Businessman Secures Bail in CGST Fraud Case After 9 Months in Custody, Challenging Allegations of Fraudulent Input Tax Credit

HC granted regular bail in a CGST fraud case involving alleged fraudulent input tax credit of Rs. 5.65 crores. Despite department's evidence suggesting petitioner's involvement in creating bogus supplier firms, the court considered the 9-month custody period and potential lengthy trial. Bail was granted upon furnishing satisfactory bonds, emphasizing that continued detention would not serve a meaningful purpose.

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Issues: Grant of regular bail in a case under Section 132 of the Central Goods and Services Tax Act, 2017.

In this judgment, the petitioner sought regular bail in a complaint under Section 132 of the CGST Act, 2017, for allegedly availing input tax credit fraudulently. The Directorate General of GST Intelligence accused the firm of availing credit from non-existent suppliers without receiving goods, amounting to Rs. 5.65 crores. Investigation revealed discrepancies in supplier details, with some suppliers admitting to issuing invoices without supplying goods. The offense was deemed cognizable and non-bailable under Section 132(1)(b)(c)(i)(3)(5) of the Act.

The petitioner argued being falsely implicated, with insufficient evidence linking him to the offense. It was highlighted that the maximum punishment was 5 years, and the petitioner had already spent about 9 months in custody. The department had recovered a portion of the allegedly fraudulent amount, reducing the alleged fraud to around Rs. 3.6 crores. The counsel for the petitioner emphasized the lack of credible evidence against the petitioner.

Opposing the petition, the CGST counsel presented evidence suggesting the petitioner's direct involvement in creating 23 bogus supplier firms, with details such as mobile number and email matching those of the petitioner. Despite the petitioner being in custody for 9 months, only 2 out of 37 prosecution witnesses had been examined during pre-charge evidence.

After considering the submissions, the Court acknowledged the petitioner's extended custody and the potential trial duration due to numerous prosecution witnesses. Without delving into the merits of the case, the Court granted the petition, ordering the petitioner's release on regular bail upon furnishing satisfactory bail or surety bonds to the trial court or relevant magistrate. The decision was based on the view that further detention of the petitioner would not serve any meaningful purpose given the circumstances of the case.

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