The Punjab and Haryana High Court at Chandigarh has granted regular bail to King Raj, a person accused in a case involving alleged fraudulent availment of Input Tax Credit (ITC) worth Rs. 27.35 crore under the Goods and Services Tax (GST) regime noting that the accused had already spent several months in custody and that the case is largely based on documentary evidence already in possession of the authorities.
The bench of Justice Sanjay Vashisth has observed that personal liberty cannot be curtailed indefinitely, especially in cases where the maximum punishment is limited and the matter is triable by a Magistrate.
The case relates to alleged offences under Section 132(1)(b), 132(1)(c), and 132(5) of the Central GST Act, 2017, read with Section 20(xv) of the Integrated GST Act, 2017.
According to the GST intelligence authorities, the accused had fraudulently availed Input Tax Credit amounting to approximately ₹27.35 crore against a taxable value of around ₹152 crore for the period April 2023 to March 2025, without any genuine underlying supply of goods.
During the investigation, the department claimed that only one bank account with Yes Bank, Mandi Gobindgarh branch had been declared for GST registration purposes. Scrutiny of the bank statements allegedly revealed that payments corresponding to the value of invoices issued by suppliers were not made, indicating that the transactions reflected in the invoices were not supported by real financial dealings.
Based on these findings, the department argued that the petitioner was involved in a fraudulent ITC network causing significant loss to the government exchequer and therefore should not be granted bail.
The petitioner contended that the accused had been falsely implicated and had no direct role in the alleged fraudulent activities of the firm under investigation.
It was argued that the firm was actually operated by another individual and that the petitioner was merely an employee drawing a monthly salary of ₹25,000 with no control over the business operations. The defence also emphasized that no incriminating material was recovered during the petitioner’s personal search, and the prosecution had not produced evidence demonstrating his active involvement in the alleged fraud.
The petitioner had been in judicial custody since November 3, 2025, and the defence argued that since the case is primarily based on documentary evidence already seized by the department, further custodial detention would serve no useful purpose.
The petitioner relied on several judicial precedents, including decisions of the Supreme Court and previous orders of the Punjab and Haryana High Court, where bail had been granted in similar GST-related cases.
The Court also referred to the Supreme Court’s ruling in Radhika Aggarwal v. Union of India, which noted that assessment proceedings under Sections 73 or 74 of the CGST Act should ordinarily be completed before initiating criminal prosecution under Section 132, except in exceptional circumstances.
Further observations from earlier judicial decisions highlighted concerns that authorities sometimes focus more on custodial detention than on completing investigations and trials efficiently.
After hearing both sides, the High Court observed that The petitioner had already remained in custody for several months. The allegations are primarily supported by documentary evidence. Such evidence is already in the possession of the investigating agency. The trial is likely to take considerable time, particularly due to the volume of documents involved.
The Court held that further custodial interrogation would not serve any meaningful purpose. The High Court granted regular bail to the petitioner, subject to furnishing appropriate bail and surety bonds to the satisfaction of the trial court or the concerned magistrate.
The Court also clarified that the observations made in the order should not be treated as a comment on the merits of the case, and the trial court must decide the matter independently based on the evidence on record.
Case Details
Case Title: King Raj Versus DGGI Chandigarh
Case No.: CRM-M-71678-2025
Date: 05.03.2026
Counsel For Petitioner: Sandeep Goyal, Sr. Advocate
Counsel For Respondent: Saurabh Goel, Sr. Standing Counsel
