Serious economic offence in fake input tax credit cases led to refusal of bail under GST law.

Allegations of generating fake input tax credit without supply of goods under the CGST Act were treated as a serious economic offence, requiring a stricter approach at the bail stage. The charge-sheet was said to disclose large-scale wrongful input tax credit creation, and the Court held that the gravity of such allegations was relevant in exercising bail discretion. Reliance on an earlier bail order was found inapplicable because the factual matrix differed. Bail was declined, and the accused-petitioner was not enlarged on bail.

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Issues: Whether the accused-petitioner was entitled to bail in a prosecution under section 132 of the Central Goods and Services Tax Act, 2017 on allegations of generating fake input tax credit.

Analysis: The allegations in the charge-sheet disclosed generation of fake input tax credit of Rs. 20,28,40,841/- without supply of goods. The Court treated the matter as an economic offence requiring a different approach at the stage of bail. The reliance placed on the earlier order in Ratnambar Kaushik was found inapplicable because that case involved a different factual situation. The Court also noted the dismissal of bail in Lalit Goyal on similar allegations involving fake firms and wrongful input tax credit, and considered the gravity of the present allegations relevant to the exercise of bail discretion.

Conclusion: Bail was declined and the accused-petitioner was not enlarged on bail.

Final Conclusion: The application for bail failed because the allegations of large-scale fake input tax credit were treated as serious economic offences warranting refusal of bail.

Ratio Decidendi: In cases involving serious economic offences under the GST law, especially where the charge-sheet alleges creation of fake input tax credit without supply of goods, bail may be refused on the basis of the gravity of the offence and the need for a stricter approach at the bail stage.

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