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 Magistrate. The court reasoned that prolonged pretrial custody (about six-seven months), absence of fraud allegations, documentary basis of complaints, and the limited sentence exposure weighed in favour of bail; further investigation or potential supplementary complaint under criminal procedure did not automatically bar relief. The court noted the general rule that assessment under Sections 73-74 should ordinarily precede prosecution, but accepted narrow exceptions require specific reasons. Petitioners released on bail subject to usual surety conditions.

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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.

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