Bail Granted To Director In Online Gaming GST Evasion Case

Bail Granted To Director In Online Gaming GST Evasion Case As Investigation Was Completed

Issue

Whether pre-trial bail under Section 132 read with Section 69 should be granted to a director in an alleged Rs 28.61 crore GST evasion case where investigation is complete, the complaint is filed, and no risk of tampering or absconding exists.

Facts

The applicant was a director in a company alleged to be running an online money gaming business.
The prosecution alleged that receipts were routed through payment aggregators to multiple bank accounts without issuing invoices, resulting in an alleged GST evasion of approximately Rs 28.61 crores.
Statements of a co-accused indicated that the applicant merely provided incorporation and directorship documents out of friendship, while operational handling was done by co-accused without direct material linking the applicant to handlers.
The investigation was completed and the prosecution complaint was filed before the Special Chief Judicial Magistrate, Agra.
The alleged offenses are triable by a Magistrate carrying a maximum statutory punishment of five years.
Charges were not yet framed, the applicant had no prior criminal antecedents, and had spent a considerable period in pre-trial custody.

Decision

The High Court noted that the prosecution established no prior criminal history, non-cooperation, or evidence of risk regarding tampering, witness intimidation, or absconding.
The High Court held that the constitutional principle of “bail as a rule and jail as an exception” under Article 21 applies, reinforcing the presumption of innocence and non-punitive pre-trial detention.
The High Court held that with the investigation complete and early conclusion of trial unlikely, personal liberty must prevail over continued incarceration.
The High Court allowed the bail application considering the nature of the offense, evidence on record, and the applicant’s degree of complicity.

Key Takeaways

Pre-Trial Detention Is Non-Punitive: In Section 132 GST prosecution cases carrying a maximum sentence of five years, bail cannot be denied as a punitive measure once the investigation is complete and the complaint is filed.
Impact of Nominal Directorship: Lack of active operational involvement and statements showing passive directorship serve as strong grounds for granting bail in complex tax fraud allegations.
Article 21 Supremacy in Tax Prosecutions: Where the trial is likely to take time and the accused presents no flight risk or tampering danger, fundamental liberty under Article 21 overrides extended pre-trial custody.

HIGH COURT OF ALLAHABAD

Dhruv Seth

Union of India

Vikram D. Chauhan, J.

CRIMINAL MISC. BAIL APPLICATION No. 14325 of 2026

MAY 25, 2026

Mahima Singh and Sudhanshu Kumar for the Applicant. Dhananjay Awasthi for the Respondent.

ORDER

1. Heard learned counsel for applicant and Sri Dhananjay Awasthi, learned counsel for opposite party and perused the record.

2. Learned counsel for applicant submits that applicant is Director of company namely M/s Pymplay Advance Gaming Tech. (OPC) Pvt. Ltd. It is further submitted that as per prosecution case it is alleged that company was involved in online money gaming and payment received by the aggregator was transferred in different account, therefore, tax evasion to the tune of Rs. 28,61,45,695/- was payable. Learned counsel for applicant further submits that during investigation statement of one Sachet Goyal co-accused has been recorded where he has stated that applicant being friend of Sachet Goyal has given his documents for establishment of company and directorship. The aforesaid co-accused in paragraph no. 11 of complaint has specifically stated that directors of company was not in direct contact of handlers and work was done by Sachet Goyal only. There is no material evidence available that there was any contact of applicant with the handlers. It is further submitted by learned counsel for applicant that although there may be the fact that applicant being the Director is responsible for the affairs of the company, however, the same would arise only in respect of the tax liability and not for the purpose of criminal prosecution. The maximum punishment provided is five years. The applicant has no criminal history. Applicant is languishing in jail since 15.3.2026 and in case he is released on bail, he will not misuse the liberty of bail and will cooperate in the trial.

3. Sri Dhananjay Awasthi, learned counsel for opposite party opposed the prayer for bail and submits that applicant was Director of the company and he was involved in not issuing invoices for gaming and as a result of same there was a tax evasion to the tune of Rs. 28,61,45,695/-. However, he does not dispute the statement of Sachet Goyal co-accused.

4. Learned counsel for opposite party has not brought any fact or circumstances to indicate criminal history or antecedents of the applicant which would disentitle the applicant for Bail.

5. It is not the case of the opposite party that applicant has not cooperated in the investigation or proceedings before the trial court.

6. The principle that Bail is a rule and Jail is an exception has been well recognised by Apex Court more specifically on the touch stone of Article 21 of the Constitution. The said principle has been reiterated by the Apex Court in Satyendra Kumar Antil v. CBI (2022) 10 SCC 51. Learned counsel for the opposite party has not shown any exceptional circumstances which would warrant denial of bail to the applicant.

7. No material, facts or circumstances has been shown by learned counsel for the opposite party that the accused may tamper with the evidence or witnesses or the accused is of such character that his mere presence at large would intimidate the witnesses or that accused will use his liberty to subvert justice or tamper with the evidence.

8. It is settled principle of law that the object of bail is to secure the attendance of the accused at the trial. No material particulars or circumstances suggestive of the applicant fleeing from justice or thwarting the course of justice or creating other troubles in the shape of repeating offences or intimidating witnesses and the like have been shown by learned counsel for the opposite party.

9. Learned counsel for opposite party has not shown any material or circumstances that the accused/applicant is not entitled to bail in larger interests of the public or State.

10. It is well settled that at pre-conviction stage, there is presumption of innocence. The object of keeping a person in custody is to ensure his availability to face the trial and to receive the sentence that may be passed. The detention (pending trial) is not supposed to be punitive. Delay in commencement and conclusion of trial is a factor to be taken into account and the accused cannot be kept in custody for indefinite period if trial is not likely to be concluded within reasonable time.

11. In Sanjay Chandra v. CBI (2012) 1 SCC 40 Hon’ble Supreme Court has held that accused cannot be in jail during trial as a punitive measure for his conduct. In this respect paragraph 21, 22 and 23 of Sanjay Chandra (supra) is quoted herein below:-

“21. In bail applications, generally, it has been laid down from the earliest times that the object of bail is to secure the appearance of the accused person at his trial by reasonable amount of bail. The object of bail is neither punitive nor preventative. Deprivation of liberty must be considered a punishment, unless it is required to ensure that an accused person will stand his trial when called upon. The courts owe more than verbal respect to the principle that punishment begins after conviction, and that every man is deemed to be innocent until duly tried and duly found guilty.

22. From the earliest times, it was appreciated that detention in custody pending completion of trial could be a cause of great hardship. From time to time, necessity demands that some unconvicted persons should be held in custody pending trial to secure their attendance at the trial but in such cases, “necessity” is the operative test. In this country, it would be quite contrary to the concept of personal liberty enshrined in the Constitution that any person should be punished in respect of any matter, upon which, he has not been convicted or that in any circumstances, he should be deprived of his liberty upon only the belief that he will tamper with the witnesses if left at liberty, save in the most extraordinary circumstances.

23. Apart from the question of prevention being the object of refusal of bail, one must not lose sight of the fact that any imprisonment before conviction has a substantial punitive content and it would be improper for any court to refuse bail as a mark of disapproval of former conduct whether the accused has been convicted for it or not or to refuse bail to an unconvicted person for the purpose of giving him a taste of imprisonment as a lesson.”

12. Article 21 of Constitution provides that no person will be deprived of his life or liberty except by procedure established by law. The procedure established by law should be just, fair and reasonable. The presumption of innocence is applicable to under trial accused. Even if prima facie case is made out, the constitutional Court while considering the bail application are required to examine whether it is reasonable to keep the accused in custody during trial and in only exceptional cases (like heinous crime) the bail can be denied.

13. In Amit Mehra v. Union of India 114 GST 253/106 GSTL 3 (SC)/Special Leave to Appeal (Criminal) No 20996 of 2025 by order dated 12.1.2026, Hon’ble Supreme Court while granting bail to the accused under Section 132(i) of GST Act, 2017 and Section 20(xv) of IGST Act, 2017 (who was under detention for eight months) has observed as under:-

“4. We do not undermine the gravity of the alleged offence. However, at the same time, we should not overlook the fact that the petitioner is in judicial custody as an under-trial prisoner past 8 months. The Trial Court is yet to commence. Charge is yet to be framed. Even if the trial commences in near future, it would not conclude within next one year. The offences are triable by Magistrate. The maximum punishment that the trial court may be in a position to impose upon the petitioner if held guilty would be upto 5 years.”

14. The Vineet Jain v. Union of India 99 GSTL 129 (SC)/Supreme Court in Criminal Appeal No 2269 of 2025 (Arising out of SLP (Criminal) No 4349 of 2025) decided on 28.4.2025 while grating bail to accused Clauses (c), (f) and (h) of Section 132(1) of the Central Goods and Services Tax Act, 2017 has observed as under:-

“The offences alleged against the appellant are under Clauses (c), (f) and (h) of Section 132(1) of the Central Goods and Services Tax Act, 2017. The maximum sentence is of 5 years with fine. A charge-sheet has been filed. The appellant is in custody for a period of almost 7 months. The case is triable by a Court of a Judicial Magistrate. The sentence is limited and in any case, the prosecution is based on documentary evidence. There are no antecedents.

We are surprised to note that in a case like this, the appellant has been denied the benefit of bail at all levels, including the High Court and ultimately, he was forced to approach this Court. These are the cases where in normal course, before the Trial Courts, the accused should get bail unless there are some extra ordinary circumstances”

15. In Ratnambar Kaushik v. Union of India [2023] 95 GST 548/68 GSTL 233 (SC)/(2023) 2 SCC 621, Hon’ble Supreme Court while granting bail to an accused under Sections 132(1)(a), (h), (k) and (l) read with Section 132(5) of the Central Goods and Services Tax Act, 2017 has observed as under:-

“8. In considering the application for bail, it is noted that the petitioner was arrested on 21-7-2022 and while in custody, the investigation has been completed and the charge-sheet has been filed. Even if it is taken note that the alleged evasion of tax by the petitioner is to the extent as provided under Section 132(1)(l)(i), the punishment provided is, imprisonment which may extend to 5 years and fine. The petitioner has already undergone incarceration for more than four months and completion of trial, in any event, would take some time. Needless to mention that the petitioner if released on bail, is required to adhere to the conditions to be imposed and diligently participate in the trial. Further, in a case of the present nature, the evidence to be tendered by the respondent would essentially be documentary and electronic. The ocular evidence will be through official witnesses, due to which there can be no apprehension of tampering, intimidating or influencing. Therefore, keeping all these aspects in perspective, in the facts and circumstances of the present case, we find it proper to grant the prayer made by the petitioner.”

16. Under Section 132 of CGST Act, maximum punishment provided is 5 years. The prosecution is triable by Magistrate. Applicant is in jail since 15.3.2026. Investigation is completed against applicant and complaint is filed before Special Chief Judicial Magistrate, Agra. It has not been shown by opposite party that charge has been framed against applicant. Even if the trial commences in near future, it would not conclude within next one year. Applicant has no previous criminal history.

17. In Manish Sisodia v. Directorate of Enforcement 185 SCL 315 (SC)/(2024) 12 SCC 660, Hon’ble Supreme Court has recognised the principle that “Bail is a Rule and jail is exception”

“52. The Court in Javed Gulam Nabi Shaikh case [Javed Gulam Nabi Shaikh v. State of Maharashtra, (2024) 9 SCC 813 : (2025) 1 SCC (Cri) 222] further observed that, over a period of time, the trial courts and the High Courts have forgotten a very well-settled principle of law that bail is not to be withheld as a punishment. From our experience, we can say that it appears that the trial courts and the High Courts attempt to play safe in matters of grant of bail. The principle that bail is a rule and refusal is an exception is, at times, followed in breach. On account of non-grant of bail even in straightforward open-and-shut cases, this Court is flooded with huge number of bail petitions thereby adding to the huge pendency. It is high time that the trial courts and the High Courts should recognise the principle that “bail is rule and jail is exception”.”

18. Considering the facts and circumstances of the case, nature of offence, evidence, complicity of the accused, submissions of learned counsel for the parties and without expressing any opinion on the merits of the case, the Court is of the view that the applicant has made out a case for bail. The bail application is allowed.

19. Let the applicant-Dhruv Seth involved in Case Crime No. GEXCOM/AE/INV/GST/1555/2026-AE-P/o-COOMR-CGST-AGRA-A, under Sections 132(1)(A), 132(1)(F), 132(1)(i) of CGST Act, 2017, Police Station Hariparwat, District Agra be released on bail on furnishing a personal bond and two sureties each in the like amount to the satisfaction of the court concerned subject to the following conditions:-

The applicant will not tamper with the evidence during the trial.

ii.

The applicant will not pressurize/intimidate the prosecution witness.

iii.

The applicant will appear before the trial court on the date fixed, unless personal presence is exempted and/or the applicant shall make himself available for interrogation by a police officer as and when required.

iv.

The applicant shall not commit an offence similar to the offence of which he is accused, or suspected, of the commission of which he is suspected.

The applicant shall not directly or indirectly make 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 any police officer or tamper with the evidence.

vi.

The applicant shall not leave India without the previous permission of the Court.

vii.

In the event, the applicant changes residential address, the applicant shall inform the court concerned about new residential address in writing.

20. In case of breach of any of the above condition, the prosecution shall be at liberty to move bail cancellation application before this Court.