Prolonged Pre-Trial Custody Overrides Gravity of Economic Offence in Bail Grant

The Issue

Whether an accused, alleged to be the mastermind behind a massive ₹315.3 Crore fake ITC scam involving 44 shell firms, is entitled to bail despite the economic gravity of the offence, considering he has been in custody for over eight months without the trial commencing.

The Facts

The Allegation: The accused allegedly set up a network of 44 proxy/non-existent firms to pass on fraudulent Input Tax Credit (ITC) via goods-less invoices, causing a massive loss to the exchequer.
High Court’s Stance: The High Court initially denied bail, labeling economic offences as a “class apart” that require a more stringent view due to their impact on the national economy.
The Appeal: The petitioner approached the Supreme Court, highlighting that he had spent over eight months in judicial custody, charges had not been framed, and the trial was unlikely to conclude anytime soon.

The Decision

Triable by Magistrate: The Supreme Court noted that the offences under Section 132 of the GST Act are triable by a Magistrate and carry a maximum punishment of five years.
Liberty vs. Gravity: While acknowledging that the gravity of the offence cannot be undermined, the Court emphasized that “bail is the rule, jail is the exception.” Prolonged incarceration without trial violates Article 21 of the Constitution.
Lack of Progress: Since the trial had not yet commenced and was unlikely to finish within a year, the Court exercised its discretion to release the petitioner.
Outcome: The SLP was disposed of, and the petitioner was granted bail subject to conditions imposed by the Trial Court. In favour of assessee.

SUPREME COURT OF INDIA

Amit Mehra

Union of India^*

J.B. PARDIWALA and ALOK ARADHE, JJ.

SLP Appeal (Crl.) No. 20996 OF 2025

JANUARY 12, 2026

P.B. Suresh, Sr. Adv., Saurabh Kapoor, Mayank Jain, Madhur Jain, Gurwinder Singh, Kartik Yadav, Ms. Muskaan Gupta, Ms. Muskan Chauhan, Tanya Kumar, Ms. Shivani Kapoor, Advs. and Nikilesh Ramachandran, AOR for the Petitioner. Raja Thakre, ASG, Gurmeet Singh Makker, AOR, Rohit Khare, Bhuvan Mishra, Udit Dediya and Mayanlk Pandey, Advs. for the Respondent.

ORDER

1. Exemption Application is allowed.

2. The petitioner has been denied regular bail by the High Court in connection with Case No.442 of 2025 arising from the File No.DGGI/INT/INTL/442/2025-RU-DGGI-SML dated 01.05.2025 in connection with the offence punishable under Section 132(l)(b) of the Central Goods and Services Tax Act, 2017 (for short, the “CGST Act”), Section 132(l)(i) of the Goods & Services Tax Act. 2017 (for short, the “GST Act”) and Section 20 (xv) of the IGST Act, 2017 respectively.

3. Heard Mr. P.B. Suresh, the learned Senior counsel appearing for the petitioner and the learned Additional Solicitor General appearing for the Respondent – Union of India.

4. We do not undermine the gravity of the alleged offence. However, at the same time, we should not overlook the fact that the petitioner is in judicial custody as an under-trial prisoner past 8 months. The Trial Court is yet to commence. Charge is yet to be framed. Even if the trial commences in near future, it would not conclude within next one year. The offences are triable by Magistrate. The maximum punishment that the trial court may be in a position to impose upon the petitioner if held guilty would be upto 5 years.

5. In such circumstances, referred to above, we are persuaded to exercise our discretion in favour of the petitioner.

6. The petitioner is ordered to be released on bail, subject to terms and conditions that the Trial Court may deem fit to impose.

7. If the department wants a particular condition to be imposed upon the petitioner to safeguard its interest, it may make a request to the Trial Court. If any such request is made by the department, the Trial Court shall consider it in accordance with law.

8. With the aforesaid, the Special Leave Petition is disposed of.

9. Pending applications, if any, also stand disposed of.

10. Dasti permitted