GST | Court Should Not Presume Denial Of Bail Is Rule: Punjab & Haryana High Court Grants Bail In ₹23.66 Cr Fake ITC Case

The Punjab and Haryana High Court held that even in cases involving economic offences under the CGST Act, courts must not proceed on the presumption that “Denial of Bail is the Rule and grant being the exception”. Justice Aaradhna Sawhney stated that even in cases involving economic offences, the Court seized of the matter has to go through the gravity of the offence, the object of the Act, the attending circumstances, etc. Thus, economic offences cannot be categorised in one group, and the Court should not proceed on the presumption that “Denial of Bail is the Rule and grant being the exception”. In the case at hand, it was alleged that the petitioner/assessee had been running a syndicate of nine taxpayer firms and had passed on fraudulent/fake ITC of Rs.23.66 Cr. to various taxpayers within and outside the jurisdiction of the CGST, Faridabad Commissionerate. As per the department, all these nine taxpayer firms in the syndicate owned and operated by the assessee have 'Nil' or 'Negligible' inward supplies. According to the department, the assessee is the mastermind, at whose instance transfers of goods-less invoices had happened and having the knowledge of all the offences, actively participated with the mens rea to defraud the State Exchequer. Thus, the assessee committed an offence under Clause (b), (c), (f) and (l) of Section 132(1) of the CGST Act, 2017, punishable under Section 132 (1)(i) of the CGST Act. The assessee/petitioner was arrested on 28.01.2025 and has been in custody since then. An application for the grant of bail was moved by the assessee before the Additional Sessions Judge, Faridabad, which was dismissed. The bench, after referring to Section 132 CGST Act, noted that the offences alleged to have been committed by the assessee are punishable with imprisonment for a term which may extend to 05 years and fine, meaning thereby that the maximum term of imprisonment is 05 years. The bench stated that the allegations against the assessee are yet to be proved. The fact that he has been in custody since 28.01.2025, has been admitted by the department. His further detention is not justified as the evidence to be rendered by the department is primarily documentary and electronic. The same (further incarceration) would be violative of his rights under Article 21 of the Constitution of India, including the right to speedy trial, and would, thus, also be against the principle of “Bail is a general rule and incarceration is an exception”, added the bench. In view of the above, the bench allowed the petition and granted bail to the assessee. Case Title: Arun Garg v. State of Kerala Case Number: CRM-M-25342-2025 Counsel for Petitioner/Assessee: Deepak Gautam and Bhavishay Sharma Counsel for Respondent/Department: Vishal Singh, AAG, Ajay Kalra, Senior Standing Counsel with Isha Janjua, Advocate for complainant/Department Click Here To Read/Download Order

GST | Court Should Not Presume Denial Of Bail Is Rule: Punjab & Haryana High Court Grants Bail In ₹23.66 Cr Fake ITC Case

Mehak Dhiman

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