The Gujarat High Court has upheld an order granting bail to an accused in a tax evasion case, observing that his tax liability stood discharged under Section 49 of the Central Goods and Services Tax (CGST) Act, 2017, once the amount was debited from his account, deposited into the Electronic Government Ledger, and credited to the Government account.
The bench of Justice Divyesh A. Joshi heard an application filed by the Superintendent (AE) of Central GST & Central Excise, Gandhinagar, who sought cancellation of bail granted to the accused. The applicant contended that the accused failed to comply with the bail condition requiring him to deposit ₹90 lakh within seven days of his release.
The bench cited the Gujarat High Court’s earlier decision in Arya Cotton Industries vs Union of India (2024), which held that once an amount is debited from a taxpayer’s account and credited to the Government via the electronic cash ledger, the liability stands discharged on that date.
“Considering Section 49 of the CGST Act and paragraph 24 of Arya Cotton Industries, it is evident that once the amount is debited from the concerned person and credited to the Government account, the tax liability stands discharged,” the Bench observed.
The Arya Cotton Industries judgment had further clarified that when tax amounts are credited into the electronic cash ledger, they are treated as payment of tax, and no interest is payable for the period between the deposit and the filing of returns.
Represented by Advocate Hardika Vyas, the applicant—who was also the original complainant—argued that the accused had failed to fulfill his bail condition, thereby violating the court’s order. It was alleged that the accused had gained illegal profits by non-compliance with statutory provisions, causing a loss to the public exchequer.
The respondent, represented by APP Rohan Shah, refuted the allegations and produced documents demonstrating that the required ₹90 lakh had been deposited in the Electronic Government Ledger within the stipulated period. Of this, ₹45 lakh each was credited to the CGST and SGST portals respectively.
After reviewing the evidence, the Bench noted that the accused had indeed deposited the amount on November 1, 2024—before the deadline of November 2, 2024. The court verified the entries from the Electronic Cash Ledger for the relevant period, confirming that the funds had been duly credited to the Government account.
Addressing the applicant’s apprehension that the accused could still access or claim a refund for the deposited amount, Justice Joshi observed that such concerns were misplaced since the accused had offered to file an undertaking not to withdraw or utilize the amount.
The court emphasized that the parameters for granting bail differ significantly from those for cancelling it, and the latter requires stronger grounds than mere procedural doubts.
Finding no violation of the bail conditions, the Gujarat High Court dismissed the application seeking cancellation of bail. The court reaffirmed that tax liability is considered discharged once the payment is credited to the Government under Section 49 of the CGST Act.
Case Details
Case Title: Superintendent (AE) Thro Arihant Kumar Jain S/O Lal Chand Jain Versus Virbhadrasinh Pratapsinh Chauhan & Anr.
Case No.: R/Criminal Misc.Application (For Cancellation Of Bail) No. 24758 Of 2024
Date: 25/09/2025
Counsel For Applicant: Hardika Vyas
Counsel For Respondent: Apurva N Mehta
