Regular bail in CGST fraud refused where prima facie fake invoice ITC and arrest authorisation were supported by material.

Regular bail was refused in a CGST prosecution where investigation disclosed prima facie fraudulent availment and passing on of ineligible input tax credit through fake invoices without movement of goods. The Court treated the alleged conduct as a serious economic offence, relied on witness statements, the applicant's own statement, and document verification, and found a real risk of destruction of evidence and witness influence while investigation remained ongoing. The challenge to arrest also failed because the material before arrest was held sufficient to satisfy the Commissioner's reasons to believe, and the arrest authorisation was not vitiated on that ground.

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Issues: Whether the applicant was entitled to regular bail in view of the alleged fraudulent availment and passing on of ineligible input tax credit; whether the arrest and investigation under the CGST Act lacked the requisite lawful basis on the ground that the Commissioner did not form the necessary reasons to believe.

Issue (i): Whether the applicant was entitled to regular bail in view of the alleged fraudulent availment and passing on of ineligible input tax credit.

Analysis: The material collected in investigation indicated that the applicant, a director of a gold trading company, was alleged to have availed and passed on substantial ineligible input tax credit by using fake invoices without movement of goods. The statements of witnesses and the applicant's own statement did not support the claimed genuineness of the transactions. The Court treated the offence as an economic offence involving a large amount and noted the apprehension of destruction of evidence and influence on witnesses while the investigation was still in progress.

Conclusion: Bail was not granted; the issue was decided against the applicant.

Issue (ii): Whether the arrest and investigation under the CGST Act lacked the requisite lawful basis on the ground that the Commissioner did not form the necessary reasons to believe.

Analysis: The Court found that enquiry material, statements of the applicant and witnesses, and the documents verified prior to arrest furnished sufficient basis for the statutory satisfaction required for arrest. It held that the authorization of the Inspector was traceable to the Commissioner's reasons to believe under the arrest framework and rejected the challenge that the arrest memorandum vitiated the proceedings on this ground.

Conclusion: The challenge to the arrest basis failed and the issue was decided against the applicant.

Final Conclusion: The application for regular bail was refused because the allegations disclosed a serious economic offence, the investigation was ongoing, and the Court found sufficient material to justify continued custody at that stage.

Ratio Decidendi: In a serious economic offence under the CGST regime, bail may be refused where investigation reveals prima facie material of fraudulent ITC availment and there exists a real apprehension of tampering with evidence or influencing witnesses, and the statutory arrest authorization is supported by the Commissioner's requisite reasons to believe.

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