Bail Denied in ₹11.97 Crore ITC Fraud Involving Fake Invoices and No Actual Supply

Case Title: Samir Kumar Sahu & Anala Kumar Rao v. Union of India
Court: High Court of Orissa at Cuttack
Petition Number: BLAPL No. 3155 & 3113 of 2025
Category of Dispute: Input Tax Credit – Fraudulent Availment & Passing without Supply
Date of Judgment: 30 May 2025
Relevant Sections: Sections 132(1)(b), 132(1)(c), 132(1)(f), 132(1)(i), and 132(5) of the CGST Act, 2017

📌 Facts of the Case [Para 3–6]

• The petitioners, Samir Kumar Sahu (proprietor) and Anala Kumar Rao (employee), were arrested on charges of availing and passing Input Tax Credit (ITC) worth ₹11.97 crore through M/s Radha Raman Traders without actual receipt of goods. [Para 3]

• E-way bills were generated, but no vehicle movements were recorded across toll plazas between Ganjam and Khordha. [Para 3]

• Discrepancy noted between ITC claimed in GSTR-3B and inward supplies reported in GSTR-2A/2B. [Para 3]

• The petitioner Rao claimed to be a mere employee without operational control, while Sahu argued for constructive delivery and legal documentation under Section 16(2)(b) CGST Act. [Para 4–5]

❓ Question(s) in Consideration [Para 2, 17]

• Whether bail should be granted to the petitioners accused of fraudulent ITC transactions exceeding ₹11.97 crore under the CGST Act.

• Whether pre-trial detention was justified considering the ongoing investigation and the alleged scale of financial fraud.

🧾 Observations of the Court [Para 8–17]

• The Court noted substantial documentary and electronic evidence showing a prima facie organized effort to defraud the exchequer. [Para 8]

• Disparity in GSTR data and absence of physical transport verification (toll data) reinforced suspicion. [Para 12]

• Economic offences with organized structure require stricter scrutiny and a different approach to bail as per SC judgments in Jagan Mohan Reddy and Mohanlal Porwal cases. [Para 10–11]

• Petitioners’ residence status did not outweigh the risk of tampering with digital records and witness influence. [Para 16]

• The stage of proceedings was not suited for adjudicating legality of constructive delivery or invoice-based claims. [Para 14]

🧑‍⚖️ Judgement of the Court [Para 18]

• The Court dismissed both bail applications, holding that the gravity, scale, and ongoing investigation warranted continued custody.

✅ Between Fine Lines

1. Bail was denied due to serious allegations of orchestrated ITC fraud.

2. Disparity between ITC claimed and actual supplies plus lack of physical movement was central to the case.

3. Constructive delivery arguments were deferred to trial stage.

4. Risk of tampering with digital records and evidence weighed against bail.

5. Court upheld public interest and financial accountability over individual liberty at the pre-trial stage.

📚 Summary of Referred Cases