Wrongful input tax credit case: regular bail granted; applicant released as custodial interrogation unnecessary and compounding remains possible

Grant of regular bail in a case of alleged wrongful utilisation of input tax credit is discussed, emphasising the special statute as a complete code and the requirement of prior sanction under the relevant provision; consequence: sanction requirement governs prosecution. The distinction between cognizable non-bailable and non-cognizable bailable offences under the statute is noted, with custodial interrogation held unnecessary, resulting in bail viability. Alleged wrongful loss exceeding the monetary threshold informs sentencing exposure and the availability of compounding of offences is acknowledged, leading to the practical release of the accused on bail to prevent business prejudice.

---

---

Issues: Whether the applicant, accused in offences involving alleged wrongful availment/utilisation of input tax credit and offences under Section 132 of the Central Goods and Services Tax Act, 2017 (along with offences under the IPC), is entitled to regular bail under Section 483 of BNSS (Section 439 Cr.P.C.).

Analysis: The matter engages the special scheme of the CGST Act which provides a self-contained code for offences, arrest and prosecution including requirements such as prior sanction of the Commissioner under Section 132(6) and provisions for compounding under Section 138. Judicial precedents recognize the CGST Act as a special legislation but also permit prosecution under general penal statutes in certain circumstances; however, non-compliance with statutory prerequisites and the existence of alternative statutory remedies weigh in bail considerations. The alleged wrongful availment relates to an amount stated to be about Rs.10 Crores which crosses the statutory threshold affecting sentencing exposure under Section 132; notwithstanding the gravity, factors relevant to bail include the absence of necessity for custodial interrogation, possibility of compounding, prior grant of anticipatory relief to a co-accused, the applicant's period in custody and the impact of continued detention on the applicant's livelihood. Balancing these considerations and applying the statutory framework and relevant authorities, release on bail subject to stringent conditions was considered appropriate.

Conclusion: Application for regular bail is allowed; result in favour of the Appellant.

---