GST fake-invoice fraud and bogus Input Tax Credit allegations justified refusal of bail despite incomplete assessment proceedings.

In a GST fake-invoice and bogus Input Tax Credit prosecution, the HC held that bail could be refused where the record disclosed a prima facie substantial economic offence involving fictitious firms, fake invoices, wrongful credit availment and passing on of credit. The court relied on active involvement, alleged tax evasion, non-cooperation with investigation, the presence of co-accused still at large, and the risk of tampering with evidence or influencing witnesses. It also rejected the argument that arrest or prosecution was impermissible because assessment or tax determination had not been completed, holding that offences under the GST regime may proceed once sufficient grounds exist. Bail was therefore rejected.

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Issues: Whether the petitioner, facing allegations of a large-scale GST fake-invoice and bogus Input Tax Credit fraud, was entitled to bail under Section 439 of the Code of Criminal Procedure, 1973.

Analysis: The allegations disclosed a prima facie case of a substantial economic offence involving creation of fictitious firms, issuance and use of fake invoices, and wrongful availment and passing on of Input Tax Credit. The materials showed active involvement, a high quantum of alleged tax evasion, non-cooperation with investigation, existence of co-accused still at large, and the possibility of tampering with evidence or influencing witnesses. The challenge based on alleged procedural irregularity in arrest and on the contention that assessment or determination of tax liability had not yet been completed was rejected. The reasoning proceeded on the basis that offences under Section 132 of the GST regime are not dependent upon completion of assessment and that arrest and prosecution could proceed when sufficient grounds existed.

Conclusion: Bail was not granted and the petition was rejected.

Ratio Decidendi: In cases of serious GST fraud involving fake invoices and wrongful Input Tax Credit, bail may be refused where the record discloses a prima facie economic offence, active involvement, risk of absconding or evidence tampering, and the prosecution is not barred merely because assessment proceedings are incomplete.

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