Punjab and Haryana High Court Grants Bail in Rs. 30-Crore GST ITC Fraud Case

The Punjab and Haryana High Court has granted regular bail to an accused booked under the Central Goods and Services Tax Act, 2017, in a case involving alleged fraudulent availment and passing of Input Tax Credit (ITC) amounting to over Rs. 30 crore. The bench of Justice Aaradhna Sawhney has observed that prolonged incarceration in a case resting largely on documentary evidence would not serve the ends of justice, particularly when the maximum punishment prescribed under law is five years. The bail petition was filed under Section 483 of the Bharatiya Nagarik Suraksha Sanhita (BNSS) by the accused, who was arrested in connection with a criminal complaint initiated by the Central GST Department under Section 132 of the CGST Act. The prosecution alleged that the accused played a key role in a network of bogus firms created for generating goods-less invoices and passing on ineligible ITC, causing substantial loss to the State exchequer. According to the GST Department, scrutiny of GST returns revealed that a mobile phone trading firm had availed ineligible ITC from multiple suppliers, including one firm alleged to be non-existent. The alleged wrongful ITC availed during the period from December 2023 to March 2024 was quantified at approximately ₹30.54 crore. Based on these findings, a show cause notice was issued in March 2024, followed by cancellation of GST registration. Although the registration was initially cancelled, it was later restored by the appellate authority in May 2024. Subsequently, the department invoked Rule 86A of the CGST Rules to freeze the electronic credit ledger. This action was challenged before the High Court in a separate writ petition, where interim relief was granted directing de-freezing of the bank account and electronic credit ledger. That writ petition remains pending adjudication. Meanwhile, the accused was arrested on May 6, 2025. His applications for bail were rejected by the Chief Judicial Magistrate, Faridabad, and later by the Additional Sessions Judge. Aggrieved by these orders, the accused approached the High Court. Counsel for the petitioner argued that the accused had been falsely implicated and that all purchases were made in the normal course of business through banking channels, in compliance with Section 16 of the CGST Act. It was contended that the investigation was complete, the complaint had already been filed, and the evidence relied upon by the prosecution was primarily documentary and electronic in nature. Prolonged custody, it was argued, would violate the fundamental right to personal liberty and speedy trial under Article 21 of the Constitution. The GST Department opposed the bail plea, asserting that the accused was the mastermind behind a large-scale ITC fraud involving fake firms and fictitious transactions. The department claimed that statements recorded during investigation showed voluntary admissions regarding the operation of bogus entities and issuance of fake invoices. It was further argued that economic offences of this magnitude posed a serious threat to fiscal stability and that granting bail could lead to tampering with evidence or repetition of the offence. After examining the material on record, the court noted that offences under Section 132 of the CGST Act carry a maximum punishment of five years’ imprisonment. Relying on recent judgments of the Supreme Court, including Vineet Jain v. Union of India, Sanjay Chandra v. CBI, Ratnambar Kaushik v. Union of India, and Ashutosh Garg v. Union of India, the Court reiterated that bail should be the norm, particularly where the trial is likely to take considerable time and the evidence is largely documentary. The Court observed that the accused had already spent several months in custody, the investigation stood completed, and the prosecution’s case would primarily depend on official and documentary evidence, reducing the risk of witness tampering. It further held that economic offences, though serious, cannot be treated as a separate class warranting automatic denial of bail. The High Court allowed the bail petition and directed that the accused be released on bail, subject to conditions to be imposed by the trial court. These include surrender of the passport and compliance with any other conditions deemed necessary to ensure the accused’s presence during trial. Case Details Case Title: Sanket Mittal v. Central GST Department Case No.: CRM-M-44925-2025 Date: 18.12.2025 Click Here To Read Order Read More: Defective Arrest, Non-Compliance with Mandatory BNSS Procedure in Rs. 8 Crore GST Fake ITC Case: HC Grants Bail

Ask Jurishour AI

Punjab and Haryana High Court Grants Bail in Rs. 30-Crore GST ITC Fraud Case

Membership Required

Latest articles

S. 80P(4) No Bar to Deduction on Interest Earned From Co-operative Bank: ITAT

Dept. Can’t Fully Disbelieve Hospital’s Higher Cash Receipts During Demonetisation: ITAT Restricts Rs. 1.80 Crore Addition to Rs. 5 Lakh

GSTAT Admits ITC Dispute Over Alleged Retrospective Application of Section 16(2)(c) Amendment, Says Appeal Raises “Pure Question of Law”

Failure to Reverse ITC on Exempt Electricity Supply, Alleged Suppression U/S 74: GSTAT Admits Dept.’s Appeal

More like this

S. 80P(4) No Bar to Deduction on Interest Earned From Co-operative Bank: ITAT

Dept. Can’t Fully Disbelieve Hospital’s Higher Cash Receipts During Demonetisation: ITAT Restricts Rs. 1.80 Crore Addition to Rs. 5 Lakh

GSTAT Admits ITC Dispute Over Alleged Retrospective Application of Section 16(2)(c) Amendment, Says Appeal Raises “Pure Question of Law”

About us

Company

Categories