2025 (7) TMI 1249 - HC - GST

Accused in fake Input Tax Credit fraud case worth Rs. 6.73 crore granted interim bail after five months custody

Sarthak Jain Versus Senior Intelligence Officer.

Sarthak Jain Versus Senior Intelligence Officer. - 2025:PHHC:085931 ISSUES: Whether the arrest of the petitioner complied with the procedural requirements under Section 69 of the Central Goods and Services Tax (CGST) Act, 2017.Whether an enquiry as mandated under Section 70 of the CGST Act was conducted prior to prosecution and arrest.Whether the petitioner is entitled to bail in an offence punishable under Sections 132(1)(b) and 132(1)(c) of the CGST Act involving fraudulent availment of Input Tax Credit (ITC).Whether the petitioner's incarceration period and absence of criminal antecedents justify grant of bail.Whether the allegations of fraudulent availment of ITC amounting to Rs. 8.36 crores through fake invoices justify denial of bail. RULINGS / HOLDINGS: The arrest was held to be illegal for non-compliance with Section 69 of the CGST Act, as the petitioner was not apprised of the grounds of arrest before being taken into custody.Prosecution without conducting the enquiry as required under Section 70 of the CGST Act was impermissible; the petitioner was arrested without such enquiry.The petitioner was granted bail considering that the offence under Sections 132(1)(b) and 132(1)(c) of the CGST Act carries a maximum sentence of five years, and the petitioner had already undergone incarceration of approximately five months.The petitioner's lack of criminal antecedents and the documentary nature of evidence weighed in favor of bail, subject to trial court's satisfaction upon furnishing bail/surety bonds.The court emphasized that the 'veracity of the allegations would be assessed only after conclusion of the trial' and that the bail order does not express any opinion on the merits of the case. RATIONALE: The Court applied statutory provisions of the Central Goods and Services Tax Act, 2017, specifically Sections 69 (procedure for arrest), 70 (enquiry before prosecution), and 132 (offences and penalties).The Court relied on the principle that procedural safeguards such as informing the accused of grounds of arrest and conducting enquiry before prosecution are mandatory to protect individual liberty.The decision reflects adherence to settled legal principles that bail is not to be denied merely on the basis of serious allegations where the accused has no criminal antecedents and where investigation is complete, especially when maximum punishment is limited to five years.The Court recognized that the trial process and appreciation of evidence are the proper forums for determination of guilt or innocence, thus reserving merit-based adjudication for trial.No dissent or doctrinal shift was indicated; the judgment follows established legal standards on bail and procedural compliance under the CGST Act.