The Punjab and Haryana High Court has granted regular bail to two persons accused of orchestrating a massive Goods and Services Tax (GST) fraud involving fake firms and fraudulent Input Tax Credit (ITC) transactions worth nearly ₹197.39 crore, holding that continued incarceration was not justified once the investigation had been completed and the prosecution case rested primarily on documentary and electronic evidence. 

The bench of Justice Shalini Singh Nagpal allowed the regular bail petitions observing that the allegations against the accused would ultimately have to be tested during trial and that the possibility of tampering with evidence or influencing witnesses was minimal, particularly as the prosecution proposed to examine government officials and had already collected the relevant documentary material. 

According to the Directorate General of GST Intelligence (DGGI), the petitioners allegedly created and operated a network of 26 fake firms using the identity documents of other persons obtained through fraudulent means. The department alleged that fake GST invoices amounting to approximately ₹1,161.10 crore were generated through these entities, enabling fraudulent availment and passing on of fake ITC worth about ₹176.24 crore to beneficiary firms. 

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The DGGI further alleged that the accused retained commissions of around 4–5% from the transactions after cash withdrawals routed through another business entity.

The department also claimed that Ankit Goyal was the mastermind behind the fraudulent availment and utilization of ITC worth approximately ₹21.15 crore through three firms—M/s Patiala Oil and Fat, M/s Shiv Shankar Enterprises, and M/s Shiva Enterprises—which were allegedly operated in his name and in the names of his family members. Collectively, the alleged fraud was stated to have caused a loss of around ₹197.39 crore to the Government exchequer on GST invoices valued at nearly ₹1,299.75 crore. 

The petitioners argued that they had already remained in custody since December 2025 and that the prosecution case was founded entirely upon documentary and electronic records already seized by the department.

Senior counsel appearing for the petitioners contended that the allegations regarding fake firms and fraudulent ITC involved disputed questions of fact relating to actual movement of goods, admissibility of electronic evidence, and proof of criminal intent, all of which could only be examined during trial.

It was further submitted that there had been no recovery from the petitioners, the complaint had been filed along with voluminous documentary evidence, and all relevant GST portal records, e-way bills, bank statements, and ledgers remained in the custody of the department, making any possibility of tampering virtually impossible. The defence also pointed out that the alleged ITC figures represented investigative estimates rather than adjudicated liabilities. 

The DGGI strongly opposed the grant of bail, describing the petitioners as the masterminds behind a syndicate of fake firms established solely for generating fake invoices and passing fraudulent ITC without any actual supply of goods or services.

The department argued that raids had resulted in the recovery of various firm seals and that the magnitude of the alleged fraud, involving hundreds of crores of rupees, justified continued detention. 

While considering the bail applications, the High Court relied upon several Supreme Court decisions, including Vineet Jain v. Union of India, Ashutosh Garg v. Union of India, and Ratnambar Kaushik v. Union of India, where the apex court emphasised that bail should ordinarily be granted in prosecutions under Section 132 of the CGST Act unless extraordinary circumstances exist. 

The Court also referred to multiple earlier decisions of coordinate Benches of the Punjab and Haryana High Court granting bail in similar GST prosecution cases.

After examining the material on record, the Court noted that the prosecution case was substantially based on documentary and electronic evidence already collected during investigation.

It further observed that the offences alleged carry a maximum punishment of five years’ imprisonment, are triable by a Magistrate, and that the petitioners had already spent over seven months in custody.

The Court also noted that the proposed prosecution witnesses were predominantly government officials, reducing the likelihood of witness intimidation or evidence tampering. Additionally, the petitioners had no criminal antecedents and were stated to have permanent roots in society. 

Holding that the allegations would be examined during trial and that continued incarceration was not warranted, the Court directed the release of both accused on regular bail.

The High Court imposed several conditions while granting bail, including the petitioners shall not tamper with evidence or influence prosecution witnesses. They must surrender their passports and cannot leave India without prior permission of the trial court. They must inform the authorities before changing their residence. They must appear before the trial court on every date unless specifically exempted. They shall not commit any similar offence or misuse the liberty granted by the Court.

The Court clarified that any violation of these conditions would entitle the DGGI to seek cancellation of bail. 

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