The Hon’ble Gujarat High Court in the case of Rohitkumar Parsotambhai Sanghani v. State of Gujarat & Anr. [R/Criminal Misc. Application No. 2111 of 2026, order dated March 3, 2026] held that an Advocate accused in a GST input tax credit (ITC) fraud case was entitled to regular bail where his role appeared confined to compliance-related activities, the charge-sheet had already been filed, and he did not appear to be a major participant in the alleged conspiracy.
Facts:
Rohitkumar Parsotambhai Sanghani (“the Applicant”) is an Advocate who had allegedly filed GST returns for certain companies. The allegation against him was that he had filed fraudulent returns despite knowing that the companies for which such returns were filed were non-existent entities.
State of Gujarat &Anr. (“the Respondent”) initiated proceedings against the Applicant for offences punishable under Sections 132(1)(b) and 132(1)(c) of the Central / Gujarat Goods and Services Tax Act.
The Applicant contended that considering the role attributed to him and the nature of the allegations, he should be enlarged on regular bail and that no useful purpose would be served by keeping him in jail for an indefinite period. He further submitted that he was ready and willing to abide by any conditions imposed by the Court.
The Respondent contended that looking to the nature of the offence and the role attributed to the Applicant, the Court should not exercise discretion in favour of the Applicant and the bail application should be dismissed.
The Applicant’s grievance was that despite the investigation being completed and the charge-sheet having been filed, he continued to remain in custody. Accordingly, he approached the High Court by filing an application for regular bail under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023.
Issue:
Whether an Advocate accused of filing GST returns for allegedly fake entities involved in fraudulent availment of ITC is entitled to regular bail?
Held:
The Hon’ble Gujarat High Court in R/Criminal Misc. Application No. 2111 of 2026 held as under:
- Observed that, the Applicant is an advocate and the allegation levelled is that he had filed fraudulent returns knowing that the companies for which the returns were being filed were absolutely non-existent.
- Noted that, prima facie the Applicant had given a statement under Section 70 of the Act whereby he admitted that he was aware that some of the firms were non-functional and fake entities created solely for fraudulent availment and passing of input tax credit without any actual supply of goods.
- Noted that, the role attributed to the Applicant was of having performed compliance activities and that the financial benefit received by the Applicant appeared to be only slightly more than what a normal consultant would ordinarily charge.
- Observed that, beyond the same it does not appear that the Applicant was part of the conspiracy or was in any way a major player in the entire alleged fraud.
- Observed that, considering that the investigation is over and having regard to the role attributed to the applicant and the maximum punishment that could be imposed, the Court was inclined to consider the application. In the facts and circumstances of the case and considering the nature of the allegations made in the FIR, this was a fit case to exercise discretion and enlarge the applicant on regular bail.
- Directed that, the Applicant be released on bail upon executing a bond of Rs. 50,000 with one surety of like amount, subject to conditions including: not misusing liberty, not acting in a manner injurious to the prosecution, surrender of passport within one week, not leaving the State of Gujarat without prior permission, furnishing residential address, marking presence once a month for six months before the concerned police station.
Our Comments:
The Hon’ble Supreme Court in Sanjay Chandra v. Central Bureau of Investigation [(2012) 1 SCC 40], held that the object of bail is to secure the appearance of the accused at trial and that detention before conviction should not be punitive, particularly where the investigation is complete and the accused is not likely to tamper with evidence. The Supreme Court further observed that the seriousness of the charge alone cannot justify prolonged pre-trial detention.
The reasoning adopted in the present case aligns with the above principle, where the Supreme Court emphasized that once the investigation is complete and the charge-sheet is filed, continued incarceration must be justified by compelling circumstances. In the present case, the High Court noted that the role attributed to the applicant was primarily compliance-related and that he did not appear to be a major participant in the alleged conspiracy.
The approach adopted by the High Court reflects the consistent judicial view that bail is the rule and jail is the exception, particularly in economic offences where the investigation has been completed and the accused is not shown to be the principal conspirator.
Relevant Provisions:
Section 132(1)(b) and 132(1)(c) of the Central Goods and Services Tax Act, 2017
“132. Punishment for certain offences.—
(1) Whoever commits any of the following offences, namely:
(b) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax;
(c) avails input tax credit using such invoice or bill referred to in clause (b) or fraudulently avails input tax credit without any invoice or bill;”
Section 70 of the Central Goods and Services Tax Act, 2017
“70. Power to summon persons to give evidence and produce documents.-
(1) The proper officer under this Act shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil Procedure, 1908 (5 of 1908).
(1A) All persons summoned under sub-section (1) shall be bound to attend, either in person or by an authorised representative, as such officer may direct, and the person so appearing shall state the truth during examination or make statements or produce such documents and other things as may be required.
(2) Every such inquiry referred to in sub-section (1) shall be deemed to be a “judicial proceedings” within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860).”
Section 483(1) of the Bharatiya Nagarik Suraksha Sanhita, 2023
“483. Special powers of High Court or Court of Session regarding bail
(1) A High Court or Court of Session may direct,-
(a) that any person accused of an offence and in custody be released on bail, and if the offence is of the nature specified in sub-section (3) of section 480, may impose any condition which it considers necessary for the purposes mentioned in that sub-section
(b) that any condition imposed by a Magistrate when releasing any person on bail be set aside or modified:
Provided that the High Court or the Court of Session shall, before granting bail to a person who is accused of an offence which is triable exclusively by the Court of Session or which, though not so triable, is punishable with imprisonment for life, give notice of the application for bail to the Public Prosecutor unless it is, for reasons to be recorded in writing, of opinion that it is not practicable to give such notice:
Provided further that the High Court or the Court of Session shall, before granting bail to a person who is accused of an offence triable under section 65 or sub-section (2) of section 70 of the Bharatiya Nyaya Sanhita, 2023, give notice of the application for bail to the Public Prosecutor within a period of fifteen days from the date of receipt of the notice of such application.”
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