Pre-Arrest Bail Denied: Prima Facie Complicity in False Invoicing and Custodial Investigation Necessary

By | June 9, 2025
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Pre-Arrest Bail Denied: Prima Facie Complicity in False Invoicing and Custodial Investigation Necessary

Issue:

Whether pre-arrest bail should be granted to a petitioner accused of trading on the basis of false invoices without actually supplying goods, where prima facie complicity is apparent, and custodial investigation is deemed necessary to unearth the truth.

Facts:

The instant petition was filed by the petitioner seeking pre-arrest bail in a complaint lodged under Sections 132(1)(b) and 132(1)(c) of the Central Goods and Services Tax Act, 2017 (CGST Act). The allegations against the petitioner were serious: he allegedly created three firms and used these entities to conduct trading activities based on false invoices, without any actual supply of underlying goods.

Decision:

The court ruled in favor of the revenue. From a perusal of the replies submitted by the petitioner to various questions put by the respondent authority during the investigation, the court found that the prima facie complicity of the petitioner was “well apparent.” Therefore, his custodial investigation was deemed “very much necessary to unearth the truth.” Accordingly, the instant petition for pre-arrest bail was dismissed.

Key Takeaways:

  • False Invoicing as a Serious Offence: Trading on the basis of false invoices without actual supply of goods is considered a grave economic offense under the GST regime, as it facilitates fraudulent Input Tax Credit (ITC) claims and tax evasion. Sections 132(1)(b) and 132(1)(c) deal with issuing invoices without supply and availing/utilizing fraudulent ITC, respectively.
  • Prima Facie Complicity and Custodial Investigation: In cases involving economic offenses, courts are often reluctant to grant pre-arrest bail if there is prima facie evidence of the petitioner’s involvement and if custodial interrogation is deemed necessary to gather further evidence, trace the money trail, identify other conspirators, and unearth the full truth of the crime.
  • Purpose of Pre-Arrest Bail: Pre-arrest bail (anticipatory bail) is granted to protect individuals from arbitrary arrest, but it is not an absolute right, especially in serious offenses where the investigating agency requires unhindered access for interrogation.
  • “Unearthing the Truth”: The phrase “unearth the truth” indicates that the court recognized the complexity of such financial frauds, which often involve multiple layers and require detailed custodial interrogation to break down the network.
  • No Interference with Investigation: By dismissing the pre-arrest bail, the court prioritized the investigative powers of the revenue authorities, allowing them to proceed with the arrest and custodial interrogation of the petitioner.
  • In Favor of Revenue: The decision is in favor of the revenue, enabling them to pursue the investigation against the petitioner without the constraint of pre-arrest bail.
HIGH COURT OF PUNJAB & HARYANA
Ripan Jain
v.
Additional Directorate General of GST Intelligence, Zonal Unit, Ludhiana
Mahabir Singh Sindhu, J.
CRM-M No.20055 of 2025 (O & M)
APRIL  28, 2025
Aman Bansal, Adv. for the Petitioner. Sourabh Goel, Senior Standing Counsel, Ms. Geetika Sharma and Kush Goyal, Advs. for the Respondent.
ORDER
CRM-15777-2025
Present application has been filed under Section 528 of Bharatiya Nagarik Suraksha Sanhita, 2023 (for short ‘BNSS*) for placing on record affidavit of the petitioner. The same is allowed as prayed for subject to all just exceptions. Registry to tag the affidavit at appropriate place.
MAIN CASE
(1) Present petition under Section 482 of the BNSS has been filed for grant of pre-arrest bail to the petitioner in complaint No.DIN NO.202502DNN5000000BP68 under Sections 132(l)(b) and 132(l)(c) of the Central Goods and Service Tax Act, 2017 (for short ‘GST Act”) read with corresponding provisions of the Punjab Goods and Service Tax Act, 2017, registered by Additional Directorate General of GST Intelligence, 51D, Zonal Unit, Sarabha Nagar, Ludhiana.
(2) Allegations are that petitioner created three Firms, namely, M/s Disha Enterprises, Sarthak Enterprises and Kashbhi Accessories Point and he used to do trading on the basis of false invoices without actually supplying the underlying goods.
(3) Contends that petitioner has been falsely implicated in the present case. Further contends that petitioner is neither proprietor; nor partner of any Firm(s) and he has no role in the commission of alleged crime. Also contends that no complaint has been supplied to the petitioner; nor to any other co-accused. Lastly contends that petitioner is ready to join the proceedings, but he be protected.
(4) Although, there is no formal notice of motion in the case, however, Mr. Sourabh Goel, learned Senior Standing Counsel for the respondents has appeared and produced statements dated 27.01.2025 & 28.01.2025 of Saurabh Goyal, Director-cum-Authorized Signatory of M/s Jay Kay Hosiery Mills Private Limited, Ludhiana before Additional Assistant Director, DGGI, Ludhiana Zonal Unit under Section 70 of the Central Goods and Services Tax Act, 2017 (forshort ‘CGSTAct”), which are taken on record as Mark ‘X’ & Mark ‘Y’, respectively.
(5) Learned Senior Standing Counsel for the respondents submits that during investigation, it surfaced that several persons, including Saurabh Goyal (Director, M/s Jay Kay Hosiery Mills Private Limited), to whom various Invoices & Bills were supplied by the petitioner, has stated that it is the petitioner, who had provided them with the account number(s) and GST number(s) of the Firms, namely, M/s Disha Enterprises, Sarthak Enterprises and Kashbhi Accessories Point and on the basis of these Invoices, money was transferred in his favour.
(5.1) Further submits that petitioner manages the affairs of aforementioned Firm(s) and despite four repeated notices, he is not coming forward; rather deliberately evading the process of law. Thus, petitioner does not deserve the concession of pre-arrest bail.
(6) Heard both sides and perused the paper-book.
(7) Perusal of aforesaid statements (Mark ‘X’ & Y’) reveals that petitioner used to do trading on the Invoices without actually supplying the goods. Also discernible that on the basis of these Invoices, he availed income tax rebate of Rs.84.19 Crore. For reference, question Nos.7, 8, 10, 13, 14, 16, 17, 18, 19 & 22, put to said Saurabh Goyal with answers thereof (Mark X) (supra), being relevant, are recapitulated as under:-
Question : 7 Who were the dealing persons of the above mentioned firms?
Answer: I used to deal with a person named Mr. Ripan Kumar Jain and he used to personally provide me the GST invoices of the above mentioned GST firms. Mr. Ripan Kumar Jain manages three firms namely M/s Sarthak Enterprises (Prop. Sarthak Jain S/o Sh. Ripan Kumar Jain) GST-03APYPJ2569Q1ZY, M/s Disha Enterprises (Partnership Firm Sarthak Jain and Disha Jain W/o Sh. Sarthak Jain) GST-03AAQFD2947K1Z6 and M/s Kashbhi Accessories Point GST 03CFDPJ7189F1ZF. All the firms are operated from the registered address of M/s Disha Enterprises i.e. B-24/2724/1, Diamond Complex. First Floor, Opp. First Lane Hosiery, Ludhiana. His mobile numbers are 6280676781, 6239319590, and 8591855555. J am not sure about the exact residential address of Mr. Ripan Kumar Jain but he lives in some rented accommodation in Haibowal Kalan,Ludhiana. J am providing you the copy of the images of Mr. Ripan Kumar Jain and Mr. Sarthak Jain and J have put my dated signature on the same.
Question: 8 What did you do with the fake JTC availed on the basis of fake invoices issued by the above mentioned firms and provided by Mr. Ripan Kumar Jain.
Answer: I state that the J used to do the trading of fake invoices without actual supply of underlying goods. J used to issue the parallel invoices in respect of such fake invoices to the following firms:-
Party NameGSTIN
Oasis Knitwears03AADFO8465A1ZK
Kaur Sain Spinning Mills03AADFK0688B1ZX
Nagpal Exports03A A CFN3695C1ZK
Thukral Fabrics03AADFT3137C1ZS
SA oswal03AEKFS8922B1Z5
Woolworth Knitwears03AALPN5941LJZE
Royal Jmpex Private Limited03AAFCR3220H2ZV
Harish International03AAEFH9378J1Z1
Star Spintex Pvt Ltd03A A OCS1082K1Z7
Emmy Knitwears03AEKPG1583J1ZK
Starlight Hosiery Mills03AFYPK7882B2Z2
Unimax Apparels03AFSPJ5524P1ZY

 

Question 10: Did you use to deal directly with the buyers of such fake invoices?
Answer: It is stated that I did not deal directly with the buyers of the fake invoices. It was Ripan Kumar Jain, who used to collect the fake invoices from me and provide the same to the buyers.
Question 13: On checking the above mentioned suppliers on GSTIN, it has been observed that the following suppliers are cancelled from the date prior to the date on which you have made purchases from them for the reasons as detailed in the table below. Please comment on the same.
Sr No.TRADENAMEGSTINSum of Taxable ValueSum of Total tax
1A D ENTERPRISES07BIGPT7065M2ZH2,50,52,26030,06,271
2MS TREDING CO070FQPS3299L2202,31,85,95027,82,314
3RADHEY KRISHNA03L CPPK8123G1ZD1,69,27,15011,12,806
4TEYHAR KNITWEARS03AAHCT7882R1ZF1,10,50,6587,02,049
5Vivek Enterprises03EXYPP6573G1ZP82,56,4826,93,299
6PK ENTERPRISES03JFFPK8904A1ZQ65,14,2656,06,000
7Balaji Trading CO03CGVPG2734G1ZF65,08,2256,05,383
8KV TRADER03GXWPK5190L1ZO1,19,34,0005,96,700
9PANJAB ENTERPRISES03NNBP54532L1ZM1,13,63,5605,68,178
10C.K TRADERS03GHTPS2371LIZN45,29,2905,73,215
11SAI ENTERPRISES03DUWPA1415G1ZY1,05,52,7105,27,636
12VIKASH ENTERPRISES03HRFPK4599K1Z71,01,61,5105,08,076
13C.S. TRADERS03NCSPS6105M1ZT78,14,0003,90,700
14VOICETELE SOLUTIONS03AAICV2738D1ZK69,58,5503,47,928
15JG ENTERPRISES03BPUPK9661K1Z565,99,4853,29,974
16KASHMIRA SINGH &CO03CJKPS078G1ZZ31,17,4001,55,870
17SHIV SHAKTI ENTERPRISESO3HECPS9422F1ZG27,94,1761,39,709
17,33,19,6711,36,46,108

 

Answer: It is stated that I have seen the above table and have completely understood the same. I state that we have taken ITC of Rs. 1,36,46,108/- on the basis of the invoices raised by these suppliers and provided to me by Mr. Ripan Kumar Jain without the actual supply of the underlying goods and further issued the parallel invoices to the firms as detailed in answer to Question No. 8.
Question 14: In addition to the above 17, you have availed ineligible ITC from on the basis of the invoices issued by the following units without supply of the underlying goods. Please comment on the same.
Sr. No.TRADENAMEGSTINSum of Taxable ValueSum of Total tax
1MEERAJ KNITWEAR03AALCM0973A1ZV1,32,97,0839,38,842
2AASTHA INTERNA TIONAL03AIJPJ6957E2Z784,62,2904,58,193
3SARTHAK ENTERPRISES03APYPJ2569Q1ZY3,07,35,84415,36,792
4JAI DURGA TRADERS03EEOPR4688B1Z61,46,30,3859,91,142
5B.S CLOTH AND YARN TRADERS03HGCPS9725K1ZV44,93,1815,39,182
6R. K TRADERS03GKLPR0149Q1ZJ1,62,75,92511,14,779
7J S ENTERPRISES03EMDPR1169C1ZC1,06,01,0257,90,766
8DISHA ENTERPRISES03AA QFD2947K1Z61,74,26,0318,71,302
9DS ENTERPRISES030VYPK7306E1Z354,33,7866,52,054
10AM ENTERPRISES03DOEPG5859C2Z58,89,9601,06,795
11R.D YARN TRADERS03BJPPR6396R1ZZ2047570102378.5
12SHUBH ARAMBH INDUSTRIES03JTOPS5303G1ZH68,55,2153,42,761
13SHUBH ARAMBH INDUSTRIES03JTOPS5303G1ZHTo be determinedTo be determined
14SKY HIGH INTERNA TIONAL07A GPPG1224P1Z5
15SUHAAS YARNNA
Total13,11,48,29584,44,987

 

Answer: It is stated that I have seen the above table and have completely understood the same. I state that we have taken ITC of Rs. 84,44,987/-on the basis of the invoices raised by these suppliers and provided to me by Mr. Ripan Kumar Jain without the actual supply of the underlying goods and further issued the parallel invoices to the firms as detailed in answer to Question No. 8.
Question 16. Do you purchase fake invoices from the 32 (17+15) suppliers mentioned in the answer to Question 13 and 14 above in M/s Jay Kay Hosiery Mills too?
Answer: It is stated that I deal in purchase of fake invoices without actual supply of underlying goods from the below mentioned 23 suppliers:-
Sr. No.GSTINLegal NameSum of Taxable ValueTotal ITC availed
103AAHCT7882R1ZFTEYHAR KNITWEARS PRIVA TE LIMITED5249349410802
203AAICV2738D1ZKVOICETELE SOL UTIONS PRIVA TE LIMITED6295020314751
303AALCM0973A1ZVMEERAJ KNITWEAR PVT. LTD.5264562362362
403AA QFD2947K1Z6DISHA ENTERPRISES391413772048251
503AIJPJ6957E2Z7AASTHA INTERNA TIONAL8098982404949
603APYPJ2569Q1ZYSARTHAK ENTERPRISES419441942112619
703BJPPR6396R1ZZR.D YARN TRADERS7220841361042
803BPUPK9661K1Z5JG ENTERPRISES14406005844001
903CJKPS0786G1ZZKASHMIRA SINGH CO189420094710
1003DOEPG5859C2Z5AM ENTERPRISES865800103896
1103DUWPA1415G1ZYSAI ENTERPRISES6861160343058
1203EEOPR4688B1Z6JAI DURGA TRADERS6648900761328
1303EMDPR1169C1ZCJ S ENTERPRISES6605250756930
1403GKLPR0149Q1ZJR. K TRADERS6690900764688
1503GXWPKS190L1ZOKV TRADER2783250139163
1603HECPS9422F1ZGSHIV SHAKTI ENTERPRISES2794624139731
1703HGCP59725K1ZVB.S CLOTH AND YARN TRADERS2582455309895
1803HRFPK4599K1Z7VIKASH ENTERPRISES10001283500064
1903L CPPK8123G1ZDRADHEY KRISHNA ENTERPRISES5610600673272
2003NCSPS6105M1ZTOS. TRADERS7859525392976
2103NNBPS4532L1ZMPANJAB ENTERPRISES5420790271040
2207BIGPT7065M2ZHAD ENTERPRISES10382795519140
23070FQPS3299L2Z0MS TREDING CO168668001460726
Total22,14,88,6611,40,89,393

 

It is stated that the same were sold to the buyers mentioned in the answer to Question 8 through Mr. Ripan Kumar Jain from M/s Jay Kay Hosiery Mills too. All the transactions are dealt in the similar way as stated in the foregoing answer in respect of M/s Jay Kay Hosiery Mills Pvt. Ltd.
Question 17: It has been observed that you have claimed ITC on the basis of Invoices raised by certain firms registered in Delhi. However, ewaybill analysis depicts that there is no movement of goods as no toll is crossed or the vehicle has movement in some other state. Screenshots of some sample ewaybills are attached under. From, this it is evident that these two suppliers have only raised the invoices without actual supply of the underlying goods. What are your comments on the same.
Answer: I have perused the above table and the screenshots and have completely understood it. As stated earlier, I was just purchasing the fake invoices from these firms like other mentioned firms without actual supply of underlying goods through Mr. Ripan Kumar Jain. Since, there was no actual supply of the underlying goods, there was no toll movement of the vehicles mentioned in the Ewaybills, Question 18: Who use to generate the e-waybills of all such fake invoices?
Answer: It is stated that in the case of both M/s Jay Kay Hosiery Mills Pvt. Ltd. And M/s Jay Kay Hosiery Mills, the e-waybills for the purchase side was generated by the supplier firms and provided to me by Mr. Ripan Kumar Jain and for the sale side, the e-way bill was generated by us and we provided the same to Mr. Ripan Kumar Jain alongwith the invoices.
Question 19: How and when you met Mr. Ripan Kumar Jain and whether you were engaged in any cash transactions with him?
Answer: Mr. Ripan Jain has been one of the accessories supplier to M/s Jay Kay Hosiery Mills since long. I used to meet him frequently. Thereafter, when I was facing losses I never dealt with him in Cash transaction. All the transactions have been carried out through bank accounts.
Question 22: You are being shown the following invoices:-
Sr. No.Name of the SupplierName of the BuyerInvoice No. & DateDescription of GoodsQty. (kg)Unit PriceTotal ValueTaxTotal Amount
1Teyhar Knitwears Private LimitedJay Kay Hosiery MillsTKPL/215 dated 0902-2024Spun Polyester349020069800083760781760
2Teyhar Knitwears Private LimitedJay Kay Hosiery MillsTKPL/220 dated 1002-2024Spun Polyester348220571381085657799467
3Jay Kay Hosiery MillsVihan InternationalGST-2142 dated 1002-2024Spun Polyester349021575035090042840392
4Jay Kay Hosiery MillsVihan InternationalGST-2146 dated 1002-2024Spun Polyester348220872425686910811166

 

In this case, although the quantity of goods as per fake purchase invoices and fake sale invoices match but the unit price and total amount of fake sale purchases are higher than corresponding/parallel fake purchase invoices. However, in answer to the foregoing questions you have stated that you have not availed any commission/profit on the trading of fake invoices. Please comment.
Answer: I have seen the above mentioned invoices and have put my dated signatures on the same as a token of having seen and understood them. It is stated that the unit price of the sale invoices were decided by Mr. Ripan Kumar Jain. However, the amount received from the buyer of the fake invoices and sent to the seller of the fake invoices was not on invoice to invoice basis. The same was received and transferred in round figures as told by Mr. Ripan Kumar Jain. I have supplied you the signed copies of ledger account of M/s Vihaan International.
I further state that I am providing you signed copies (4 pages) listing the details of the missing sale invoices (2 pages) and purchase invoices (2 pages) of M/s Jay Kay Hosiery Mills Private Limited. I undertake to provide the same by tomorrow positively. “
(8) From perusal of the above extract, prima facie, complicity of the petitioner is well apparent; therefore, his custodial investigation would be very much necessary to unearth the truth.
(9) Consequently, there is no option except to dismiss the petition.
(10) Ordered accordingly.
(11) The above observations be not construed as an expression of opinion on merits of the case.
Pending application(s), if any, shall also stand disposed off.