Regular bail granted in alleged fraudulent ITC case due to sufficient incarceration

By | June 3, 2025
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Regular bail granted in alleged fraudulent ITC case due to sufficient incarceration, bail to main co-accused, clean antecedents, no recovery, and right to speedy trial.

Issue:

Whether regular bail should be granted to an accused arrested for allegedly availing fraudulent Input Tax Credit (ITC) by using fake invoices and firms, when a co-accused (identified as the key person) has already been granted bail, the accused has undergone sufficient incarceration, has clean antecedents, and nothing incriminating was recovered from their premises.

Facts:

  • The accused was arrested for allegedly availing fraudulent ITC, committing offenses under Sections 69 (Power to arrest) and 132 (Punishment for certain offenses) of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017) / Punjab Goods and Services Tax Act, 2017 (PGST Act, 2017).
  • It was alleged that the accused had availed fake ITC invoices on fake firms created and operated by two co-accused, causing a loss to the State Exchequer to the tune of Rs. 18.22 crores.
  • The accused contended that one of the co-accused, identified as the key person involved in the alleged fake/bogus invoices and causing the loss, had already been granted concession of bail by another High Court.
  • The accused prayed for the grant of regular bail.
  • It was noted that the accused had already suffered incarceration for 2 months and 6 days.
  • The antecedents of the accused were clean, meaning they were not a habitual offender.
  • Nothing was recovered from the premises of the accused.
  • Other persons had been named by the accused who were being interrogated.

Decision:

The court held in favor of the accused, granting regular bail. It considered the following factors:

  1. The accused had already suffered “sufficient incarceration” of 2 months and 6 days.
  2. The “main accused” (key co-accused) had already been granted bail.
  3. The antecedents of the accused were clean, indicating no prior criminal record as a habitual offender.
  4. Nothing incriminating was recovered from the premises of the accused.
  5. Other persons named by the accused were undergoing interrogation.
  6. The principle of criminal jurisprudence dictates that no one should be considered guilty until guilt is proved beyond a reasonable doubt.
  7. Detaining the accused behind bars for an indefinite period would serve no purpose.
  8. The right to a speedy trial is a part of the reasonable, fair, and just procedure enshrined under Article 21 of the Constitution of India (Right to Life and Personal Liberty). Accordingly, the accused was ordered to be released on regular bail upon furnishing bail and surety bonds to the satisfaction of the trial Court.

Key Takeaways:

  • Factors for Grant of Bail: The court considered several well-established factors for granting bail in criminal cases:
    • Period of Custody/Incarceration: The fact that the accused had already spent over two months in custody was deemed “sufficient incarceration.”
    • Parity: The most significant factor was the grant of bail to the “main accused” or “key person.” The principle of parity dictates that if a similarly situated or even more culpable co-accused has been granted bail, the present accused should also be considered for bail unless there are distinguishing factors.
    • Antecedents of Accused: “Clean antecedents” (no prior criminal record, not a habitual offender) are always a strong point in favor of granting bail.
    • No Recovery from Accused: The absence of any incriminating recovery from the accused’s premises reduces the likelihood of evidence tampering or further criminal activity.
    • Stage of Investigation: The mention that other persons were being interrogated suggests the investigation might be ongoing, but detaining the accused indefinitely might not further it significantly if direct evidence against them is lacking.
  • Presumption of Innocence: The court reiterated the fundamental principle of criminal jurisprudence that an accused is presumed innocent until proven guilty1 beyond a reasonable doubt.
  • Right to Speedy Trial (Article 21): The right to a speedy trial is an integral part of the right to life and personal liberty. Prolonged pre-trial detention without a clear likelihood of a speedy trial is frowned upon by courts.
  • Discretion of Court: Granting bail is a discretionary power of the court, to be exercised judiciously, balancing the liberty of the individual with the interests of society and the proper administration of justice. In this case, the balance tilted in favor of the accused’s liberty.
  • Conditions for Bail: The standard condition of furnishing bail and surety bonds ensures the accused’s presence during trial.
HIGH COURT OF PUNJAB & HARYANA
Arvind Kumar
v.
Directorate General of GST Intelligence, Amritsar
SANDEEP MOUDGIL, J.
CRM-M-24201 of 2025
MAY  15, 2025
Arrest – Bail – ITC fraud – Accused was arrested for allegedly availing fraudulent ITC – It was alleged that accused had availed fake input Tax Credit invoices on fake firms created and operated by 2 co-accused and thus, committed offences – Accused contended that one of co-accused was key person involved in alleged fake/bogus invoices and thereby causeing loss to State Exchequer to tune of Rs.18.22 crores but he had been granted concession of bail by another High Court – Hence, accused prayed for grant of regular bail to him – HELD : Accused had already suffered sufficient incarceration of 2 months and 6 days – Main accused had already been granted bail – Antecedents of accused were clean, meaning thereby he was not a habitual offender – Nothing was recovered from premises of accused – Other persons had been named by accused who were being interrogated – As per principle of criminal jurisprudence, no one should be considered guilty, till guilt was proved beyond reasonable doubt – Detaining accused behind bars for an indefinite period would solve no purpose – Right to speedy trial is a part of reasonable, fair and just procedure enshrined under article 21 of Constitution of India – Accused was to be released on regular bail on his furnishing bail and surety bonds to satisfaction of trial Court [Section 69, read with section 132, of Central Goods and Services Tax Act, 2017/ Punjab Goods and Services Tax Act, 2017] [Paras 4 and 5] [In favour of
Nikhil Ghai, Adv. for the Petitioner. Sunish Bindlish, Adv. for the Respondent.
ORDER
1. Prayer
This petition has been filed under Section 483 of BNSS of 2023 for grant of regular bail to the petitioner in case endorsement No.DGGI/INT/MISC/53/2025-Gr-B-O/0 DD-DGGI-RU, Amritsar u/s 132(1) of CGST Act, 2017 read with relevant provisions of Punjab GST Act, 2017 and Section 20 of IGST Act, 2012 (Annexure P-1).
2. Contentions
On behalf of the petitioner
Learned counsel for the petitioner has argued that the petitioner has been falsely implicated in the present case. He submits that the allegation levelled against the petitioner are that the petitioner is proprietor of Bhumi Steel Traders having GSTIN 03APLPK2516FIZA situated at 370-A, Sector 20A, Harchand Mill Road, Mandi Gobindgarh, District Fatehgarh Sahib had availed fake input Tax Credit invoices on fake firms created and operated by Sh. Dipanshu Srivastav and Mohit Kumar and thus, committed the offences mentioned above. It is his contention that co-accused Deepanshu Srivastav 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 Luckhnow High Court vide order dated 19.03.2024 (Annexure P-3). Hence, prays for grant of regular bail to the petitioner.
3. On behalf of the State
On the other hand, learned State Counsel appearing on advance notice, accepts notice on behalf of respondent-State and has filed the custody certificate of the petitioner, which is taken on record.
Learned State Counsel on instructions from the Investigating Officer opposes the prayer for grant of regular bail stating that the petitioner is 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.
4. Analysis
From the above discussion, it can be culled out that the petitioner has already suffered sufficient incarceration i.e. 2 months and 6 days, main accused has already been granted concession of bail by this Court, antecedents of the petitioner are clean, meaning thereby he is not a habitual offender, added with the fact that nothing stands recovered from the premises of the petitioner. The details have been divulged by the counsel for the petitioner and also deposition has been made qua his role whereas certain other persons have been named by the petitioner who are being interrogated and on that account it would be unjust to deny the petitioner concession of regular bail who has suffered custody for more than 2 months whereas the interrogation qua other persons is underway, and 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.
Reliance can be placed upon the judgment of the Apex Court rendered in “Dataram v. State of Uttar Pradesh” 2018(2) R.C.R. (Criminal) 131, 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. Relevant paras of the said judgment is reproduced as under:-
“2. A fundamental postulate of criminal jurisprudence is the presumption of innocence, meaning thereby that a person is believed to be innocent until found guilty. However, there are instances in our criminal law where a reverse onus has been placed on an accused with regard to some specific offences but that is another matter and does not detract from the fundamental postulate in respect of other offences. Yet another important facet of our criminal jurisprudence is that the grant of bail is the general rule and putting a person in jail or in a prison or in a correction home (whichever expression one may wish to use) is an exception. Unfortunately, some of these basic principles appear to have been lost sight of with the result that more and more persons are being incarcerated and for longer periods. This does not do any good to our criminal jurisprudence or to our society.
3. There is no doubt that the grant or denial of bail is entirely the discretion of the judge considering a case but even so, the exercise of judicial discretion has been circumscribed by a large number of decisions rendered by this Court and by every High Court in the country. Yet, occasionally there is a necessity to introspect whether denying bail to an accused person is the right thing to do on the facts and in the circumstances of a case.
4. While so introspecting, among the factors that need to be considered is whether the accused was arrested during investigations when that person perhaps has the best opportunity to tamper with the evidence or influence witnesses. If the investigating officer does not find it necessary to arrest an accused person during investigations, a strong case should be made out for placing that person in judicial custody after a charge sheet is filed. Similarly, it is important to ascertain whether the accused was participating in the investigations to the satisfaction of the investigating officer and was not absconding or not appearing when required by the investigating officer. Surely, if an accused is not hiding from the investigating officer or is hiding due to some genuine and expressed fear of being victimised, it would be a factor that a judge would need to consider in an appropriate case. It is also necessary for the judge to consider whether the accused is a first-time offender or has been accused of other offences and if so, the nature of such offences and his or her general conduct. The poverty or the deemed indigent status of an accused is also an extremely important factor and even Parliament has taken notice of it by incorporating an Explanation to section 436 of the Code of Criminal Procedure, 1973. An equally soft approach to incarceration has been taken by Parliament by inserting section 436A in the Code of Criminal Procedure, 1973.
5. To put it shortly, 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 as noticed by this Court in In Re-Inhuman Conditions in 1382 Prisons, 2017(4) RCR (Criminal) 416: 2017(5) Recent Apex Judgments (R.A.J.) 408 : (2017) 10 SCC 658
6. The historical background of the provision for bail has been elaborately and lucidly explained in a recent decision delivered in Nikesh Tara chand Shah v. Union of India, 2017 (13) SCALE 609 going back to the days of the Magna Carta. In that decision, reference was made to Gurbaksh Singh Sibbia v. State of Punjab (1980) 2 SCC 565 in which it is observed that it was held way back in Nagendra v. King-Emperor AIR 1924 Calcutta 476 that bail is not to be withheld as a punishment. Reference was also made to Emperor v. Hutchinson, AIR 1931 Allahabad 356 wherein it was observed that grant of bail is the rule and refusal is the exception. The provision for bail is therefore age-old and the liberal interpretation to the provision for bail is almost a century old, going back to colonial days.
7. However, we should not be understood to mean that bail should be granted in every case. The grant or refusal of bail is entirely within the discretion of the judge hearing the matter and though that discretion is unfettered, it must be exercised judiciously and in a humane manner and compassionately. Also, conditions for the grant of bail ought not to be so strict as to be incapable of compliance, thereby making the grant of bail illusory. “
Therefore, to elucidate further, this Court is 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 in Balwinder Singh v. State of Punjab [SLP (Crl.) No. 8523 of 2024]. Relevant paras of the said judgment reads as under:-
“7. 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.
8. It is not for nothing the Author Oscar Wilde in “The Ballad of Reading Gaol”, wrote the following poignant lines while being incarcerated:

“I know not whether Laws be right,

Or whether Laws be wrong;

All that we know who be in jail

Is that the wall is strong;

And that each day is like a year,

A year whose days are long. ”

5. Relief
In view of the aforesaid discussions made hereinabove, the petitioner is directed to be released on regular bail on his furnishing bail and surety bonds to the satisfaction of the trial Court/Duty Magistrate, concerned.
However, it is made clear that anything stated hereinabove shall not be construed as an expression of opinion on the merits of the case.
The petition in the aforesaid terms stands allowed.