Rajasthan High Court’s Approach to Pre-Arrest Bail in Major GST Evasion Cases

Background of the Case

The matter before the Rajasthan High Court in Premchand Jain Vs Union of India concerned a pre-arrest (anticipatory) bail plea under Section 482 of the BNSS in relation to Criminal Case No. DGGI/INV/GST/574/2025-Gr.I. The case was registered for offences under Sections 132(1), 132(1)(i)(iv) and 132(5) of the Central Goods and Services Tax Act, 2017.

Two individuals approached the Court:

  • Petitioner No.1 – Premchand Jain, Director of:

    • M/s Prem Jain Ispat Udyog Pvt. Ltd. (M/s PJIUPL), and
    • M/s Tanay Dhyata Steel Concast Ltd. (M/s TDSCL)

  • Petitioner No.2 – Dhyata Jain, son of Petitioner No.1 and also a Director in the same companies.

The Directorate General of Goods and Services Tax Intelligence (DGGI) alleged that, acting through these two companies, the petitioners were involved in clandestine clearances of TMT bars, resulting in GST evasion of Rs. 20,63,97,337.

Petitioners’ Submissions Before the Court

Core defence put forward

Counsel for the petitioners argued that:

  • The petitioners were wrongly implicated and there was no credible material to show their direct involvement in any fraudulent activity.
  • The accusations were said to be based mainly on the statement of one Manoj Vijay, proprietor of M/s Mahaveer Trading Company, who was alleged to have supplied scrap material/TMT bars without issuance of invoices.
  • It was claimed that:
    • The petitioners had no connection with Manoj Vijay or M/s Mahaveer Trading Company.
    • The only link sought to be created was through the statement of Mr. Gyan Chand, General Manager of M/s PJIUPL and authorised signatory of M/s TDSCL, who reportedly stated that certain transactions happened under the instructions of Petitioner No.1.
    • Apart from this single allegation, there was no substantive prima facie material indicating conscious involvement of the petitioners.

Part payment of alleged tax dues

The petitioners further submitted that:

  • Against the alleged tax evasion of Rs. 20,63,97,337, they had already deposited Rs. 10,38,98,566 with the Department.
  • This, according to them, showed bona fide conduct and willingness to comply with the law.

Cooperation with investigation and needlessness of arrest

It was also argued that:

  • The petitioners were ready to fully cooperate with the investigation.
  • Pursuant to directions issued by a Coordinate Bench of the High Court, they had appeared before the concerned authority.
  • Once they had joined the investigation, custodial interrogation was not required, and arrest would serve no useful purpose.
  • On this basis, they requested that pre-arrest bail be granted.

Case law relied upon by the petitioners

To strengthen their plea, the petitioners referred to several decisions of the Supreme Court and High Courts, including: