The Chhattisgarh High Court has granted regular bail to an accused arrested by the Directorate General of GST Intelligence (DGGI), Raipur Zonal Unit, in connection with an alleged fraudulent Input Tax Credit (ITC) availment and passing case involving invoices worth ₹7.59 crore observing that while serious allegations had been levelled, the prosecution had not placed any unimpeachable material at the bail stage to conclusively establish that the accused was the proprietor of the firm through which the alleged fraud was carried out.

The bench of Chief Justice Ramesh Sinha has observed that  no document of an unimpeachable character had been produced at this stage to conclusively establish that the applicant was the proprietor of the firm. It further held that issues relating to conscious involvement, beneficial ownership, operational control and criminal intent would require detailed examination during trial and could not be conclusively determined while deciding a bail application.

According to the DGGI, M/s Hindustan Corporation, a proprietorship concern standing in the name of Jagat Sanyasi, allegedly availed Input Tax Credit without actual receipt of goods from several bogus or non-existent suppliers and subsequently passed on such ITC to downstream entities without any corresponding supply of goods. The department alleged that fraudulent invoices amounting to ₹7,59,25,127 were issued as part of the scheme.

The investigation reportedly began following secret information received by DGGI. During verification, officials allegedly found that the firm was not operational at its registered premises. The proprietor was stated to be hospitalized and did not appear before the department despite service of summons. During a subsequent search conducted at the premises of another concern, M/s Khyati Enterprises, officials allegedly found Jagat Sanyasi present, and his statement was recorded. The department claimed that he disclosed that the firm had been established at the directions of the applicant.

The defence argued that the applicant had been falsely implicated and that no document existed demonstrating that he was the proprietor of M/s Hindustan Corporation. It was contended that the actual proprietor was Jagat Sanyasi and that the prosecution’s case was based primarily on allegations and statements recorded during investigation. The applicant further argued that if the firm was indeed responsible for the alleged fake ITC transactions, the registered proprietor ought to have proceeded before arresting him.

The defence also emphasized that the applicant had been in custody since March 14, 2026, and that continued detention would serve no useful purpose.

Opposing the bail plea, the DGGI relied upon statements recorded during investigation and scrutiny of bank accounts. The department pointed to evidence allegedly showing that returns of M/s Khyati Enterprises, M/s Hindustan Corporation and another related firm were handled through the applicant.

The department further claimed that examination of bank records revealed financial transactions of approximately ₹4.93 crore transferred from M/s Khyati Enterprises to M/s Hindustan Corporation, while only about ₹24.5 lakh was returned. According to the DGGI, these transactions lacked any genuine business purpose and indicated operational control and management of the entities by the applicant.

The department also alleged that the applicant repeatedly avoided appearance despite multiple summons and later admitted during questioning that he had facilitated transactions, handled invoices received through WhatsApp and assisted in GST return filings. The DGGI argued that these circumstances demonstrated active involvement in the alleged fraudulent ITC network.

While considering the matter, the High Court noted that the prosecution’s allegation was that the applicant was instrumental in the creation and operation of M/s Hindustan Corporation and in the alleged fraudulent availment and passing of ITC amounting to ₹7.59 crore. However, the Court observed that the proprietorship of the firm admittedly stood in the name of Jagat Sanyasi.

The Court also took note of the fact that the applicant had remained in custody since March 14, 2026, that the investigation had substantially progressed, relevant documents and electronic evidence had already been seized, and no further custodial interrogation appeared necessary.

In light of these considerations, the High Court allowed the bail application and directed the release of the applicant upon furnishing a personal bond of ₹1 lakh along with one solvent surety to the satisfaction of the concerned court. The Court clarified that its observations were confined to the bail stage and would not affect the merits of the prosecution during trial.

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