Chhattisgarh High Court gives pre-arrest bail to man in Rs 124 crore GST fraud case

The petitioner, Mohd Farhan, a freelance accountant, was accused of creating bogus firms and facilitating fake e-way bills involving Rs 124 crore in tax and transactions amounting to Rs 821 crore.

He sought anticipatory bail through advocate Vikalp Sharma, who said there was a “genuine apprehension of arrest” while underlining the “coercive manner of the search and repeated summons”.

No heinous, violent crime

The high court noted that the allegations against the accused were primarily based upon documentary and digital evidence, which were already in the custody of the investigating agency and noted that the maximum punishment for the alleged offence was only five years.

“The offence is, therefore, not of the category of heinous or violent crimes that ordinarily warrant pre-trial incarceration. The limited statutory severity of punishment, coupled with the nature of allegations, militates against the necessity of custodial detention at this stage,” it added.

Justice Sinha observed that the relevant data had already been seized and that the investigation would take time. The order noted that the “accused’s continued liberty with reasonable conditions does not pose any risk of absconding or tampering with evidence”.

‘Merely freelance accountant’

Sharma argued that his client was innocent as he had only discharged his professional duties as a freelance accountant. The lawyer submitted that the “allegations were exaggerated, unsupported by any cogent material, and based purely on suspicion and inference”.

Sharma said GST registration was an entirely system-driven process, involving Aadhaar OTP authentication, physical verification, and approval after detailed scrutiny and argued that in such a multi-layered statutory mechanism, forgery at his client’s end is impossible, and hence the allegations were inherently false.

Custodial interrogation to trace full chain

Deputy attorney general U K S Chandel, who appeared for the state, in this GST fraud case, argued that the accused was associated with 21 non-existent firms, which were used solely for issuing e-way bills amounting to Rs 821 crore and identity theft.

Chandel opposed the anticipatory bail plea and argued that the accused did not appear once despite the issuance of five summons, adding that Frahan was obstructing the investigation, which is still at an “early and sensitive stage”.

The custodial interrogation, the state’s counsel said, was required to trace “full chain and recover data” in light of the organised nature of the economic offence, destruction of evidence, and involvement of multiple entities.

Background

It came on record that Central GST officers seized certain documents and digital records relating to GST registrations and recovered Rs 2.48 lakh from the accused’s premises after conducting a search based on unsubstantiated allegations. The authority suspected his involvement in creating bogus firms and facilitating fake e-way bills.

The department issued three successive summons to the accused, but he did not appear before the authorities and then approached the session court for anticipatory bail, which was rejected.