High Court grants bail to accused of alleged GST evasion of Rs. 120 crores

High Court grants bail to accused of GST evasion of Rs. 120 crores as they were in custody for six months but no prosecution witness were examined.

In a recent case, the Hon’ble Punjab & Haryana High Court granted bail to the accused of GST evasion of Rs. 120 crores as accused were in custody for six months but none of the prosecution witness were examined delaying the Trial.

ABCAUS Case Law Citation:
4781 (2025) (10) abcaus.in HC

In the instant case, three Petitioners (Father and two sons) had filed a Writ Petition seeking the grant of regular bail under Section 483 of BNSS, 2023 in case under Sections 132(1)(a) and 132(1)(c) r/w Section 132(1) of CGST Act, 2017 r/w Section 20 of IGST Act, 2017 and Punjab GST Act, 2017 pending before the Trial Court.

The GST Department received a secret information that one of the petitioners alongwith his two sons were involved in Clandestine sale of goods through their six firms, namely.  Based on the said secret information, the GST Department conducted a search under Section 67(2) of CGST Act, 2017 at the business premises of the said firms alongwith the residential premises of their partners and employees. 

On the basis of various searches conducted on the said date, it was concluded that the petitioners were the key persons for the Clandestine Sale of goods.  It was allegedly found that there were various sale of goods without actual issuance of invoices involving GST amount of Rs. 70 Crores and further there were fraudulent availment and utilization of ITC of Rs. 50 Crores without physical receipt of goods from non-existence firms. 

Therefore, the Department alleged that there was total GST evasion of Approx Rs. 120 Crores.  Pursuant thereto, on conclusion of the investigation, the Petitioners were arrested and a complaint was filed before the Court of the Chief Judicial Magistrate, for commission of the offences under Sections 132(1)(a) and (c) of CGST Act, 2017.

Before the Hon’ble High Court, the Petitioners contended that the allegations levelled against them were baseless.  That the petitioners were taken into custody illegally but their arrest had been shown later.  No grounds of arrest were served upon them.  The petitioners had been arrested without following the mandatory provisions of Sections 73 and 74 of the CGST Act, 2017. 

It was further submitted that the complaint already stood filed.  As the petitioners had been in custody for six months but none of the 25 prosecution witness had been examined so far, therefore the Trial of the case was not likely to be concluded anytime soon and therefore, they were entitled to the concession of bail, particularly, when the maximum sentence on conviction would be for a period of 05 years.

The Hon’ble High Court noted that the Petitioners were in custody since six months but none of the 25 prosecution witnesses had been examined so far.  Therefore, the Trial was not likely to be concluded anytime soon. 

The Hon’ble High Court opined that in the given situation the further incarceration of the petitioners was not required. The veracity of the prosecution case against the petitioners shall be adjudicated upon during the course of the Trial. 

Accordingly, without commenting on the merits of the case, the petitions were allowed and all the three petitioners were ordered to be released on bail subject to their furnishing bail bonds and surety bonds each to the satisfaction of learned CJM.

It was also directed that the petitioners shall appear before the police station in the local area in which they are ordinarily resident on the first Monday of every month till the conclusion of the trial and inform in writing each time that they are not involved in any other crime/case other than the present one.

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