Person Accused Of Wrongful Availment Of GST ITC Illegally Detained For More Than 24 Hours: Patiala House Court Grants Bail

The Patiala House Court has granted the bail to the person accused of wrongful availment of Input Tax Credit (ITC) illegally detained for more than 24 hours.

The bench of Chander Jit Singh (DHJS) has observed that the list of documents and list of witnesses shows that the evidence is documentary and even if there is an ocular statement has already been recorded in this regard. Complaint having been filed, is primarily an indicator that investigation is being completed by the applicant/accused. No purpose seems to be served by keeping the applicant/accused in custody any further.

The applicant/accused has been falsely implicated in the case without any substantive evidence and solely on the basis of third party statement of third persons. The applicant/accused has duly received the goods from his suppliers and has made due payments against proper invoices. It is well established principle of the CGST Act 2017 that buyer cannot be penalized on the default of his supplier.

The arrest of the applicant/accused has been made in complete disregard to the consistent cooperation of the applicant with the respondent department in regard to their investigation in the impugned case. That it is evident to note that the applicant/accused has produced all the documents asked by the respondents department and has also time and again produced himself before the respondent department in order to tender his statement in regard to the investigation initiated by the respondent department.

The applicant was accused of receiving and availing ineligible/fraudulent Input Tax Credit total amounting to Rs. 17,41,37, 269 from various bogus firms. From the evidence collected during the investigation, it is established that accused/applicant has evaded more than Rs. 5 crores and committed offence u/s 132 (1) (b) & (c) of the Act.

Rahul Ranjan, the Counsel for applicant/accused contended that the arrest of applicant/accused has been made in the most arbitrary way possible and in complete disregard to the law established by the court of law. The department before making the formal arrest of the applicant/accused, illegally detained the applicant/accused for more than 24 hours at the office of CGST.

The court admitted the bail subject to furnishing bail bond of Rs. 2,00,000/- with one surety who should be family member of accused subject to various conditions.

Firstly, the applicant/accused person shall appear before Trial court and IO as and when directed to appear.

Secondly, the applicant/accused person shall furnish his address where the accused actually resides and any change in the address shall be notified to Court and IO within five days of such change.

Thirdly, the applicant/accused person shall not leave the country without prior intimation to Trial court. Authorities concerned be informed in this regard.

Fourth, the applicant/accused person shall not tamper with evidence nor otherwise indulge in any act or commission that is unlawful or that would prejudice the proceedings in the pending matter.

Lastly, the accused shall not tamper or influence the witnesses.

Case Details

Case Title: CGST Vs Liyakat

Case No.: Bail Matter No. 776/2025

Date: 28.05.2025

Counsel For Applicant: P.C. Aggarwal

Counsel For Respondent: Rahul Ranjan