Investigators Lack Grounds for Continued Detention in GST Fraud Case, Interim Bail Granted to Accused

The HC granted interim bail to petitioners in a GST fraud investigation involving alleged ineligible Input Tax Credit. Despite 70 days in custody, the Court found custodial interrogation unnecessary, noting evidence was primarily documentary. Petitioners were directed to cooperate with investigation, furnish personal bonds, and not leave the country without Court permission. The interim bail order was made absolute until trial or complaint quashing.

---

---

Issues involved:
The petitioners sought regular bail in an investigation under Sections 132(1)(b) & (c) of the Central Goods and Services Tax Act 2017 regarding fraudulent availing and passing on ineligible/fake Input Tax Credit (ITC).

Details of the Judgment:
1. The respondent alleged that the petitioners, including a Director of a company, were involved in fraudulently availing and passing on ineligible ITC. The company purportedly engaged in procurement of goods attracting different GST rates, but suppliers were found non-existent. The company was accused of availing and passing on ineligible ITC amounting to Rs. 17.2 crores.

2. The petitioners had been in custody for 70 days when the matter came before the Court. Despite ongoing investigation, a complaint was hastily filed on the 60th day after Court hours. The Court granted interim bail as custodial interrogation was deemed unnecessary, and evidence was primarily documentary. The petitioners were directed to cooperate with the investigation and not leave the country without Court permission.

3. The Court directed the petitioners to be released on interim bail upon furnishing a personal bond and sureties. The legal issues raised included whether tax liability can be compounded at any stage under Section 138 of the CGST Act and if the arrest of an assessee can occur before prosecution.

4. The respondent, upon filing the complaint and taking cognizance, did not object to the order granting interim bail. The issues of law raised during arguments were left open for decision in future appropriate petitions.

5. Considering the facts and circumstances, the order granting interim bail was made absolute until the trial or complaint is quashed. The petitioners were granted liberty to raise legal issues in future proceedings.

6. The petitions were disposed of, and the order was directed to be uploaded on the Court's website.

---