Wrongful availment of input tax credit: anticipatory bail granted; custodial interrogation declined and compounding considered as possibility

Allegations concern wrongful availment and utilisation of input tax credit through generation of fake GST returns and fraudulent transactions; the alleged amount exceeds prosecutorial thresholds affecting potential sentence, and therefore sentencing exposure is noted. The possibility of compounding of offences is recognised as an available legal mechanism and may affect prosecution outcome. Custodial interrogation is considered unnecessary and detention would prejudice ongoing business operations, leading to an order granting anticipatory bail subject to bond and specified restrictive and cooperative conditions while declining custodial detention and noting compounding as a potential resolution.

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Issues: Whether anticipatory bail should be granted to the applicant accused of offences relating to alleged wrongful availment/utilisation of input tax credit and allied offences under the CGST Act, IPC and IT Act.

Analysis: The Court examined whether the GST statutory scheme (Chapter XIV/XIX of the CGST Act) operates as a special and complete code governing offences, penalties and procedure including arrest and previous sanction, and whether continued prosecution under general penal provisions would result in double jeopardy given prior proceedings initiated by GST authorities. The Court considered precedent on the interaction between special statutes and general penal provisions, the safeguards and non obstante character of special enactments, the requirement of previous sanction under Section 132(6) CGST Act, and factors relevant to anticipatory bail such as nature and gravity of offence, role of accused, likelihood of tampering with evidence, need for custodial interrogation, and possibility of compounding. Applying those principles to the material before it, including that prior proceedings had been undertaken and that custodial interrogation was not necessary, the Court found custodial detention would adversely affect the applicant and that the alleged amount and statutory scheme permitted non-custodial handling and prospect of compounding.

Conclusion: Anticipatory bail is granted to the applicant; the applicant shall be released on furnishing personal bond of Rs. 5,00,000 with two sureties of like amount and shall comply with enumerated conditions including cooperation with investigation, non-interference with witnesses, surrender of passport and other specified restrictions.

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