2026-VIL-771-MAD
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SGST High Court Cases

GST - Bail - ITC Fraud - Petitioners were arrested for alleged offences under Section 132(1)(c) of the CGST Act for fraudulently obtaining GST registrations in names of different persons, generating fake tax invoices and unlawfully availing ITC. The Department opposed bail contending that investigation was still in progress and multiple Aadhaar cards were recovered suggesting possible role in larger conspiracy - Whether bail should be granted in a GST fraud case where the maximum punishment is five years and the petitioners have already undergone more than 55 days of incarceration - HELD - In cases involving ITC fraud and GST offences under Section 132(1)(c) of the CGST Act carrying a maximum punishment of five years imprisonment, bail should normally be granted unless extraordinary circumstances justify continued incarceration. The Supreme Court has observed that it is surprised when accused persons are denied bail at all levels of courts in such cases where the maximum punishment is only five years - The fact that investigation is still pending does not by itself constitute an extraordinary circumstance especially when the petitioner has already been in custody for a substantial period exceeding 55 days and much of the investigation would have been completed. The offence under Section 132(1)(c) is compoundable under Section 138 of the GST Act which further militates against prolonged incarceration. The prosecution case rests substantially on documentary evidence and there is no requirement for custodial interrogation for documentary evidence. The mere allegation of running shell companies without foundational facts or evidence of involvement of the petitioners in their operation does not justify continued custody - Bail is granted subject to appropriate conditions including personal bond, sureties, deposit of amount and reporting obligations – The petition is allowed
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