GST input tax credit fraud allegations: Bombay HC emphasises custodial necessity and grants regular bail after charge-sheet.

In a CGST prosecution alleging fraudulent availment and passing on of input tax credit through invoices without actual supply and shell firms, the Bombay HC considered arrest and bail under Sections 69 and 132 of the CGST Act. It noted that investigation was complete, the charge-sheet had been filed, and the alleged offences carried a maximum punishment of five years. Applying the settled approach that custodial necessity must be shown and that arrest should not be mechanical in economic offences, the Court found continued custody unnecessary where further investigation was no longer required. Regular bail was granted.

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Issues: Whether the applicant, arrested in a case alleging fraudulent availment and passing on of input tax credit under the CGST Act, was entitled to regular bail after completion of investigation and filing of charge-sheet.

Analysis: The application was considered in the context of the statutory power of arrest under Section 69 of the Central Goods and Services Tax Act, 2017 and the punishment structure under Section 132 of that Act. The allegations concerned issuance and use of invoices without actual supply, wrongful availment of input tax credit, and operation of shell firms. The Court noted that the investigation had been completed and the charge-sheet had already been filed. It further considered that the offences alleged attracted a maximum punishment of five years, and applied the settled approach that prolonged custody is not justified where further investigation is not required. The Court also relied on the principles governing arrest and bail in economic offences, including the need to assess custodial necessity and the mandate that arrest should not be mechanical.

Conclusion: The applicant was held entitled to regular bail.

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