Anticipatory Bail Granted for Rs 11.08 Crore GST Fraud Set Aside Requiring Custodial Interrogation

By | August 13, 2026
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Anticipatory Bail Granted for Rs 11.08 Crore GST Fraud Set Aside Requiring Custodial Interrogation

Issue

Whether the High Court was justified in granting anticipatory bail to a proprietor accused of fraudulently availing Input Tax Credit (ITC) worth Rs. 11.08 crores without actual supply of goods when custodial interrogation was required by the Revenue.

Facts

  • The respondent-proprietor of a scrap-trading concern was investigated for fraudulently availing ITC without actual supply of goods.
  • Investigations revealed suspicious transactions involving 13 high-risk suppliers and an alleged fraudulent ITC availment of Rs. 11.08 crores.
  • A panchnama was prepared, and summons were issued under the State GST Act for oral evidence, but the proprietor failed to appear, citing medical reasons.
  • The Sessions Court rejected the proprietor’s anticipatory bail application due to non-cooperation with the investigation.
  • The proprietor then approached the High Court, which granted anticipatory bail subject to standard conditions against evidence tampering and ensuring appearance.
  • The Revenue filed a Criminal Appeal before the higher court against the High Court’s order granting anticipatory bail.
  • The Revenue submitted that relevant financial entries, books of account, and the scale of the fraud required custodial interrogation.

Decision

  • The Court held that the grant of anticipatory bail by the High Court was not justified given the gravity of allegations involving Rs. 11.08 crores of fraudulent ITC and suspicious transactions with 13 high-risk suppliers.
  • The Court agreed with the Revenue that custodial interrogation was necessary to examine books of account and unearth the details of the fraudulent scheme.
  • The High Court’s order granting anticipatory bail was set aside in favour of the Revenue.
  • The proprietor was ordered to be taken into custody, with the clarification that setting aside anticipatory bail would not preclude him from applying for regular bail.

Key Takeaways

  • Custodial Interrogation in High-Value Tax Frauds: Anticipatory bail is generally inappropriate in economic offenses involving large-scale GST fraud where custodial interrogation is necessary to trace financial transactions and examine books of account.
  • Non-Cooperation Weighs Against Pre-Arrest Bail: Repeated failure to comply with departmental summons under GST law undermines a plea for anticipatory bail.
  • Regular Bail Avenue Remains Open: Reversal of an anticipatory bail order does not restrict the accused’s right to apply for regular bail once taken into custody.
SUPREME COURT OF INDIA
State of Chhattisgarh
v.
Aman Singh*
J.K. Maheshwari and ATUL S. CHANDURKAR, JJ.
SLP CRIMINAL APPEAL NO. 5522 OF 2026†
MAY  26, 2026
Apoorv Shukla, AOR, Ms. Prabhleen A. Shukla and Ms. Ilashri Gaur, Advs. for the Petitioner. Aftab Ali Khan, AOR for the Respondent.
ORDER
1. Leave granted.
2. The State has preferred this appeal assailing order dated 05.08.2025 passed by the High Court1 allowing MCRCA No. 919 of 2025/Aman Singh v. State of Chhattisgarh  (Chhattisgarh) preferred by the respondent herein and granting him anticipatory bail in relation to summons issued under Section 70 of the Chhattisgarh State Goods and Services Tax Act, 2017(hereinafter referred to as ‘CGST Act’), by the Office of the Commissioner of State Tax, Chhattisgarh, for the offence punishable under Section 132 of the CGST Act.
3. We find that the allegation of suspicious transactions with 13 high-risk suppliers, including availing fraudulent Input Tax Credit of Rs. 11,08,79,628/- without actual supply any goods, has been alleged in the present case, to which entries would be relevant along with records of books of accounts.
4. During the course of the hearing, it was informed that the respondent is already in custody in another case.
5. After hearing learned counsel for the parties at length and in the peculiar facts and circumstances of this case, in our view, granting of pre-arrest bail for the reasons as stated in the impugned order by the High Court is not justified. Accordingly, the impugned order granting anticipatory bail stands set aside.
6. The respondent be taken into custody in present case as well, and subjected to custodial interrogation, as contended, for the purpose of ascertaining the truth and to supply of the document.
7. We make it clear that the setting aside of the order of anticipatory bail would not come in the way in case the respondent applies for grant of regular bail.
8. The criminal appeal is, accordingly, allowed. Pending application(s), if any, shall stand disposed of.