Rs. 55 Crore Service Tax Evasion Case: Punjab & Haryana High Court Denies Bail

The Punjab and Haryana High Court has refused to grant regular bail to the Managing Director and Chairman-cum-Managing Director of a multi-level marketing company accused of large-scale service tax evasion amounting to nearly Rs. 55 crore, holding that the allegations disclose a serious economic offence affecting public revenue. The bench of Justice Manisha Bat while dismissing a bail petition filed by Radhey Shyam and another director of M/s Future Maker Life Care Private Limited, who were summoned to face trial under provisions of the Central Excise Act, 1944, the Finance Act, 1994, and the Central Goods and Services Tax Act, 2017 According to the prosecution, intelligence inputs received by the Directorate General of GST Intelligence (DGGI) revealed that the company was engaged in multi-level direct marketing of agricultural, health, and textile products, but had failed to properly discharge its tax liabilities. It was alleged that the company had not filed GST returns from March 2018 onwards, prompting a detailed inquiry by tax authorities. During the investigation, it emerged that between January 2015 and September 2018, the company had received an amount exceeding ₹29,59,46,96,250 from its direct sellers and members. These payments were allegedly collected as membership fees, joining charges, platform access fees, and for allotment of unique user IDs—categorised as “business support services” liable to service tax under the Finance Act, 1994. The Court noted that statements recorded under Section 70 of the CGST Act indicated that while unique user IDs were allotted on receipt of payments, invoices were raised only upon delivery of goods. However, the authorities concluded that the act of enrolling members itself constituted a taxable service. It was alleged that the company charged ₹3,750 or ₹7,500 per member but failed to pay service tax at the applicable rate of 15 percent. As per the investigation, service tax amounting to ₹54,77,88,938 for the period from October 2016 to June 2017 remained unpaid. The company had neither obtained mandatory service tax registration nor made true disclosures of its tax liability, allegedly with deliberate intent to evade payment. Following adjudication, the tax demand was confirmed, along with penalties imposed on the company and its directors, and sanction was granted to launch prosecution. The petitioners surrendered before the trial court on November 10, 2025, and were remanded to judicial custody. Their bail application was earlier rejected by the trial court, leading to the present petition before the High Court. The defence argued that the case was based entirely on documentary evidence, custodial interrogation was unnecessary, and most of the offences were bailable in nature. Reliance was placed on the Supreme Court’s decision in Satender Kumar Antil v. CBI to contend that the petitioners were entitled to bail upon surrender, especially since the maximum punishment prescribed was up to seven years. Rejecting the plea, the High Court held that economic offences form a distinct class and must be viewed seriously. Relying on the Supreme Court’s ruling in Y.S. Jagan Mohan Reddy v. CBI, the Court observed that offences involving deep-rooted conspiracies and massive loss of public funds require a different approach while considering bail. The Court also took note of the prosecution’s submission that the petitioners had failed to cooperate with the investigation, did not furnish requisite records despite repeated notices, and avoided adjudication proceedings, compelling the department to initiate criminal prosecution. It further noted that the petitioners were allegedly involved in as many as 49 FIRs registered across the country for defrauding the public. Holding that the alleged evasion of approximately ₹55 crore constituted a grave economic offence impacting the country’s financial health, the Court ruled that the benefit of bail could not be extended merely because custodial interrogation was no longer required. The bail petition was accordingly dismissed. While dismissing the petition, the High Court clarified that the observations made in the bail order were limited to the consideration of bail and should not be treated as an expression on the merits of the case, nor influence the outcome of the trial Case Details Case Title: Radhey Shyam and another Versus Assistant Commissioner, CGST Division, Hisar Case No.: CRM-M-68186-2025 Date: 24/12/2025 Counsel For Petitioner: R.S. Rai, Senior Advocate Counsel For Respondent: Saurabh Goel, Senior Panel Counsel Click Here To Read Order Read More: GST Appeal Can’t Be Rejected for Non-Filing of Hard Copy: Jammu & Kashmir High Court

Rs. 55 Crore Service Tax Evasion Case: Punjab & Haryana High Court Denies Bail

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Rs. 55 Crore Service Tax Evasion Case: Punjab & Haryana High Court Denies Bail

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