail [Para 12].
  • Bail Conditions: The petitioner was ordered to be released on bail upon furnishing a bail bond with two sureties of like amount to the satisfaction of the Additional Chief Judicial Magistrate (ACJM) [Para 12].

Key Takeaways

  • Bail Post Charge Sheet: Filing of the charge sheet and conclusion of investigation serve as strong grounds for granting bail in GST fraud offenses, as pre-trial detention should not act as punitive punishment.
  • No Automatic Bar on Pre-Trial Incarceration: Even where an accused professional is alleged to be a primary mastermind behind bogus ITC transactions, bail can be granted if custody is no longer required for investigation and there is no risk of tampering with evidence.
HIGH COURT OF PATNA
Sanjeet Kumar Pandey @ Sanjeet Pandey
v.
Union of India
Ashok Kumar Pandey, J.
CRIMINAL MISCELLANEOUS No. 56740 of 2026
SEPTEMBER  17, 2026
D.V. Pathy, Sr. Adv., Shambhu Sharan Singh, Sadashiv Tiwari and Shivam, Advs. for the Petitioner. Sriram Krishna, Sr. S.C. for the Respondent.
ORDER
1. Heard Mr. D.V. Pathy, learned senior counsel for the petitioner and Mr. Sriram Krishna, learned Senior Standing Council for the GST Intelligence.
2. The petitioner has prayed for bail registered for the offence punishable under Sections 132(1)(b),(c), (f) & (I) punishable under Sections 132(1)(i) of the Central Goods & Services Tax, 2017.
3. The case of the prosecution in brief is that the specific intelligence was developed regarding an organised multi-layered network of entities involved in the issuance and availment of an inadmissible/fake Input Tax Credit (ITC) without the actual physical supply of goods or services. Based on this intelligence, a search operation was conducted. On 25.05.2026 at the residence cum principal place of business of M/s Maa Vaishnavi Singh & Sons. Investigation revealed that the accused, Shree Sanjeet Kumar Pandey (the petitioner), acting in his professional capacity as the accountant, served as the functional operational brain and key mastermind behind the orchestrating, preparing and issuing of fraudulent tax invoices of M/s Maa Vaishnavi Singh & Sons. The firm registered on 19.08.2017 and cancelled on 16.07.2024 lacked any genuine business infrastructure or logistic records yet declared high-value taxable turnover systematically managed by the accused in active connivance with the proprietor, Shree Jaswant Singh. Analyses of financial records, data logs and statements recorded under Section 70 of the CGST Act 2017 established that the accused operated far beyond the traditional scope of an accountant. Furthermore, the primary proprietor, Shree Jaswant Singh, in his voluntary statement, has explicitly indicted Shree Sanjeet Kumar Pandey as the Chief Architect responsible for managing the entire network of fake invoices, secure login credentials and illicit fund routing.
4. During the investigation, it emerged that the accused maintained absolute command and operational control over the secure GST login credentials. He knowingly utilised these entities as multi-layered conduits for routine circular fake transactions generating fake invoices, drafting and uploading fake tax invoices on the GST portal across multiple financial years to several beneficiary firms without underlying supplies. The financial impact of this organised economic offence is substantial. M/s Maa Vaishnavi Singh & Sons fraudulently availed inadmissible ITC of approximately Rs. 36.21 crores and passed on inadmissible ITC of approximately 8.08 crores, leading to a total revenue implication of Rs. 44.30 crores.
5. Learned counsel for the petitioner has submitted that the petitioner is merely the accountant of the said firm. The main thrust of allegation is against the proprietor who has already been granted bail by this Court vide Cr. Misc. No. 55304 of 2026.
6. Learned counsel for the petitioner has further submitted that after reading of section 69 of Central GST Act 2017, there must be a reason to believe that a person has committed an offence which is as under:-
69. Power to arrest.
(1) Where the Commissioner has reasons to believe that a person has committed any offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of section 132 which is punishable under clause (i) or (ii) of sub-section (1), or subsection (2) of the said section, he may, by order, authorise any officer of central tax to arrest such person.
(2) Where a person is arrested under sub-section (1) for an offence specified under subsection (5) of section 132, the officer authorised to arrest the person shall inform such person of the grounds of arrest and produce him before a Magistrate within twenty-four hours.
(3) Subject to the provisions of the Code of Criminal Procedure, 1973,–
(a) where a person is arrested under subsection (1) for any offence specified under subsection (4) of section 132, he shall be admitted to bail or in default of bail, forwarded to the custody of the Magistrate;
(b) in the case of a non-cognizable and bailable offence, the Deputy Commissioner or the Assistant Commissioner shall, for the purpose of releasing an arrested person on bail or otherwise, have the same powers and be subject to the same provisions as an officer-in-charge of a police station.
7. Learned counsel for the petitioner has relied various judgments of the Hon’ble Apex Court. Firstly, he has referred para ’11’ of Arnesh Kumar v. State of Bihar [Cr. Appeal No. 1277 of 2014, dated 2-7-2014] and the same is being reproduced hereunder:-
11. Our endeavour in this judgment is to ensure that police officers do not arrest accused unnecessarily and Magistrate do not authorise detention casually and mechanically. In order to ensure what we have observed above, we give the following direction:
11.1. All the State Governments to instruct its police officers not to automatically arrest when a case under Section 498-A of the IPC is registered but to satisfy themselves about the necessity for arrest under the parameters laid down above flowing from Section 41, Cr.PC;
11.2. All police officers be provided with a check list containing specified sub- clauses under Section 41(1)(b)(ii);
11.3. The police officer shall forward the check list duly filed and furnish the reasons and materials which necessitated the arrest, while forwarding/producing the accused before the Magistrate for further detention;
11.4. The Magistrate while authorising detention of the accused shall peruse the report furnished by the police officer in terms aforesaid and only after recording its satisfaction, the Magistrate will authorise detention;
11.5. The decision not to arrest an accused, be forwarded to the Magistrate within two weeks from the date of the institution of the case with a copy to the Magistrate which may be extended by the Superintendent of police of the district for the reasons to be recorded in writing;
11.6. Notice of appearance in terms of Section 41A of Cr.PC be served on the accused within two weeks from the date of institution of the case, which may be extended by the Superintendent of Police of the District for the reasons to be recorded in writing;
11.7. Failure to comply with the directions aforesaid shall apart from rendering the police officers concerned liable for departmental action, they shall also be liable to be punished for contempt of court to be instituted before High Court having territorial jurisdiction.
11.8. Authorising detention without recording reasons as aforesaid by the judicial Magistrate concerned shall be liable for departmental action by the appropriate High Court.
8. Learned counsel for the petitioner has further relied on the judgment of Hon’ble Apex Court in paragraph ’17’ in the case of Satender Kumar Antil v. CBI [M.A. No. 2034 of 2022, dated 15-1-2026] wherein the Hon’ble Apex Court has taken a similar view as in the case of Arnesh Kumar (supra) the same is being reproduced hereunder:-

17. An arrest, being an act done by a police officer in furtherance of an investigation, is discretionary and optional to be applied on the facts of a particular case. Section 35 of the BNSS, 2023 provides for situations where a person may be arrested by a police officer, without a warrant.

Section of the BNSS, 2023

“35. When police may arrest without warrant.— (1) Any police officer may without an order from a Magistrate and without a warrant, arrest any person—

(a) who commits, in the presence of a police officer, a cognizable offence; or
(b) against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists that he has committed a cognizable offence punishable with imprisonment for a term which may be less than seven years or which may extend to seven years whether with or without fine, if the following conditions are satisfied, namely:—
(i) the police officer has reason to believe on the basis of such complaint, information, or suspicion that such person has committed the said offence;
(ii) the police officer is satisfied that such arrest is necessary—
(a) to prevent such person from committing any further offence; or
(b) for proper investigation of the offence; or
(c) to prevent such person from causing the evidence of the offence to disappear or tampering with such evidence in any manner; or
(d) to prevent such person from making any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the Court or to the police officer; or
(e) as unless such person is arrested, his presence in the Court whenever required cannot be ensured, and the police officer shall record while making such arrest, his reasons in writing:
Provided that a police officer shall, in all cases where the arrest of a person is not required under the provisions of this sub-section, record the reasons in writing for not making the arrest; or
(c) against whom credible information has been received that he has committed a cognizable offence punishable with imprisonment for a term which may extend to more than seven years whether with or without fine or with death sentence and the police officer has reason to believe on the basis of that information that such person has committed the said offence; or
(d) who has been proclaimed as an offender either under this Sanhita or by order of the State Government; or
(e) in whose possession anything is found which may reasonably be suspected to be stolen property and who may reasonably be suspected of having committed an offence with reference to such thing; or
(f) who obstructs a police officer while in the execution of his duty, or who has escaped, or attempts to escape, from lawful custody; or
(g) who is reasonably suspected of being a deserter from any of the Armed Forces of the Union; or
(h) who has been concerned in, or against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists, of his having been concerned in, any act committed at any place out of India which, if committed in India, would have been punishable as an offence, and for which he is, under any law relating to extradition, or otherwise, liable to be apprehended or detained in custody in India; or
(i) who, being a released convict, commits a breach of any rule made under sub-section (5) of Section 394; or
(j) for whose arrest any requisition, whether written or oral, has been received from another police officer, provided that the requisition specifies the person to be arrested and the offence or other cause for which the arrest is to be made and it appears therefrom that the person might lawfully be arrested without a warrant by the officer who issued the requisition.
(2) Subject to the provisions of Section 39, no person concerned in a non- cognizable offence or against whom a complaint has been made or credible information has been received or reasonable suspicion exists of his having so concerned, shall be arrested except under a warrant or order of a Magistrate.
(3) The police officer shall, in all cases where the arrest of a person is not required under sub-section (1) issue a notice directing the person against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists that he has committed a cognizable offence, to appear before him or at such other place as may be specified in the notice.
(4) Where such a notice is issued to any person, it shall be the duty of that person to comply with the terms of the notice.
(5) Where such person complies and continues to comply with the notice, he shall not be arrested in respect of the offence referred to in the notice unless, for reasons to be recorded, the police officer is of the opinion that he ought to be arrested.
(6) Where such person, at any time, fails to comply with the terms of the notice or is unwilling to identify himself, the police officer may, subject to such orders as may have been passed by a competent Court in this behalf, arrest him for the offence mentioned in the notice.
(7) No arrest shall be made without prior permission of an officer not below the rank of Deputy Superintendent of Police in case of an offence which is punishable for imprisonment of less than three years and such person is infirm or is above sixty years of age.”
(emphasis supplied)
9. Learned counsel for the petitioner has also relied on some judgments of Hon’ble Apex Court as well as Hon’ble High Courts which are as follows:-
(i) State of Punjab v. Davinder Pal Singh Bhullar (2011) 14 SCC 770 .
(ii) Radhika Agarwal v. UOI  95 GSTL 225 (SC)/WP (Cri) No. 336 of 2018 (SC).
(iii) Andaman Timber Industries v. CCE  314 ELT 641/52 GST 355/[2016] 38 GSTR 117 (SC).
(iv) Mukesh Agarwal v. UOI  (Gauhati)/Bail Application No. 3440/2025 (Gauhati).
(v) Sanket Mittal v. Central GST Department  114 GST 104 (Punjab & Haryana)/CRM-M- 44925 of 2025 (P & H).
10. Learned counsel for the petitioner has submitted that in this case, the charge sheet has been filed and keeping the petitioner behind the bars after the completion of investigation, will not serve any purpose and there is no any chance of tampering evidence. Moreover, the petitioner is languishing in judicial custody since 26.05.2026.
11. Countering this, learned Senior Counsel for the GST Intelligence has vehemently opposed the bail and has submitted that this is an economic offense which shatters the economy and that it should be dealt with stern hands. Section 132 sub-clause (1) (ii) provides with an imprisonment for a term which may extend up to three years and fine, where the wrongly availed or utilised or amount of refund wrongly taken exceeds two hundred lakh rupees (2 crores) but does not exceed five hundred lakhs rupees (5 crores) and in case the amount exceeds five hundred lakh rupees (5 crores), the punishment may extend up to five years in view of Section 132 Sub-clause 1 (i) of the Act.
12. Having heard learned counsel for the parties and considering the facts and circumstances of the case, this Court is inclined to enlarge the petitioner on bail. The above named petitioner is directed to be enlarged on bail on furnishing bail bond of Rs. 10,000/- (Rs. ten thousand only) with two sureties of the like amount each to the satisfaction of the learned Additional Chief Judicial Magistrate-II-cum-Special Judge Economic Offence, Patna in connection with Complaint Case No. 49 of 2026 arising out of File No. DGGI/INT/INTL/1203/2025-Gr C-O/o ADG-DGGI-ZU-Patna.