The Punjab and Haryana High Court has granted regular bail to the authorised signatory of a steel manufacturing firm accused of fraudulently availing or utilising input tax credit (ITC) of approximately Rs. 11.56 crore through invoices allegedly issued without actual supply or movement of goods.

The bench of Justice Vikram Aggarwal considered the petitioner’s clean antecedents, custody of almost three months, completion of the investigation and the likelihood of a lengthy trial and noted that no personal recovery remained to be made and that the maximum sentence for the alleged offences was five years.

The order, delivered on October 30, 2026, expressly clarifies that the Court was not expressing any opinion on the merits of the case.

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The petitioner/assessee is the authorised signatory of M/s Gaurav Steel Industries, a sole proprietorship owned by his mother, Sushma Rani.

According to the order, the firm manufactures MS bars, flat bars and round bars by cutting and reheating iron scrap in a furnace and re-rolling it.

Officers of the Central Goods and Services Tax Commissionerate, Ludhiana, searched the petitioner’s residence and factory on August 6, 2026. The department alleged that the firm had fraudulently availed or utilised ITC of approximately ₹11.56 crore by submitting invoices issued by different suppliers without actual supply or movement of goods.

The petitioner was arrested on August 8, 2026, and remained in custody thereafter.

He approached the High Court under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023, seeking regular bail in proceedings involving Sections 132(1)(b) and 132(1)(c) of the Central Goods and Services Tax Act, 2017.

The petitioner submitted that he had been falsely implicated and that the maximum punishment for the alleged offences was five years.

The defence emphasised that the petitioner had clean antecedents and had already spent almost three months in custody. It further submitted that the investigation had been completed and the final report filed, while charges were yet to be framed.

With 18 prosecution witnesses to be examined, counsel argued that the trial would take considerable time and that keeping the petitioner in custody would serve no useful purpose.

The respondent opposed the grant of bail. The order records the opposition without detailing the department’s arguments.

While examining the request, the High Court considered both the allegations and the stage of the criminal proceedings.

The Court recorded that the petitioner’s antecedents were clean and that no personal recovery had to be made. It also noted that the investigation was complete, the final report had been submitted and charges had not yet been framed.

The Court considered the presence of 18 prosecution witnesses and concluded that the trial would take a sufficiently long time.

These circumstances, together with the five-year maximum sentence and the period of custody already undergone, weighed in favour of granting bail.

The High Court referred to the Supreme Court’s decision in Vineet Jain v. Union of India, SLP (Criminal) No. 4349 of 2025, decided on April 28, 2025.

As recounted in the High Court’s order, the Supreme Court had expressed displeasure that bail in an identical matter had been denied at every level, including the High Court, forcing the accused to approach the apex court.

The High Court noted the Supreme Court’s observation that, in cases of that nature, an accused should ordinarily be granted bail unless extraordinary circumstances existed.

Applying that consideration, Justice Aggarwal recorded that no extraordinary circumstances had been pointed out in the present case.

The High Court directed that the petitioner be released on regular bail upon furnishing bail and surety bonds to the satisfaction of the concerned trial court, Chief Judicial Magistrate or Duty Magistrate.

Pending applications, if any, were also disposed of.

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