The Rajasthan High Court has refused to grant bail to an accused citing statements coupled with whatsapp chats establishes prima facie role in Goods and Service Tax (GST) fraud.
The bench of Justice Praveer Bhatnagar, allegedly involved in a massive fake invoicing and GST fraud case, held that the principle of parity cannot be invoked mechanically merely because a co-accused has secured bail from the Supreme Court. Where the accused is alleged to have played a significantly graver role in the conspiracy, each bail application must be decided on its own facts and evidence.
The petitioner had been arrested by the Directorate General of GST Intelligence (DGGI), Jaipur Zonal Unit, in connection with offences under Sections 132(1)(a), 132(1)(f), 132(1)(h), and 132(1)(l) of the Central Goods and Services Tax Act, 2017.
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According to the prosecution, the DGGI unearthed a large-scale GST fraud involving the creation and operation of multiple fictitious firms, issuance of fake tax invoices, generation of bogus e-way bills, and fraudulent availment and passing on of Input Tax Credit (ITC). The investigating agency alleged that the accused orchestrated a sophisticated network that facilitated tax evasion amounting to approximately ₹48.41 crore on transactions having a taxable value of nearly ₹268.80 crore.
The petitioner was arrested on 13 August 2025, and his first bail application had already been rejected by the High Court in April 2026 after considering the nature of the allegations and the evidence collected during the investigation.
In the second bail application, the petitioner argued that there had been a material change in circumstances because a co-accused, whose role was allegedly similar, had subsequently been granted bail by the Supreme Court. On that basis, the petitioner claimed he was entitled to bail on the principle of parity.
The defence further contended that the prosecution was primarily based on statements recorded under Section 70 of the CGST Act; there was no independent corroborative evidence linking the petitioner to the alleged offences; investigation had been completed and the complaint had already been filed; all documentary and electronic evidence had been seized, eliminating any possibility of tampering; only one out of twenty-eight prosecution witnesses had been examined, indicating that the trial would take considerable time; and continued incarceration violated the petitioner’s right to personal liberty under Article 21 of the Constitution.
The petitioner also argued that no show cause notice had been issued under Sections 73 or 74 of the CGST Act before initiation of prosecution and that he had already undergone custody exceeding six months, which he claimed warranted release on bail.
The DGGI strongly opposed the application, contending that the petitioner was not similarly situated to the co-accused who had obtained bail.
According to the investigating agency, the petitioner was the principal architect of the alleged GST fraud and played the dominant role in creating fake firms, generating fictitious invoices and e-way bills, and facilitating fraudulent ITC claims.
The department further relied upon documentary evidence, electronic records, WhatsApp chats, statements recorded under Section 70 of the CGST Act, and other seized material to establish the petitioner’s active participation in the conspiracy. It also argued that one of the fake firms had been transferred by the co-accused to the petitioner and was thereafter used for issuing bogus invoices.
The High Court rejected the principal argument based on parity and held that a successive bail application can succeed only if there is a substantial change in circumstances directly affecting the merits of the case.
Relying upon the Supreme Court’s decision in Sagar v. State of Uttar Pradesh, the Court reiterated that parity is not an automatic ground for grant of bail. Instead, courts must independently evaluate the role attributed to each accused, the gravity of allegations, and the evidence available against them.
The Court observed that although the co-accused had obtained bail from the Supreme Court, the material collected during investigation suggested that the present petitioner occupied a far more significant position in the alleged conspiracy.
After examining the record, the Court observed that the investigation prima facie indicated the petitioner’s involvement in establishing fictitious business entities, generating fake invoices and e-way bills, and facilitating clandestine movement of goods to enable fraudulent GST benefits.
The Court noted that documentary evidence, electronic evidence, WhatsApp conversations, and statements recorded during investigation collectively disclosed the petitioner’s direct and substantial role in the alleged tax fraud. Consequently, his case could not be equated with that of the co-accused who had secured bail.
The Court also reiterated the settled legal principle that economic offences constitute a distinct class of offences because of their serious impact on public revenue and the national economy.
Referring to the Supreme Court’s decision in Y.S. Jagan Mohan Reddy v. CBI, the Court observed that offences involving deep-rooted financial conspiracies require a stricter approach while considering bail applications. The magnitude of the alleged GST evasion, the petitioner’s alleged leadership role, and the material gathered during investigation justified continued custody at this stage.
Finding no substantial change in circumstances since the rejection of the earlier bail application, the Rajasthan High Court dismissed the second bail plea.
The Court concluded that the subsequent grant of bail to another accused did not create an automatic entitlement to similar relief, particularly where the present petitioner was alleged to be the kingpin of the fraudulent GST syndicate and faced significantly graver allegations supported by prima facie evidence.
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