Sanket Mittal Vs Central GST Department (Punjab & Haryana High Court)
Summary: The Punjab and Haryana High Court, in Sanket Mittal Vs Central GST Department, granted regular bail to an accused facing prosecution under Section 132 of the Central Goods and Services Tax Act, 2017, in connection with alleged fraudulent availment and passing of input tax credit exceeding Rs.30 crore. Justice Aaradhna Sawhney held that although economic offences can seriously affect the State’s financial interests, the gravity of the alleged offence cannot automatically justify prolonged pre-trial incarceration. The Court considered that the petitioner had remained in custody since 6 May 2025, the maximum punishment prescribed for the alleged offences was five years’ imprisonment with fine, the complaint had already been filed, and the prosecution evidence was primarily documentary and electronic. Applying the principles laid down by the Supreme Court in Vineet Jain Vs Union of India, Sanjay Chandra Vs CBI, Ashutosh Garg Vs Union of India and Ratnambar Kaushik Vs Union of India, the Court held that continued detention was unjustified and ordered the petitioner’s release on stringent conditions.
The allegations arose from the business activities of M/s Balaji Mobile Addition, a firm engaged in trading mobile phones, particularly iPhones. Upon examining returns available on the GST portal, the Department alleged that the firm had received ineligible ITC from several suppliers, including M/s Monit Enterprises, through invoices issued without corresponding supplies of goods. The alleged fraudulent credit relating to M/s Monit Enterprises was approximately Rs.30.54 crore for the period December 2023 to March 2024. The Department initially issued a show-cause notice dated 19 March 2024 and cancelled the firm’s GST registration by order dated 26 March 2024, with effect from 29 February 2024. An application seeking revocation of the cancellation was rejected on 30 April 2024, but a statutory appeal succeeded on 8 May 2024, resulting in restoration of the registration.
Thereafter, the Department invoked Rule 86A of the CGST Rules to block the firm’s electronic credit ledger concerning the disputed ITC of Rs.30,54,15,229. The firm challenged the action through CWP-18358-2024 before the Punjab and Haryana High Court. By an interim order dated 24 September 2024, the High Court directed the Department to release the bank account and electronic credit ledger. The writ petition remained pending adjudication. Subsequently, the Department proceeded with criminal allegations concerning fraudulent ITC transactions, and Sanket Mittal, who looked after the firm’s business affairs, was arrested on 6 May 2025. Following investigation and inquiry, a criminal complaint was filed before the competent court. His applications for regular bail were rejected by the Chief Judicial Magistrate, Faridabad, on 13 May 2025 and by the Additional Sessions Judge, Faridabad, on 25 July 2025.
Before the High Court, the petitioner’s father, Shri Dheeraj Mittal, appeared on his behalf because members of the Bar were abstaining from work. He submitted that the petitioner had been falsely implicated and that the disputed purchases from M/s Monit Enterprises were genuine business transactions. According to the defence, the firm had purchased mobile phones from 187 suppliers in its normal course of business, the purchases were reflected in the books of account, and payments were made through banking channels. Reliance was placed upon compliance with Section 16 of the CGST Act and the earlier orders restoring GST registration and directing release of the electronic credit ledger. It was argued that further incarceration would serve no useful purpose and that bail should be granted.
In support of the bail application, the petitioner cited Ganga Ram Vs State of Punjab, Ratnambar Kaushik Vs Union of India, Vishal Chauhan Vs Haryana State GST, Ashutosh Garg Vs Union of India, Sandeep Singhal Vs DGGSTI, Manish Kumar Vs Directorate General of Goods and Services Tax Intelligence and Manoj Gupta Vs Union of India. These authorities were relied upon to demonstrate that the Court must evaluate custody, the nature of evidence, completion of investigation, the punishment prescribed and the likely duration of trial when deciding applications for bail in GST-related economic offences.
The Department strongly opposed bail and alleged that the petitioner was the mastermind of a network of bogus firms created or operated for generating fake invoices and passing fraudulent input tax credit without any actual supply of goods. It asserted that the fraudulent transactions had caused loss exceeding Rs.30 crore to the public exchequer. According to the Department, the petitioner had voluntarily acknowledged involvement in operating bogus firms, obtaining credentials, generating invoices and passing irregular ITC. It further claimed that the investigation revealed several suppliers to be non-existent. The Department argued that releasing the petitioner could result in commission of similar offences, evasion of judicial proceedings or tampering with evidence. It relied upon decisions including SFIO Vs Nitin Johari, Narain Popli Vs CBI, P.V. Ramana Reddy Vs Union of India and Shailesh Rajpal Vs Commissioner.
The High Court first examined Section 132(1) of the CGST Act, relating to offences involving invoices without supply of goods, wrongful availment or utilisation of input tax credit, and other tax-related offences. The Court noted that the alleged conduct attracted a maximum sentence of five years’ imprisonment and a fine. It recognised that economic offences pose a threat to the State’s financial stability and deserve serious consideration. Nevertheless, the Court held that the nature of an economic offence was not, by itself, conclusive in deciding whether an accused should remain in custody pending trial. The surrounding facts, likely punishment, evidence, stage of proceedings, possibility of interference with witnesses and constitutional right to liberty must also be examined.
Particular reliance was placed upon the Supreme Court’s ruling in Vineet Jain Vs Union of India, Criminal Appeal No. 2269 of 2025. In that matter, the Supreme Court had observed that where an accused faced offences under Section 132 of the CGST Act carrying a maximum punishment of five years, the charge-sheet had been filed, the trial was before a Judicial Magistrate and the case was principally based on documentary evidence, bail ought ordinarily to be granted in the absence of extraordinary circumstances. The Supreme Court had expressed concern that such an accused had been denied bail at several judicial levels despite prolonged custody and completion of investigation. The Punjab and Haryana High Court found this reasoning directly relevant.
The Court also referred to Sanjay Chandra Vs CBI, (2012) 1 SCC 40, where the Supreme Court emphasised that pre-trial detention must not become an indefinite deprivation of liberty, particularly where investigation is complete and the trial may require considerable time. The right to a speedy trial under Article 21 of the Constitution of India, the seriousness of the accusation, the likely sentence and the risks of flight or interference with evidence are all relevant considerations. The judgment also discussed State of Kerala Vs Raneef and Gurcharan Singh Vs State, concerning the length of pre-trial custody, the right to liberty and the purposes of granting or refusing bail.
Further reliance was placed upon Ashutosh Garg Vs Union of India, where the Supreme Court granted bail in a case involving alleged fraudulent ITC of Rs.1,032 crore and the creation of 294 fake firms, considering that the accused had been in custody for approximately nine months and that the prescribed maximum punishment was five years. The High Court also examined Ratnambar Kaushik Vs Union of India, in which bail was granted after considering that the investigation had concluded, the accused had spent more than four months in custody and the prosecution evidence was primarily documentary, electronic and official in nature.
Applying these authorities, the High Court concluded that economic offences could not be treated as one uniform category in which refusal of bail was the rule. Although the allegations against Sanket Mittal were serious and involved substantial disputed ITC, the accusations had not yet been proved. The petitioner had remained in custody for more than seven months, the prosecution case principally depended on documentary and electronic material, and continued incarceration was not justified on the facts. The Court considered further detention inconsistent with the guarantee under Article 21, including the right to a speedy trial, and applied the principle that bail is ordinarily the rule and incarceration the exception.
Accordingly, the High Court granted regular bail subject to execution of bail bonds and two sound sureties of Rs.1 lakh each to the satisfaction of the trial court or Duty Magistrate. The petitioner was directed to surrender his passport, refrain from leaving India without permission, avoid tampering with evidence or influencing witnesses, attend court hearings unless specifically exempted, avoid committing similar offences and comply with all other conditions imposed by the trial court. He was also required to provide his address and mobile number and intimate any subsequent changes. The Court clarified that the prosecution could seek cancellation of bail in the event of breach of the prescribed conditions.
The High Court expressly clarified that its observations were confined to the bail proceedings and did not amount to findings on the merits of the criminal complaint. The trial was to proceed independently. The judgment therefore reinforces that even substantial GST fraud allegations must be evaluated against the constitutional right to personal liberty, the maximum prescribed sentence, the duration of custody, the nature of evidence and the progress of investigation. Grant of bail does not determine the accused’s guilt or innocence, and the allegations remain subject to proof at trial.
Cases Discussed
1. Vineet Jain Vs Union of India — Criminal Appeal No. 2269 of 2025, arising out of SLP (Criminal) No. 4349 of 2025 (Supreme Court). Relied upon. The Supreme Court held that bail should ordinarily be granted in GST prosecutions carrying a maximum sentence of five years where investigation is complete, evidence is documentary and no extraordinary circumstances justify detention. The High Court applied these principles when assessing the petitioner’s prolonged incarceration.
2. Ashutosh Garg Vs Union of India — (2024) 20 Centax 595 (Supreme Court). Relied upon. The Supreme Court granted bail in an alleged fraudulent ITC case involving Rs.1,032 crore and 294 fake firms, considering custody of approximately nine months and the maximum punishment of five years.
3. Manish Kumar Vs Directorate General, Goods and Services Tax Intelligence Zonal Unit, Ludhiana — 2025-TIOL-1233-HC-P&H-GST (Punjab and Haryana High Court). Cited by the petitioner. Tendered among the authorities supporting the petitioner’s request for bail in a GST-related criminal prosecution.
4. Manoj Gupta Vs Union of India and Others — CRM-M No. 20320 of 2025; decided on 10/07/2025 (Punjab and Haryana High Court). Cited by the petitioner. Relied upon in support of granting bail in the circumstances of the present case.
5. Sandeep Singhal Vs DGGSTI — (2024) 16 Centax 443 (Rajasthan High Court). Cited by the petitioner. Tendered as authority concerning the consideration of bail in GST prosecutions.
6. Vishal Chauhan Vs Haryana State GST (Intelligence Unit), Rohtak — (2024) 21 Centax 434 (Punjab and Haryana High Court). Cited by the petitioner. Relied upon while seeking regular bail under the statutory framework governing GST offences.
7. SFIO Vs Nitin Johari and Another — Criminal Appeal No. 1381 of 2019; 12/09/2019 (Supreme Court). Relied upon by the Revenue. The Department cited this decision to emphasise the seriousness of economic offences and oppose grant of bail.
8. Ratnambar Kaushik Vs Union of India — (2022) 1 Centax 278 (Supreme Court). Relied upon. The Court considered the documentary and electronic character of prosecution evidence, four months of custody, completion of investigation and likely duration of trial when granting bail.
9. Shailesh Rajpal Vs Commissioner — (2020) 32 GSTL 336 (Madhya Pradesh High Court). Relied upon by the Revenue. Cited in opposition to bail in view of the alleged seriousness and economic consequences of fraudulent GST transactions.
10. Sanjay Chandra Vs CBI — (2012) 1 SCC 40 (Supreme Court). Relied upon. The Supreme Court explained the relevance of Article 21, speedy trial, completion of investigation, seriousness of offences, quantum of punishment and the risk of interference with witnesses in considering bail.
11. Ganga Ram Vs State of Punjab — (2021) 44 GSTL 5 (Punjab and Haryana High Court). Cited by the petitioner. Relied upon in the application for regular bail concerning GST-related offences.
12. Dataram Vs State of Uttar Pradesh and Another — 2018 (2) RCR (Criminal) 131 (Supreme Court). Relied upon. The Court referred to the principle that bail is generally the rule and incarceration is an exception, considering constitutional liberty and the circumstances of the accused.
13. State of Kerala Vs Raneef — (2011) 1 SCC 784 (Supreme Court). Relied upon through Sanjay Chandra. The Supreme Court emphasised the importance of the probable delay in concluding trial and the consequences of prolonged incarceration when deciding bail applications.
14. Gurcharan Singh and Others Vs State — AIR 1978 SC 179 (Supreme Court). Relied upon through Sanjay Chandra. The decision identified the likelihood of absconding and interference with prosecution witnesses as important considerations when deciding applications for bail.
15. P.V. Ramana Reddy Vs Union of India — Writ Petition No. 4764 of 2019 (Telangana High Court). Cited by the Revenue. Relied upon in support of its opposition to bail in a prosecution involving alleged fraudulent input tax credit.
16. Narain Popli Vs CBI — AIR 2003 SC 3257 (Supreme Court). Cited by the Revenue. Tendered in support of the Department’s argument concerning the gravity of the alleged economic offence.
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT
1. Upon a call given by Punjab and Haryana High Court Bar Association, the Members of the Bar are abstaining from work.
2. This petition for grant of bail under Section 483 of BNSS, has been filed by petitioner, an accused in criminal complaint No. COMA/518/2025 dated 5.7.2025, titled “Mr. Vikas Kumar Verma, Superintendent, CGST Commissionerate v. Sh. Sanket Mittal and another,” under Section 132 of Central Goods Service Tax Act, 2017 (in short “the CGST Act”).
3. M/s Balaji Mobile Addition has been engaged in the trading of mobile phones (especially I-phones). On perusal of GST returns available on the GST Portal, it came to notice that M/s Balaji Mobile Addition had availed ITC from various suppliers including M/s Monit Enterprises, who had passed on ineligible ITC to the tune of Rs.30.4 crores to it during the period December, 2023 to March, 2024 using goods-less invoices. Accordingly, a show cause notice dated 19.3.2024 (Annexure P-2) followed by order dated 26.3.2024 (Annexure P-3) for cancellation of registration w.e.f. 29.2.2024 were issued. Against the order (Annexure P-3), an application for revocation of order was filed which was rejected vide order dated 30.4.2024 (Annexure P-4) passed by the Assistant Commissioner holding that the tax payer firm has availed ITC to the tune of Rs.30,54,15,229/- from one M/s Monit Enterprises. The statutory appeal preferred by petitioner against the order (Annexure P-4) was allowed vide order dated 8.5.2024 (Annexure P-5) by revoking the cancellation and the registration of the aforesaid firm was restored. Thereafter, the respondent proceeded to freeze the ITC ledger of the firm by invoking Rule 86A of the CGST Rules against the alleged ITC availment amounting to Rs.30,54,15,229/-. Against the action of the respondent, M/s Balaji Mobile Addition filed CWP-1835802924. This Court vide order date 24.9.2024 (Annexure P-6) issued an interim order directing the respondent to release the account as well as the electronic credit ledger. The said writ petition is pending trial adjudication. On the basis of said allegations of fraudulent availment and passing of ITC, petitioner, who looks after business activities of M/s Balaji Mobile Addition was arrested, on 6.5.2025. Thereafter, respondent moved an application before learned Chief Judicial Magistrate, Faridabad seeking permission to record the statement of petitioner on 8.5.2025, which was allowed. Petitioner, who was arrested on 06.05.2025 has been in custody since then. Complaint was filed before the competent Court after completion of necessary investigation/enquiry, the same is pending before the Court.
4. Petitioner moved an application for grant of regular bail before learned Chief Judicial Magistrate, Faridabad, which came to be dismissed in terms of order dated 13.5.2025. Against the order dated 13.5.2025, petitioner moved an application before the learned Additional Sessions Judge, Faridabad, which also came to be dismissed in terms of order dated 25.7.2025 (Annexure P-4). Aggrieved of the same, present petition has been filed.
5. Shri Dheeraj Mittal, father of the petitioner submits that petitioner has been falsely implicated in the present case. The respondent issued a show cause notice dated 19.3.2024 for the cancellation of GST registration of M/s Balaji Mobile Addition which was followed by cancellation order dated 26.3.2024. Petitioner filed revocation application which was dismissed on 30.4.2024 and thereafter, filed a statutory appeal before the appellate authority, which was allowed and the cancellation was revoked. Respondent also proceeded to freeze the ITC credit ledger of M/s Balaji Mobile Addition for ITC availment amounting to Rs.30 crores qua M/s Monit Enterprises. The said action of respondent was challenged before this Court in CWP-18358-2024 and this Court vide order dated 24.9.2024 ordered for de-freezing of ITC ledger. It has been further submitted that all purchases from M/s Monit Enterprises were made in normal course of business and in compliance with the provisions of Section 16 of the CGST Act. Further, M/s Balaji Phone Addition had purchased mobile phones in the regular course of business from 187 suppliers including M/s Monit Enterprises and all such purchases were duly reflected in the ledger account and petitioner made the payment to its supplier including M/s Monit Enterprises through banking channel.
Lastly, prayer for taking a lenient view in favour of petitioner has been made by extending him the concession of bail, for his further incarceration would not serve any useful purpose.
Following judgments have also been tendered and placed on record:-
(i) Ganga Ram Vs. State of Punjab, (2021 (44) GSTL 5) of this Court.
(ii) Ratnambar Kaushik Vs. Union of India, (2022) 1 Centax 278 (SC) of Hon’ble Supreme Court.
(iii) Vishal Chauhan Vs. Haryana State GST (Intelligence Unit), Rohtak, ((2024) 21 Centax 434) of Punjab and Haryana High Court.
(iv) Ashutosh Garg Vs. Union of India, ((2024) 20 Centax 595 (SC)).
(v) Sandeep Singhal Vs. DGGSTI, ((2024) 16 Centax 443) of Rajasthan High Court.
(vi) Manish Kumar Vs. Directorate General, Goods and Services Tax Intelligence Zonal unit, Ludhiana, (2025-TIOL-1233-HC-P&H-GST).
(vii) Manoj Gupta Vs. Union of India and others, in CRM-M No.20320 of 2025 of this Court, decided on 10.07.2025.
6. While opposing the petition, detailed reply has been filed by the respondent department reiterating that petitioner is the mastermind of the entire network i.e. for the generating fake invoices, passing fraudulent Input Tax Credit without actual supply of goods causing huge loss of over Rs.30 crores to the State Exchequer. It was alleged in the reply that entire search proceedings were conducted in accordance with law, thus no question of any threat, coercion or intimidation against the petitioner arises and petitioner himself voluntarily admitted regarding their role in operating various bogus firms, purchasing their credentials, issuing fake invoices and passing fraudulent ITC. Further investigation reveals that all the major suppliers of bogus taxpayer firm were found to be non-existent. The evidence collected during the course of investigations, statements recorded of various concerned persons, have also been referred to in the reply.
Reference has been made to various judgments of Hon’ble Supreme Court, as also that of the other High Courts, in support of its stand that petitioner, at whose instance these transactions of goods-less invoices occurred/created does not deserve the concession of bail, for if the relief sought for is extended, there is every likelihood of him (petitioner) indulging in same offence, fleeing from the process of justice by not appearing in the Court and to tamper with the evidence. Dismissal of the petition has been prayed for.
Reliance has been placed on the following judgments:-
1) SFIO Vs. Nitin Johari and another, in Crl. Appeal No.1381/2019 dated 12.09.2019 of Hon’ble Supreme Court.
2) Narain Popli Vs. CBI, (AIR 2003 SCC 3257) of Hon’ble Supreme Court.
3) P.V. Ramana Reddy Vs. Union of India in Writ Petition No.4764 of 2019 of Telangana High Court.
4) Shailesh Rajpal Vs. Commissioner, (2020 (32) G.S.T.L. 336) of Madhya Pradesh High Court.
7. I have heard Mr. Dheeraj Mittal, father of petitioner and have also gone through the material available on record.
8. Before expressing any opinion on the merits of the rival contentions, it would be appropriate to carefully go through Section 132 CGST Act, which reads as under: –
“132. Punishment for certain offences.—
(1) Whoever commits any of the following offences, namely:—
(a) supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made thereunder, with the intention to evade tax;
(b) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax;
(c) avails input tax credit using such invoice or bill referred to in clause (b); shall be punishable––
(i) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilized or the amount of refund wrongly taken exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five year and with fine.
(ii) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilized or the amount of refund wrongly taken exceeds two hundred lakh rupees but does not exceed five hundred lakh rupees, with imprisonment for a term which may extend to three years and with fine;
(iii) in the case of any other offence where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds one hundred lakh rupees but does not exceed two hundred lakh rupees, with imprisonment for a term which may extend to one year and with fine;”
A bare perusal of the aforesaid provision leaves no doubt that the offences alleged to have been committed by the petitioner are punishable with imprisonment for a term which may extend to 05 years and fine, meaning thereby that the maximum terms of imprisonment is 05 years.
Economic offences by their very nature pose threat to the State’s financial stability and deserve to be dealt with sternly. Question that arises is as to what criteria/factors/circumstances need to be kept in mind while dealing with the petition for grant of bail in such economic offences.
At this stage, it would be most appropriate to refer to recent judgment of Hon’ble Supreme Court in “Vineet Jain Vs. Union of India (Criminal Appeal No.2269 of 2025 (arising out of SLP(Crl.) No.4349 of 2025), wherein while discussing the current state of affairs with regard to grant of bail arising out of CGST cases, it was held as under:
“The offences alleged against the appellant are under Clauses (c), (f) and (h) of Section 132(1) of the Central Goods and Services Tax Act, 2017. The maximum sentence is of 5 years with fine. A charge-sheet has been filed. The appellant is in custody for a period of almost 7 months. The case is triable by a Court of a Judicial Magistrate. The sentence is limited and in any case, the prosecution is based on documentary evidence. There are no antecedents.
We are surprised to note that in a case like this, the appellant has been denied the benefit of bail at all levels, including the High Court and ultimately, he was forced to approach this Court. These are the cases where in normal course, before the Trial Courts, the accused should get bail unless there are some extra ordinary circumstances.”
Appropriate here would also be to refer to judgment of Hon’ble Supreme Court in Sanjay Chandra Vs. CBI, (2012(1) SCC 40), wherein the Sessions Court and the High Court had declined the bail applications of the accused, who had been alleged of committing forgery and cheating, on the ground that the offences are serious, involved deep rooted planning and huge loss had been caused to the Exchequer, as also that if allowed the relief of bail the possibility of accused tampering with the evidence could not be ruled out. In that context, Hon’ble Supreme Court held as under:
“43. When the undertrial prisoners are detained in jail custody to an indefinite period, Article 21 of the Constitution is violated. Every person, detained or arrested, is entitled to speedy trial, the question is: whether the same is possible in the present case. There are seventeen accused persons. Statement of the witnesses runs to several hundred pages and the documents on which reliance is placed by the prosecution, is voluminous. The trial may take considerable time and it looks to us that the appellants, who are in jail, have to remain in jail longer than the period of detention, had they been convicted. It is not in the interest of justice that accused should be in jail for an indefinite period. No doubt, the offence alleged against the appellants is a serious one in terms of alleged huge loss to the State exchequer, that, by itself, should not deter us from enlarging the appellants on bail when there is no serious contention of the respondent that the accused, if released on bail, would interfere with the trial or tamper with evidence. We do not see any good reason to detain the accused in custody, that too, after the completion of the investigation and filing of the charge-sheet.
44. This Court, in the case of State of Kerala v. Raneef, 2011(1) RCR (Criminal) 381 : 2011(1) Recent Apex Judgments (R.A.J.) 116 : (2011)1 SCC 784, has stated :-
“15. In deciding bail applications an important factor which should certainly be taken into consideration by the court is the delay in concluding the trial. Often this takes several years, and if the accused is denied bail but is ultimately acquitted, who will restore so many years of his life spent in custody? Is Article 21 of the Constitution, which is the most basic of all the fundamental rights in our Constitution, not violated in such a case? Of course this is not the only factor, but it is certainly one of the important factors in deciding whether to grant bail. In the present case the respondent has already spent 66 days in custody (as stated in Para 2 of his counter-affidavit), and we see no reason why he should be denied bail. A doctor incarcerated for a long period may end up like Dr. Manette in Charles Dicken’s novel A Tale of Two Cities, who forgot his profession and even his name in the Bastille.
xxx xxx xxx
39. Coming back to the facts of the present case, both the Courts have refused the request for grant of bail on two grounds :- The primary ground is that offence alleged against the accused persons is very serious involving deep rooted planning in which, huge financial loss is caused to the State exchequer ; the secondary ground is that the possibility of the accused persons tempering with the witnesses. In the present case, the charge is that of cheating and dishonestly inducing delivery of property, forgery for the purpose of cheating using as genuine a forged document. The punishment of the offence is punishment for a term which may extend to seven years. It is, no doubt, true that the nature of the charge may be relevant, but at the same time, the punishment to which the party may be liable, if convicted, also bears upon the issue. Therefore, in determining whether to grant bail, both the seriousness of the charge and the severity of the punishment should be taken into consideration.
40. The grant or refusal to grant bail lies within the discretion of the Court. The grant or denial is regulated, to a large extent, by the facts and circumstances of each particular case. But at the same time, right to bail is not to be denied merely because of the sentiments of the community against the accused. The primary purposes of bail in a criminal case are to relieve the accused of imprisonment, to relieve the State of the burden of keeping him, pending the trial, and at the same time, to keep the accused constructively in the custody of the Court, whether before or after conviction, to assure that he will submit to the jurisdiction of the Court and be in attendance thereon whenever his presence is required.
41. This Court in Gurcharan Singh and Ors. v. State, AIR 1978 Supreme Court 179 observed that two paramount considerations, while considering petition for grant of bail in non-bailable offence, apart from the seriousness of the offence, are the likelihood of the accused fleeing from justice and his tampering with the prosecution witnesses. Both of them relate to ensure of the fair trial of the case. Though, this aspect is dealt by the High Court in its impugned order, in our view, the same is not convincing.
xxx xxx xxx
46. We are conscious of the fact that the accused are charged with economic offences of huge magnitude. We are also conscious of the fact that the offences alleged, if proved, may jeopardise the economy of the country. At the same time, we cannot lose sight of the fact that the investigating agency has already completed investigation and the charge sheet is already filed before the Special Judge, CBI, New Delhi. Therefore, their presence in the custody may not be necessary for further investigation. We are of the view that the appellants are entitled to the grant of bail pending trial on stringent conditions in order to ally the apprehension expressed by CBI.”
(emphasis added)
Further still, recently, in Ashutosh Garg’s case (supra), Hon’ble Supreme Court granted bail in a matter where the accused defrauded the State exchequer of Rs.1032 crore as Input Tax Credit by creating 294 fake firms, citing long custody of 09 months as well as the fact that maximum punishment in the offence under Section 132 CGST Act is 05 years.
A two Judge bench of the Hon’ble Supreme Court in Ratnambar Kaushik’s case (supra), deliberated upon the largely documentary and electronic nature of evidence as well as the prolonged trial in matters pertaining to tax evasion under the CGST Act, where the accused had undergone about 4 months of custody, and opined as follows:
“6. In considering the application for bail, it is noted that the petitioner was arrested on 21.07.2022 and while in custody, the investigation has been completed and the charge sheet has been filed. Even if it is taken note that the alleged evasion of tax by the petitioner is to the extent as provided under Section 132(1)(l)(i), the punishment provided is, imprisonment which may extend to 5 years and fine. The petitioner has already undergone incarceration for more than four months and completion of trial, in any event, would take some time. Needless to mention that the petitioner if released on bail, is required to adhere to the conditions to be imposed and diligently participate in the trial. Further, in a case of the present nature, the evidence to be tendered by the respondent would essentially be documentary and electronic. The ocular evidence will be through official witnesses, due to which there can be no apprehension of tampering, intimidating or influencing. Therefore, keeping all these aspects in perspective, in the facts and circumstances of the present case, we find it proper to grant the prayer made by the petitioner.
7. Hence, it is directed that the petitioner be released on bail subject to the conditions to be imposed by the trial Court, which among others, shall also include the condition to direct the petitioner to deposit his passport. Further, such other conditions shall also be imposed by the trial Court to secure the presence of the petitioner to diligently participate in the trial. It is further directed that the petitioner be produced before the trial Court forthwith, to ensure compliance of this order.”
(emphasis added)
It thus emerges that even in cases involving economic offences, the Court seized of the matter has to go through the gravity of the offence, the object of the Act, the attending circumstances, etc. Thus, economic offences cannot be categorized in one group and the Court should not proceed on the presumption that “Denial of Bail is the Rule and grant being the exception”.
9. In the case in hand, the allegations against petitioner is that he is key-person in creating/operating firms and wrongfully availed/passed input tax credit amounting to over Rs.30 crores, thus, causing loss to the State Exchequer. These claims are yet to be proved. The fact that he has been in custody since 06.05.2025, has been admitted by the respondent department. His (petitioner) further detention is not justified as the evidence to be rendered by complainant-department is primarily documentary and electronic. The same (further incarceration) would be violative of his right under Article 21 of the Constitution of India, including right to speedy trial and would, thus, also be against the principle of “Bail is a general rule and incarceration is an exception” as held by Hon’ble Supreme Court in Dataram vs. State of Uttar Pradesh and another, 2018(2) R.C.R. (Criminal) 131.
10. Resultantly, petitioner is granted the concession of bail subject to his furnishing bail bonds and two sound sureties of Rs.1 lakh each to the satisfaction of learned trial Court/Duty Magistrate concerned. The petitioner shall abide by the following conditions:-
(i) The petitioner will surrender their passports and will not leave the country without prior permission of the trial Court.
(ii) The petitioner will not tamper with the evidence during the trial.
(iii) The petitioner will not pressurize/ intimidate the prosecution witnesses.
(iv) The petitioner will appear before the trial Court on each and every date fixed, unless is exempted by a specific order of Court.
(v) The petitioner shall not commit an offence similar to the offence of which, they are accused, or for commission of which they are suspected of.
(vi) The petitioner shall not directly or indirectly coerce, induce, threaten or promise to any person acquainted with the facts of the case so as to dissuade him/her from disclosing such facts to the Court or to any police officer or tamper with the evidence in any manner.
vii) The petitioner shall not in any manner misuse their liberty.
(vii) The petitioner shall furnish his address and mobile number to the Trial Court forthwith and shall not change the same till the conclusion of the trial and in case for any reason, the petitioners seek to change any of the aforesaid, the same shall be done only with prior intimation to the learned Trial Court, stating the reason for the same.
(viii) The trial Court/Duty Magistrate may impose any other condition, as deemed appropriate while releasing the petitioner.
11. Accordingly, the present petition is allowed and it is made clear that in case there is any breach of the aforesaid conditions, the State shall be at liberty to seek cancellation of bail as granted to petitioner by this Order.
12. In view of the above, it is clarified that the observations made herein are limited for the purpose of present proceedings and would not be construed as an opinion on the merits of the case and the trial would proceed independently of the aforesaid observations.
