Anticipatory bail in GST fraud cases may be refused where paper transactions, flight risk, and non-compliance are shown.

Anticipatory bail under Section 438 CrPC was considered in alleged CGST offences, and the objection based on the cited Supreme Court precedent was rejected because that precedent concerned repeated non-appearance after summons and did not bar pre-arrest protection in every GST case. On the facts, the Court found a prima facie large-scale input tax credit fraud through paper transactions, no genuine supply of goods, diversion of funds, and a risk of flight, including one accused's attempt to travel abroad and non-compliance with bail conditions. Anticipatory bail was therefore treated as an extraordinary remedy unsuitable on these facts, and the earlier grant of protection was cancelled.

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Issues: (i) Whether anticipatory bail under Section 438 of the Code of Criminal Procedure, 1973 could be declined in proceedings arising from alleged offences under the Central Goods and Services Tax Act, 2017 in view of the Supreme Court's observations in the cited precedent; (ii) Whether the accused were entitled to anticipatory bail, and whether the grant of such bail to them was liable to be cancelled, on the facts showing a large-scale GST input tax credit fraud and an attempt by one accused to leave the country.

Issue (i): Whether anticipatory bail under Section 438 of the Code of Criminal Procedure, 1973 could be declined in proceedings arising from alleged offences under the Central Goods and Services Tax Act, 2017 in view of the Supreme Court's observations in the cited precedent.

Analysis: The cited Supreme Court observations were made in a context where persons had been summoned and were not appearing despite repeated summons. In the present matter, one co-accused had already been arrested, creating a genuine apprehension of arrest. The later Supreme Court order was also held not to operate retrospectively against the earlier bail order. The Court further noted that it could exercise its jurisdiction under Article 226 of the Constitution of India to consider pre-arrest protection, and therefore the submission that anticipatory bail was barred in all such cases was not accepted.

Conclusion: The objection based on the cited Supreme Court decision was rejected.

Issue (ii): Whether the accused were entitled to anticipatory bail, and whether the grant of such bail to them was liable to be cancelled, on the facts showing a large-scale GST input tax credit fraud and an attempt by one accused to leave the country.

Analysis: The material indicated a prima facie scheme of fraudulent availment and circulation of input tax credit through paper transactions, without genuine supply of goods, involving a very large tax amount. The investigation also disclosed absence of real business activity at the relevant premises, statements implicating the concerned persons, diversion of funds through connected entities, and in the case of one accused, violation of bail conditions by attempting to travel abroad and not complying with deposit of passport conditions. Anticipatory bail, being an extraordinary remedy, was found unsuitable on these facts, particularly in an economic offence involving substantial public loss and risk of evasion.

Conclusion: The accused were not entitled to anticipatory bail, and the earlier grant of anticipatory bail was rightly cancelled.

Final Conclusion: The challenge by the revenue succeeded, the anticipatory bail stood cancelled, and the accused's request for protection failed.

Ratio Decidendi: In a prima facie large-scale economic offence involving fraudulent input tax credit and a demonstrated risk of flight or non-compliance, anticipatory bail is an extraordinary remedy that may be refused or cancelled notwithstanding a prior bail order.

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