Anticipatory bail in alleged fake input tax credit case allowed with strict deposit and cooperation conditions

Pre-arrest protection in an alleged fake input tax credit case was considered appropriate because the tax liability had not been finally adjudicated, no show cause notice or assessment had been completed, and the investigation was still at an initial, largely documentary stage. The applicants had already made a partial deposit, there was no material showing habitual offending or a risk of absconding, and their attendance could be secured by conditions. Anticipatory bail was therefore granted, but only subject to a substantial deposit and strict safeguards requiring cooperation with the investigation.

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Issues: Whether anticipatory bail should be granted to the applicants in relation to allegations of fake input tax credit and, if so, on what conditions.

Analysis: The application arose from allegations of availing and passing on inadmissible input tax credit through fictitious firms. The liability had not yet been finally adjudicated, no show cause notice or assessment had been completed, and the investigation was at an initial stage with evidence stated to be largely documentary. The applicants had already deposited part of the alleged amount, there was no material showing habitual offending or likelihood of absconding, and their presence could be secured through conditions. In these circumstances, pre-arrest protection was considered appropriate, but only with a substantial deposit and strict safeguards to ensure cooperation with the investigation.

Conclusion: Anticipatory bail was granted in favour of the applicants, subject to deposit of Rs. 10 crores and compliance with the imposed conditions.

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