Regular bail granted in GST fake ITC case as prolonged custody was held unnecessary given documentary nature of evidence and pending trial

Case details

• Title: Regular bail granted in GST fake ITC case as prolonged custody was held unnecessary given documentary nature of evidence and pending trial

• Court: High Court of Judicature at Allahabad

• Petition No.: Criminal Misc. Bail Application No. 39820 of 2024

• Applicant: Shivam Goyal

• Opposite Party: Union of India

• Relevant Sections: Section 132(1)(c), 132(1)(i) of CGST Act, 2017; Section 483 of Bhartiya Nagarik Suraksha Sanhita, 2023

• Category of Dispute: Input Tax Credit (fake ITC / prosecution / bail)

• Judgment Date: 19.03.2025

Facts (Paras 1–3, 5)

The applicant, proprietor of M/s Shreeji Metals, was accused by DGGI Meerut of availing ineligible ITC of ₹31.18 crore through 17 fake firms. Statements of co-accused and the applicant’s own confession were relied upon. He was arrested on 19.09.2024, and his earlier bail pleas before the Special CJM and Sessions Court were rejected. The department alleged large-scale fake invoicing and circulation of ITC. The applicant argued that all transactions were disclosed in returns, investigation is complete, and co-accused in a parallel case (Devendra Kumar Jain) had already been granted bail.

Questions (Para 5–6)

The central issue before the Court was whether the applicant, accused of availing fake ITC, should be granted bail pending trial, considering the gravity of the allegations versus the fact that evidence is documentary and trial has not commenced.

Observations (Paras 7–8)

The Court noted that:

• The entire prosecution case rests on documents already collected, largely being GST returns and financial data.

• The alleged ineligible ITC pertains to FY 2022–23, but no recovery proceedings under Section 74 of CGST Act have been initiated yet.

• The firm’s bank account was attached and later released, showing cooperation with investigation.

• Trial has not begun, charges are not framed, and maximum punishment is five years.

• The applicant has been in custody for over six months, and continued detention would serve no useful purpose.

• Witnesses are official witnesses, limiting risk of tampering.

Judgment (Para 9)

The Court allowed the bail application and directed release of the applicant on regular bail, subject to conditions imposed by the trial court. The order explicitly clarified that it does not comment on merits.

Case law referred (Para 5–6)

Between fine lines

This judgment underscores that bail in GST fake ITC cases is not to be denied mechanically. If the investigation is complete, evidence is documentary, and trial will take time, continued detention is unnecessary. For businesses and tax professionals, it signals that courts will balance seriousness of GST fraud allegations against personal liberty, especially where recovery proceedings under Section 74 are still pending.

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