A Pune Sessions Court has granted regular bail to businessman Moksh Yogesh Oswal, who was arrested by the Anti-Evasion Wing of the Central Goods and Services Tax (CGST), Pune-II Commissionerate, in connection with an alleged large-scale GST fraud involving the wrongful generation and passing of inadmissible Input Tax Credit (ITC) through fictitious entities.
The court observed that the prosecution’s case is primarily based on documentary evidence already in the department’s possession and reiterated the settled legal principle that “bail is the rule and jail is the exception.”
The applicant had been arrested on 9 June 2026 in connection with offences under Sections 132(1)(b), 132(1)(c), 132(1)(i), and 132(5) of the Central Goods and Services Tax Act, 2017. The prosecution alleged that the accused was involved in an organized GST fraud by facilitating the generation, availment, and passing of fraudulent ITC through a network of dummy firms issuing invoices without any actual supply of goods or services.
Allegations by the CGST Department
The Anti-Evasion Wing alleged that the investigation uncovered a sophisticated network of fictitious entities used to generate fake tax invoices for the fraudulent availment and transfer of Input Tax Credit. According to the department, financial records, bank transactions, and documentary evidence linked the accused to the alleged offences, resulting in his arrest.
During the hearing, the CGST Department opposed the bail application, arguing that the investigation was still in progress and describing the accused as the alleged mastermind behind the fraud. The department also informed the court that it was in the process of filing the prosecution complaint (charge sheet) and contended that releasing the accused could result in similar offences being committed again.
Defence Challenges Arrest and Seeks Bail
Makarand Joshi, the Counsel for the accused argued that the applicant had committed no offence and had been arrested without being properly informed of the grounds of arrest, making the arrest illegal. It further submitted that the applicant is a genuine businessman, regularly files income tax returns, and is not the beneficiary of the alleged fraudulent proceeds.
Mr. Joshi emphasized that the investigation was substantially complete, all relevant documents were already in the department’s custody, and therefore continued incarceration was unnecessary. Reliance was placed on several judicial precedents, including Daulat Samirmal Mehta v. Union of India, Rahul Kamalkumar Jain v. Director General of Goods and Services Tax Intelligence, and Munavver Ismail Memon v. State of Gujarat, where bail had been granted in similar circumstances.
Court’s Observations
After considering the submissions of both sides, the Sessions Court observed that the alleged offences carry a maximum punishment of five years’ imprisonment and that the prosecution case is largely founded on documentary transactions that are already available with the investigating agency.
The court further noted that the investigation appeared to be almost complete, reducing the possibility of interference with evidence. It also took judicial notice of the heavy pendency of criminal cases before Magistrate Courts, observing that the trial would inevitably take considerable time to commence.
In these circumstances, the court held that keeping the accused in custody for an indefinite period would serve no useful purpose and that the settled principle of criminal jurisprudence—”bail is the rule and jail is the exception”—favoured the grant of bail.
Bail Conditions
The Sessions Court directed that the accused be released on bail upon furnishing:
- A personal bond of ₹25,000 with one surety of the like amount;
- A condition that he shall not tamper with evidence;
- A direction not to indulge in similar offences while on bail;
- A requirement to appear before the Trial Court on every hearing, unless exempted;
- Furnishing his permanent address and mobile number, with prior intimation to the court before making any changes.
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