Input tax credit fraud allegations and fake firms led the HC to grant bail on the existing record

Allegations of fraudulent availment and passing on of input tax credit under the CGST Act, involving alleged fake firms and no actual supply of goods, were assessed against the seriousness of the offence, the prescribed punishment, the material on record, the absence of any shown device by which the firms were created, and the period already spent in custody. On that basis, and without expressing any view on the merits, the applicants were found entitled to bail.

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Issues: Whether the applicants, facing prosecution for alleged fraudulent availment and passing on of Input Tax Credit under the Central Goods and Services Tax Act, 2017, were entitled to bail.

Analysis: The allegations concerned creation of fake firms and availing or passing on Input Tax Credit without actual supply of goods. The Court considered the nature of the offence, the punishment prescribed, the material on record, the absence of any shown device by which the alleged fake firms were created, and the period already spent in custody. It also noted that no opinion was being expressed on the merits of the case.

Conclusion: The applicants were found entitled to bail.

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