Alleged fake ITC fraud using non-existent proxy firms causing massive revenue loss, defence left for trial; bail denied.

Regular bail was sought in a prosecution alleging fraudulent availment of fake ITC through creation of numerous non-existent/proxy firms causing massive loss to the public exchequer. The HC held that the accused's defence pleas involved disputed questions of fact to be adjudicated at trial on evidence. Treating the allegations as an economic offence involving deep-rooted conspiracy and substantial public loss, the HC applied the SC principle that such offences warrant a stricter approach in bail due to their grave impact on the economy and public funds. Regular bail was refused and the petition was dismissed.

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Issues: Whether regular bail should be granted to the petitioner-accused facing allegations of large-scale GST fraud involving bogus firms and bogus Input Tax Credit.

Analysis: The petition challenges the denial of bail where the prosecution alleges the petitioner set up multiple non-existent/proxy firms and facilitated goods-less invoices generating bogus ITC to the tune of crores. The Court examined the nature and gravity of the allegations, the amount involved as disclosed by investigation, the existence of investigative material (including recorded statement and corroborative electronic traces), and the principle that offences of large-scale economic fraud attract a stricter approach on grant of bail. The Court applied the settled legal framework that economic offences involving deep-rooted conspiracies and substantial loss to the public exchequer warrant a more stringent view while considering bail applications, drawing on the ratio that such offences constitute a class apart for bail purposes.

Conclusion: Bail is refused and the petition is dismissed; the decision is against the petitioner and in favour of the Revenue.

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