A recent Supreme Court order granting bail to Sanjay Jain—an accused in a case involving the wrongful availment of Input Tax Credit (ITC)—has triggered confusion and concern within tax enforcement circles. The decision, passed without a detailed hearing of the Union Government’s side, is being interpreted by some legal experts as a precedent that could be used by several other GST offenders to secure bail on similar grounds.
Jain’s bail plea had earlier been rejected by the Allahabad High Court on the basis that he had not surrendered after the Supreme Court withdrew parole concessions given during the COVID-19 pandemic. However, the apex court granted bail, overruling the High Court’s stance. The issue has now snowballed into a larger legal debate, with tax authorities unsure whether the bail granted is interim or permanent in nature.
Legal observers note a seeming contradiction between the Sanjay Jain ruling and the Supreme Court’s earlier directions in the “In Re: Contagion of COVID-19 Virus in Prisons” case. In that matter, the Court had made it explicitly clear that inmates released on emergency parole during the pandemic must surrender within 15 days. After doing so, it was open for them to apply for bail, which would then be decided strictly on merit and in accordance with the law.
However, in the Sanjay Jain case, bail appears to have been granted without such procedural rigor. Importantly, the judgment does not examine the merits of the case, nor was the department given an opportunity to present its arguments—a factor that has raised eyebrows among government counsels.
Special Public Prosecutor Lakshay Kumar Singh, who appears before the Special Chief Judicial Magistrate, Meerut, in conversation with Juris Hour has highlighted the growing inconsistency in the treatment of similar GST cases. “There are multiple accused in similar cases. Some have surrendered, while others haven’t. But now, citing this judgment, even those who have evaded arrest may file for bail—arguing for parity,” Kumar said.
The ambiguity over whether the Supreme Court’s order constitutes interim relief or a final bail order has added to the department’s concerns. Tax officers fear that it may open floodgates for bail applications from other accused in GST frauds who were previously denied relief under similar circumstances.
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