Orissa High Court
Case Details
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 30-May-2025 17:08:08 IN THE HIGH COURT OF ORISSA AT CUTTACK BLAPL No. 3155 of 2025 along with BLAPL No. 3113 of 2025 …. Petitioner (s) Samir Kumar Sahu (In BLAPL No.3155 of 2025)) Anala Kumar Rao @ A. Kumar Rao (In BLAPL No.3113 of 2025) Mr. Bibekananda Bhuyan, Sr. Adv. Along with Mr. Sourav Suman Bhuyan, Adv. Mr. Byomakesh Tripathy, Adv. Union of India -versus- …. Opposite Party(s) Mr. Avinash Kedia, Jr. S.C. (For CGST) CORAM: DR. JUSTICE S.K. PANIGRAHI ORDER 30.05.2025 Dated 15.01.2025 Police Station
Decision
Order No. 03. F.I.R. No. F. No.DGGI/OI NT/INTL/118 8/2024 dated 15.01.2025 No. and Case Courts’ Name 2(c)CC Case No.06 of 2025 corresponding to F. No.DGGI/OINT/INT L/1188/2024 dated 15.01.2025 pending court of in the learned S.D.J.M., Bhubaneswar Sections Sections 132(1)(b), 132(1)(c), 132(1)(f), 132(1)(I), and 132(5) of the CGST Act, 2017. 1. Both the matters are taken up through hybrid arrangement. Page 1 of 8 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 30-May-2025 17:08:08 2. Heard learned counsel for the parties. 3. The present bail petitions arise from 2(c) CC Case No.06 of 2025, registered pursuant to F. No. DGGI/INTL/1188/2024 dated 15.01.2025, pending before the Ld. S.D.J.M., Bhubaneswar. The case concerns allegations under Sections 132(1)(b), 132(1)(c), 132(1)(f), 132(1)(I), and 132(5) of the CGST Act, 2017 against M/s Radha Raman Traders for fraudulent availment and passing of Input Tax Credit (ITC) without actual receipt of goods. The firm is said to have generated E-way bills for transport of goods such as hot-rolled bars (HSN 7213) and amine compounds (HSN 29215190), but investigation revealed that the corresponding vehicles had not passed any toll plazas between Ganjam and Khordha, casting doubt on the physical movement of goods. Further, the firm’s inward supplies as per GSTR-2A/2B were significantly lower (₹9.16 lakh in FY 2023–24 and ₹1.92 lakh in FY 2024– 25) compared to the ₹11.97 crore ITC claimed in GSTR-3B. Based on the investigation led by the DGGI, the present petitioners, A. Kumar Rao (employee) and Samir Kumar Sahu (proprietor), were arrested and remanded to judicial custody on 15.01.2025. Their bail applications were rejected by both the Ld. SDJM and the 2nd Additional Sessions Judge, Bhubaneswar. 4. The petitioner, A. Kumar Rao, asserts that he is merely an employee of Samir Kumar Sahu, the proprietor of M/s Radha Raman Traders, and had no involvement in the day-to-day operations or financial dealings of the firm. He submits that his arrest is based on a false implication, Page 2 of 8 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 30-May-2025 17:08:08 possibly motivated by external factors, and that no incriminating articles were recovered from his custody. He maintains his complete innocence and claims that no prima facie case under the CGST Act has been established against him. 5. The petitioner, Samir Kumar Sahu, is the Proprietor of M/s Radha Raman Traders, and contends that he has been falsely implicated in allegations of fraudulent ITC without any proper assessment of invoices or transactional documents. It is argued that the allegations pertain to availment of ITC on invoices without physical receipt, not tax evasion, and that taxes were duly paid on output supplies. He relies on Section 16(2)(b) of the CGST Act and Section 31(1)(b) of CGST / Section 10(1)(c) of IGST Act, which recognize constructive delivery and allow ITC based on valid documentation, even without physical movement. The case is largely documentary and electronic in nature, involving official witnesses, leaving no scope for tampering or intimidation. He submits that he is a permanent resident, the investigation has progressed substantially, and his continued incarceration is unwarranted. 6. The prosecution contends that the accused persons, particularly Samir Kumar Sahu, have orchestrated a systematic and deliberate scheme to defraud the Government by availing and passing on fraudulent Input Tax Credit (ITC) without any actual supply of goods or services. The firm, M/s Radha Raman Traders, has declared significantly inflated ITC in GSTR-3B returns compared to what is reflected in GSTR-2A. Further, it is alleged that commissions were earned on fake invoices, and a clear Page 3 of 8 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 30-May-2025 17:08:08 money trail has been established through substantial bank transfers to accounts of Samir Kumar Sahu and his close relatives from co-accused and third parties. Statements recorded under Section 70 of the CGST Act from multiple recipient firms confirm the receipt of fake ITC and voluntary repayment of around ₹4 crore via DRC-03 forms. This, according to the prosecution, evidences the existence of a well- coordinated racket, causing direct and serious loss to the exchequer. 7. It is further argued that offences under Sections 132(1)(b), 132(1)(c), 132(1)(f), and 132(1)(i) of the CGST Act are cognizable and non-bailable, falling under the scope of Section 132(5). Given the ongoing nature of the investigation and the involvement of a large number of recipient firms, the possibility of tampering with digital records, influencing witnesses, or derailing the investigation cannot be ruled out. The accused are said to be in a position to interfere with crucial elements of evidence if released. The prosecution thus submits that in view of the gravity of the offence, scale of the financial fraud, and the risk to the integrity of the investigation, this is not a fit case for grant of bail at this stage. 8. Upon perusal of the case records, including the Preliminary Report, E- way bill records, GSTR filings, and statements of officials of the Directorate General of GST Intelligence (DGGI), this Court is of the considered view that the allegations, although at the stage of investigation, are serious in nature, involving an organized and Page 4 of 8 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 30-May-2025 17:08:08 deliberate scheme to defraud the exchequer through fraudulent availment and passing of Input Tax Credit (ITC). 9. It is pertinent to note that the offence under Section 132(1)(b), 132(1)(c), and 132(1)(f) of the CGST Act, 2017 pertains to issuance and use of fake invoices without actual supply of goods or services, which has a direct bearing on public revenue and financial integrity of the nation. These offences, if the amount exceeds ₹5 crore, are categorized as non-bailable and cognizable under Section 132(5) of the Act. In the present case, the quantum of wrongly availed ITC is over ₹11.97 crore, clearly crossing the statutory threshold for denial of bail at the threshold stage. 10. There are a plethora of judicial precedents which state that economic offences require a different approach, as they are committed with cool calculation and have serious repercussions on public interest. One such case is Y.S. Jagan Mohan Reddy v. C.B.I.1 wherein the Supreme Court held as under: “15. Economic offences constitute a class apart and need to be visited with a different approach in the matter of bail. The economic offence having deep rooted conspiracies and involving huge loss of public funds needs to be viewed seriously and considered as grave offences affecting the economy of the country as a whole and thereby posing serious threat to the financial health of the country. 16. While granting bail, the court has to keep in mind the nature of accusations, the nature of evidence in support thereof, the severity of the punishment which conviction will entail, the character of the accused, circumstances which are peculiar to the accused, reasonable possibility of 1 AIR 2013 SUPREME COURT 1933. Page 5 of 8 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 30-May-2025 17:08:08 securing the presence of the accused at the trial, reasonable apprehension of the witnesses being tampered with, the larger interests of the public/State and other similar considerations.” 11. Likewise, in the case of State of Gujarat v. Mohanlal Jitamalji Porwal and Anr.2 the Supreme Court, while discussing about the serious repercussions of economic offences held as under: “5....The entire Community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the Community can be manifested only at the cost of forfeiting the trust and faith of the Community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye unmindful of the damage done to the national economy and national interest….” 12. What emerges on a closer reading of the case materials is a pattern that raises more questions than answers. The transactions declared by M/s Radha Raman Traders, on record, suggest a substantial volume of trade. However, the supporting physical movement of goods appears either absent or unverifiable. The toll data, or rather the lack of it, stands out. Given the distance and route involved, the fact that transport vehicles allegedly did not cross a single toll plaza between Ganjam and Khordha naturally invites deeper scrutiny. 2 1987 AIR 1321. Page 6 of 8 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 30-May-2025 17:08:08 13. With respect to petitioner A. Kumar Rao, the plea that he functioned only as an employee, disconnected from the financial architecture of the firm, cannot be assessed in isolation. The nature of offences under the CGST Act often involves layered responsibility, and at this stage, material on record does not convincingly exclude his operational role. Whether his involvement was incidental or deliberate remains a matter for trial, but for present purposes, the proximity of his duties to the activities under investigation does weigh against immediate release. 14. Petitioner Samir Kumar Sahu has placed reliance on legal provisions that recognise constructive delivery and documentary entitlement. While such arguments are legally plausible, the present stage of proceedings is not one where the finer aspects of invoice validity or input matching can be finally adjudicated. The significant disparity between the ITC claimed in GSTR-3B and the input tax reflected in GSTR-2A/2B, alongside the absence of physical verification markers, is sufficient at this stage to establish a prima facie case worth investigating further without external interference. 15. The nature of the evidence, largely electronic and documentary, presents unique vulnerabilities. Unlike physical evidence, digital trails can be influenced with relative ease, and access to cloud-stored records or backdated documentation cannot be entirely ruled out. This concern, while not conclusive of guilt, tilts the balance towards caution when the liberty of the accused is weighed against the integrity of the ongoing investigation. Page 7 of 8 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 30-May-2025 17:08:08 16. The Petitioners’ claim that they are permanent residents and unlikely to abscond is noted. However, risk to the process of investigation is not only about physical disappearance. It includes the ability to influence data, coordinate narratives, and weaken the evidentiary foundation in subtle ways. In financial cases of this nature, control over systems or knowledge of procedural gaps can be just as critical. 17. This Court is conscious of the principle that pre-trial detention should not be punitive. However, in matters involving substantial public funds and systemic breach of trust, restraint is warranted. The gravity of allegations, the scale of suspected financial irregularities, and the ongoing nature of the investigation collectively suggest that this may not be the appropriate stage to extend the relief sought. 18. Both the BLAPLs are, accordingly, dismissed. Vacation Judge ( Dr. S.K. Panigrahi ) Page 8 of 8