The Sessions Court of Greater Bombay has denied bail in a dual accounting case involving alleged Goods and Service Tax (GST) evasion through parallel records.
The bench of Prashant C. Kale (Additional Sessions Judge) has observed that the applicant, Popatlal Babulal Sanghavi was allegedly involved in maintaining a dual accounting system. One system (WinMoney) contained records of the actual business transactions, while the other (Prime) reflected only a portion of those transactions. This parallel system appeared to have been maintained with the intent to carry out clandestine sales and purchases, thereby evading payment of GST, while simultaneously preserving accurate accounts for internal or other business purposes.
The proceedings were initiated against the applicant by the Directorate General of GST Intelligence (DGGI), Gurugram Zonal Unit for offences under Section 132(1)(a), (f), and (i) of the Central Goods & Services Tax Act, 2017. The applicant was formally arrested during a search and seizure operation being conducted at the office premises of M/s Payal Gold Private Limited. The applicant was produced before the court of Additional Chief Judicial Magistrate who remanded the applicant to judicial custody. The allegations involve GST evasion worth INR 445.96 Crores.
The applicant accused is having and using two softwares at his office (M/s. Pyala Gold Pvt. Ltd.). One is “Prime” and other is “WinMoney”. The investigation reflects that all entries recorded in Prime are also reflected in WinMoney, however several supply entries in “Win Money” are absent in “Prime,” by evidencing unreported supplies effected without issuance of proper GST documentation, in direct violation of the CGST Act.
The department has produced the note of reasons to believe as contemplated under Section 69 (1) of the CGST Act. Further the arrest memo, grounds of arrest alongwith reasons for arrest and the reason to believe letter, filed alongwith the bail application demonstrates due compliance of the statutory provisions are made by the respondent.
The summons, arrest memo, grounds of arrest and reason of arrest were recovered from the possession of the applicant /accused in presence of two witnesses as per Jama Talashi.
The applicant contended that the arrest of the applicant was ex facie illegal, arbitrary and contrary to law. The applicant was kept under illegal detention for over 49 hours prior to being formally arrested, by violating the provisions of Article 22(2) of the Constitution of India and Section 58 of the BNSS. Further, the reasons to believe for authorization to arrest issued by the Additional Director General DGGI, Gurugram Zonal Unit fails to disclose cogent “reasons to believe” as mandated by law and precedents of the Supreme Court of India, rendering the arrest of the applicant bad in law. The alleged liability is speculative based on unverified entries in the WinMoney software, without any corroborative evidence or determination of tax liability under Sections 74 and 76 of the CGST Act.
The court while dismissing the bail held that the investigation in this matter is in progress and is at a crucial stage. The statements of the employees of M/s Payal Gold Pvt. Ltd. recorded under Section 70 of the CGST Act demonstrates the omissions / commissions by maintaining two parallel accounting software on the part of the applicant /accused being the director of the company. Certainly, the statements recorded under Section 70 of the CGST Act are used primarily as tools for investigations.
The court stated that the accusations and the amount of tax evasion is extremely high in quantity. There is every possibility of tampering of the evidence or influencing / intimidating the witnesses, if the applicant/accused is released on bail.
Case Details
Case Title: Popatlal Babulal Sanghavi Versus The State of Maharashtra
Case No.: Criminal Bail Application No. 2340 Of 2025
Date: 18th September, 2025
Counsel For Petitioner: Senior Advocate Abad Ponda
Counsel For Respondent: SPP R.K. Pathak
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