Bail in alleged GST input tax credit fraud may be granted on case-specific facts with stringent monetary conditions.

Bail in a CGST prosecution involving alleged fake firms and wrongful input tax credit turned on the case-specific assessment of the alleged economic offence, the stage of the proceedings, and the petitioner's custody since August 2022. Without expressing any view on the merits, the Rajasthan HC considered these circumstances sufficient to enlarge the petitioner on bail. The relief was made conditional on furnishing bail bonds and depositing Rs. 5 crores before the respondent department under protest, alongside the usual undertaking to appear before the trial court.

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Issues: Whether bail should be granted in a prosecution under the Central Goods and Services Tax Act, 2017, alleged to involve large-scale wrongful availment of input tax credit, and if so on what terms.

Analysis: The accusation was of evasion of tax through creation of fake firms and wrongful availment of a substantial input tax credit benefit. The Court took note of the nature of the alleged economic offence, the stage of the case, and the fact that the petitioner had remained in custody since August 2022. Without expressing any opinion on the merits, the Court considered it appropriate to enlarge the petitioner on bail subject to a monetary condition and the usual undertaking to appear before the trial court.

Conclusion: Bail was granted to the petitioner subject to furnishing bail bonds and depositing Rs.5 crores before the respondent department under protest.

Ratio Decidendi: In a fiscal prosecution involving alleged large-scale tax evasion, bail may be granted on a case-specific assessment of circumstances, including custody period and stage of trial, and the Court may impose stringent monetary conditions without adjudicating the merits.

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