Anticipatory Bail for offences committed under GST Act.

Tarun Jain v. Directorate General of GST Intelligence (DGGI)

High Court of Delhi

Bail Appln. No. 3771 of 2021 | CRL.M.A. No. 16552 of 2021

Category: Anticipatory Bail – Alleged Fake ITC Availment

Date of Judgement: 26 November 2021

Relevant Section(s): Sections 132, 69, 70, 135, 138 of the CGST Act, 2017; Section 438 CrPC

Takeaway: Anticipatory Bail Granted Amid Allegations of ₹72 Cr. ITC Fraud

Facts of the Case

1. The petitioner, Tarun Jain, is a director of M/s Jetibai Grandsons Services India Pvt. Ltd. (incorporated in August 2019) engaged in solar products.
2. The Directorate General of GST Intelligence (DGGI) alleged that the company fraudulently availed and passed on fake/ineligible Input Tax Credit (ITC) worth ₹72 crores in collusion with other firms.
3. Major suppliers from whom ITC was claimed were found to be non-existent or lacking inward supplies. The fraud allegedly occurred between Nov 2020–Mar 2021.
4. Multiple summons were issued between July and September 2021, which the petitioner failed to comply with, citing health issues and fear of arrest.
5. A previous anticipatory bail plea before the Sessions Court was rejected on 9 October 2021, prompting the petitioner to move the Delhi High Court.

Question(s) in Consideration

1. Whether anticipatory bail should be granted to the petitioner accused of availing fake ITC under Section 132 of the CGST Act, involving ₹72 crore.
2. Whether custodial interrogation is essential in such economic offences.

(Ref. Para 1, 12, 52)

Observation of Court

1. The court examined Sections 132, 69, 70, 135, and 138 of the CGST Act and reiterated that offences under Section 132(b) & (c) involving amounts over ₹5 crore are cognizable and non-bailable but still compoundable. (Para 29–34)
2. It acknowledged the petitioner’s non-cooperation but considered the reasons (illness, fear of arrest) as supported by documents. (Para 56–57)
3. The court emphasized that anticipatory bail under Section 438 CrPC is a statutory right rooted in Article 21 of the Constitution and must be granted where custodial interrogation is not necessary. (Para 45–49)
4. Distinguished the present case from P.V. Ramana Reddy, favouring the precedent in Shravan A. Mehra (Karnataka HC), where anticipatory bail was granted despite ITC fraud allegations. (Para 39–40)
5. Held that while economic offences are serious, bail cannot be denied in every such case and custodial interrogation was not justified here. (para 43-45,55)

Judgement of the Court

1. The court allowed anticipatory bail with stringent conditions including a ₹5 lakh personal bond, surrender of passport, full cooperation with investigation, and location sharing with the IO. (Para 60)
2. Reiterated the principle of “bail, not jail” and the necessity to uphold personal liberty under Article 21. (Para 58)
3. Petition and interim application disposed of accordingly. (Para 62)

Between Fine Lines

• The Delhi High Court granted anticipatory bail in a ₹72 crore GST ITC fraud case.
• While economic offences are serious, custodial interrogation was found unnecessary.
• Petitioner’s non-compliance with summons was justified by illness and fear of arrest.
• Bail was granted with stringent conditions to ensure cooperation in investigation.
• Reinforced that anticipatory bail is a fundamental right linked to personal liberty.

Summary of Referred Cases