High Court grants bail to accused of fake ITC utilization of more than 18 crores

High Court grants regular bail to the accused of availing and utilization of fraudulent Input Tax Credit.

In a recent judgment, Hon’ble High Court granted regular bail to the accused of availing and utilization of fraudulent Input Tax Credit of Rs. 18.22 crores as the accused had already suffered sufficient incarceration and main accused was granted bail.

ABCAUS Case Law Citation:
4624 (2025) (07) abcaus.in HC

In The instant case, the assessee had filed a petition under Section 483 of Bharatiya Nagarik Suraksha Sanhita (BNSS) 2023 for grant of regular bail to the petitioner in case u/s 132(1) of CGST Act, 2017 read with relevant provisions of State GST Act, 2017 and Section 20 of IGST Act, 2012.

The petitioner was a proprietor of a firm. The allegation levelled against him was that he had availed fake input Tax Credit invoices on fake firms created and operated by two persons. 

The Petitioner contended that that co-accused was the key person involved in alleged fake/bogus invoices and thereby caused loss to the State Exchequer to the tune of Rs.18.22 crores who has been granted concession of bail by Lucknow High Court.  Hence, he prayed for grant of regular bail.

On the other hand, the State Counsel on instructions from the Investigating Officer opposes the prayer for grant of regular bail stating that the petitioner was involved in the act of availing and utilization of fraudulent Input Tax Credit to the tune of Rs. 18.22 crores and the said allegations are serious in nature.

The Hon’ble High Court observed that the petitioner had already suffered sufficient incarceration i.e. slightly more than 2 months and main accused had already been granted concession of bail, antecedents of the petitioner were clean, meaning he was not a habitual offender, added with the fact that nothing stood recovered from the premises of the petitioner.

The Hon’ble High Court further observed that the details had been divulged to the Court and also deposition had been made qua Petitioner’s role whereas certain other persons had been named by the petitioner who were being interrogated and on that account, it would be unjust to deny the petitioner concession of regular bail who had suffered custody for more than 2 months whereas the interrogation qua other persons was underway.

The Hon’ble High Court stated that as per the principle of the criminal jurisprudence, no one should be considered guilty, till the guilt is proved beyond reasonable doubt, therefore, detaining the petitioner behind the bars for an indefinite period would solve no purpose.

The Hon’ble High Court placed reliance upon the judgment of the Apex Court wherein it has been held that the grant of bail is a general rule and putting persons in jail or in prison or in correction home is an exception. The Apex Court had held that a humane attitude is required to be adopted by a judge, while dealing with an application for remanding a suspect or an accused person to police custody or judicial custody. There are several reasons for this including maintaining the dignity of an accused person, howsoever poor that person might be, the requirements of Article 21 of the Constitution and the fact that there is enormous overcrowding in prisons, leading to social and other problems.

The Hon’ble High Court further observed that the Bench was conscious of the basic and fundamental principle of law that right to speedy trial is a part of reasonable, fair and just procedure enshrined under Article 21 of the Constitution of India. This constitutional right cannot be denied to the accused as is the mandate of the Apex court which held that an accused has a right to a fair trial and while a hurried trial is frowned upon as it may not give sufficient time to prepare for the defence, an inordinate delay in conclusion of the trial would infringe the right of an accused guaranteed under Article 21 of the Constitution.

As a result, the petitioner was directed to be released on regular bail on his furnishing bail and surety bonds to the satisfaction of the trial Court/Duty Magistrate, concerned. Accordingly, the petition was allowed.

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