GST fraud bail refused where ongoing investigation, active involvement, and risk of tampering with electronic evidence were established.

Bail under the CGST Act was refused in a case alleging bogus firms, fake input tax credit and fraudulent refund claims, because the investigation was still ongoing and the material indicated active involvement in creating and operating the firms through concealed identity and electronic communications. The Court treated the allegations as a serious economic offence involving substantial tax evasion and held that release on bail carried a real risk of absconding, tampering with electronic evidence and influencing witnesses. It also held that the challenge to the vires of Sections 69 and 132 did not, by itself, justify bail, and found the case fit for arrest in exceptional circumstances.

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Issues: Whether bail should be granted to a person arrested under Section 132 of the Central Goods and Services Tax Act, 2017, in a case involving alleged bogus firms, fake input tax credit and fraudulent refund claims.

Analysis: The Court noted that the investigation was still continuing, relevant links in the chain of events were yet to be completed, and the material collected during investigation indicated active involvement of the petitioner in creating and operating bogus firms through concealed identity and electronic communications. It found that the allegations disclosed a serious economic offence involving substantial tax evasion and fraudulent refunds, and that the petitioner, if enlarged on bail, would be in a position to abscond, tamper with electronic evidence and influence witnesses. The Court also held that the case fell within the category of exceptional circumstances where arrest under Sections 69 and 132 of the Act was justified, and that the challenge to the vires of those provisions did not by itself warrant bail.

Conclusion: Bail was refused and the request for release was rejected.

Final Conclusion: The petition failed because the allegations disclosed a grave economic offence with continuing investigation and sufficient material suggesting active participation, making release on bail inappropriate.

Ratio Decidendi: In a serious GST evasion case, bail may be declined where the investigation is ongoing and the material shows active involvement, a real risk of absconding, and a likelihood of tampering with evidence or influencing witnesses.

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