2026 (2) TMI 324 - HC - GST

Regular bail in GST criminal proceedings for alleged import-of-services IGST liability granted after prolonged pretrial custody and limited sentence exposure

Regular bail was granted in GST-related criminal proceedings where alleged IGST liability arose under reverse charge and offences were triable by a ... Regular bail in GST criminal proceedings - import of services and IGST liability under reverse charge mechanism - cognizability and non-bailability of offences u/s 132(1)(i) - further investigation and filing of supplementary complaint not a bar to bail absent specific justification - absence of allegation of fraud in memo of arrest - offences triable by Magistrate with limited sentence - protection of personal liberty against prolonged custody pending investigation and trial - requirement to conclude assessment proceedings before criminal prosecution-exceptions and their limitation - HELD THAT:- In Vineet Jain’s case [2025 (5) TMI 925 - SC ORDER], Hon’ble Apex Court took it seriously that once offense is triable by the Court of Magistrate and awardable sentence is also limited and the allegations are based upon the documentary evidences, it becomes a matter of right to question that despite the accused being inside jail for 07 months, why the bail could not be granted to the accused, until the allegations are proved Similarly, in Manish Kumar’s case [2025 (8) TMI 239 - PUNJAB AND HARYANA HIGH COURT], wherein, there was an allegation of creating of 27 fake firms by the accused, yet by considering the submissions of the GST Department that investigation is still pending, concession of bail was extended to the accused. Brother Judge of this Court (Harpreet Singh Brar, J.), noticed that, ‘Much to the concern of this Court, the empirical data makes it abundantly clear that securing a conviction and concluding the trial is not a matter of priority for the respondent as all its energy is devoted towards curtailing liberty of the prospective accused.’ Even the view taken by the Hon’ble Apex Court in Radhika Aggarwal v. Union of India and others [2025 (2) TMI 1162 - SUPREME COURT (LB)], was also followed by noticing that, ‘normally it would be mandatory to conclude assessment proceedings under Section 73, 74 of the CGST Act before initiating criminal prosecution under Section 132 of the CGST Act. However, in exceptional circumstances, the same can be circumscribed after providing detailed reasons for the same.’ In Sarthak Jain’s case [2025 (7) TMI 1249 - PUNJAB AND HARYANA HIGH COURT] also, though allegation of evading of tax was there, but accused in the said case had remained inside jail for the considerable period and the offences being triable by the Court of Magistrate, was extended the concession of bail. Judgments relied upon by learned Senior counsel for the respondent/complainant on the contention of the further investigation under Section 173(8) Cr.P.C. [S. 193(9) of BNSS, 2023], is premature at this stage. There is no such prayer or even application before the concerned Court in regard to the submission of the supplementary complaint/report. In view of all the aforementioned circumstances, and more particularly, the offences in the case(s) in hand being triable by the Court of learned Magistrate, and already petitioner(s) herein are there inside jail for about six months, this Court deems it appropriate to extend the concession of regular bail(s) to the petitioner(s). Consequently, prayer made in the present petitions are allowed. Petitioners are ordered to be released on bail, subject to their furnishing bail/surety bonds to the satisfaction of the learned trial Court/ Chief Judicial Magistrate/ Illaqa Magistrate/ Duty Magistrate concerned, if not required in any other case. Petitions stand disposed of. Issues: Whether the petitioners accused under Section 132(1)(a & i) of the CGST Act, 2017 are entitled to regular bail pending trial.Analysis: The petitioners were arrested in a complaint alleging non-payment of GST on import of services and claimed to involve evasion above the statutory threshold. The offences are punishable with imprisonment up to five years and are triable by the Magistrate. The factual record, including the memo of arrest, lacks specific allegations of intentional fraud or cheating. The respondent asserts further investigation and possibility of supplementary complaint; however, no continuing or specific investigative requirement that would justify continued custodial detention was demonstrated. Relevant legal framework includes the classification of import of services under Section 2(11) and treatment as interstate supply under Section 7(4) of the IGST Act, applicability of Section 132(1)(i) of the CGST Act for tax evasion above the threshold, and principles that ordinarily assessment under Sections 73/74 should precede prosecution except in exceptional circumstances. Balancing the limited statutory maximum sentence, absence of demonstrated mens rea in the arrest grounds, the pending nature of investigation without concrete need for custody, and precedents favoring bail where offences are triable by Magistrate, continued detention was not justified.Conclusion: The petitioners are entitled to regular bail; the petitions are allowed and petitioners are to be released on bail subject to furnishing bonds/sureties and usual conditions, including non-contact with prosecution witnesses.