Punjab & Haryana High Court Grants Bail in Rs. 30 Crore GST Input Tax Credit Fraud Case

The Punjab and Haryana High Court has granted regular bail to an accused, Manmohan Singh arrested in a major Goods and Services Tax (GST) fraud case involving alleged wrongful availment of Input Tax Credit (ITC) amounting to over Rs. 30 crore. The bench of Justice Surya Partap Singh observed that continued judicial custody was not warranted in the facts of the case, especially as the investigation was complete, the trial was likely to take considerable time, and the offence carried a maximum punishment of five years’ imprisonment The case arose from an investigation conducted by the Directorate General of GST Intelligence (DGGI), Chandigarh Zonal Unit, which alleged that a private company engaged in smelting operations had fraudulently availed ITC on the basis of invoices issued without any actual supply of goods. According to the prosecution, the company allegedly claimed ITC through a chain of non-existent firms, which were purportedly created solely for issuing fake invoices. The total loss to the State exchequer was estimated at approximately ₹30.21 crore. Searches were conducted at the residential premises of the accused and at multiple business locations in Ludhiana. During these searches, GST-related documents, mobile phones, cheque books, stamps, and electronic records were seized. Investigators also claimed that GST returns of multiple firms were filed from the same premises using a common internet connection, and that vehicles shown as transporting goods were incapable of carrying commercial consignments, further indicating that the transactions were fictitious. Seeking bail, the accused challenged the legality of the search and arrest, alleging procedural violations, illegal detention beyond 24 hours, and failure to properly serve the grounds of arrest. It was also argued that the premises searched did not belong to the accused and that the individual shown as a manager during the search was never employed by him. The petitioner further cited serious health issues, including a medical emergency during custody, which had earlier led to the grant of interim bail on medical grounds. Another key argument advanced was that the investigation had already been completed and the complaint filed, making further incarceration unnecessary. The defence stressed that the offence was triable by a Judicial Magistrate and that prolonged custody would violate the constitutional right to personal liberty and speedy trial under Article 21 of the Constitution. The DGGI opposed the bail plea, contending that the accused was involved in a serious economic offence with far-reaching consequences for public revenue. The prosecution maintained that the alleged fraud involved a well-organised network of shell entities and goods-less invoices, warranting strict treatment. It denied all allegations of illegal detention, procedural lapses, or denial of medical care, and argued that economic offences must be dealt with firmly to deter similar misconduct. After examining the record and hearing both sides, the High Court observed that while the allegations were serious, several factors weighed in favour of granting bail. These included the completion of investigation, the documentary nature of evidence, the absence of any material indicating that the accused would tamper with evidence or influence witnesses, and the likelihood of delay in conclusion of the trial. The Court also took note of the accused’s medical condition and the fact that interim bail had earlier been granted without any misuse of liberty. Relying on recent Supreme Court judgments on bail in GST and other economic offence cases, the Court reiterated that arrest and detention cannot be used as a tool of punishment and that bail should be the rule, not the exception, particularly when statutory safeguards and constitutional rights are at stake. Allowing the petition, the High Court ordered the release of the accused on bail subject to stringent conditions. These include furnishing personal and surety bonds, refraining from influencing witnesses, not leaving India without prior court permission, and furnishing a security bond equivalent to the amount claimed as tax and penalty. The Court clarified that any violation of these conditions would result in cancellation of bail. Case Details Case Title: Manmohan Singh Versus State (Directorate General of GST Intelligence) Case No.: Criminal Misc. No. M-38179 of 2025 Date: 15.12.2025 Counsel For Petitioner: Anil Mehta and Livleen Brar Counsel For Respondent: Rajesh Sethi, Senior Standing Counsel Click Here To Read Order Read More: DGGI’s Investigative Powers Upheld: HC Dismisses Pleas Challenging GST Summons

Punjab & Haryana High Court Grants Bail in Rs. 30 Crore GST Input Tax Credit Fraud Case

Membership Required

Most Popular

GSTAT Revokes Staggered Filing Protocol for Appeals U/s 112

Garnet Exports Are Regulated Irrespective of Inland or Beach Origin, Upholds Confiscation and Penalties: CESTAT

Customs Duty Demand, Penalties Imposed In Alleged Undervaluation And Misdeclaration Of Imported Automobile Parts Case Quashed: CESTAT

Undervaluation, Misdeclaration Allegations Solely Based On Extrapolation From Different Import Transaction Not Sustainable: CESTAT

GSTAT Revokes Staggered Filing Protocol for Appeals U/s 112

Garnet Exports Are Regulated Irrespective of Inland or Beach Origin, Upholds Confiscation and Penalties: CESTAT

Customs Duty Demand, Penalties Imposed In Alleged Undervaluation And Misdeclaration Of Imported Automobile Parts Case Quashed: CESTAT

Punjab & Haryana High Court Grants Bail in Rs. 30 Crore GST Input Tax Credit Fraud Case

Membership Required

RELATED ARTICLES

Most Popular