In a notable decision, the Jharkhand High Court has granted bail to the accused in a case involving an alleged ₹54.33 crore fraudulent Input Tax Credit ( ITC ) scam under the Goods and Services Tax ( GST ) regime.
The Single Bench of Justice Subhash Chand, concluded that the prosecution had failed to produce concrete documentary evidence to substantiate the claims against the accused, leading to the decision to grant bail.
The Directorate General of GST Intelligence (DGGI) alleged that the accused was the mastermind behind these fraudulent activities, creating bogus firms to generate and circulate fake ITC to multiple entities.
The investigation revealed that M/s Jai Bhole Enterprises, registered in August 2022, was supposedly involved in the supply of taxable goods, particularly ferrous waste and scrap. However, during a physical inspection, no business operations were found at the declared premises.
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Several other entities connected to the firm were also found to be non-existent. the accused was accused of using these fake firms to pass on ITC to companies where he or his family held significant positions, including M/s Maa Sharda Endeavour Private Limited, M/s Makers Casting Private Limited, and M/s Kedarnath Trexim Private Limited.
The prosecution argued that the accused orchestrated the creation of these fake firms solely for the purpose of generating fraudulent ITC. They claimed that the accused had passed on the fake ITC of ₹22.31 crore through these firms and further utilised or distributed it through his directorship entities, bringing the total fraudulent ITC involvement to ₹54.33 crore.
The prosecution relied heavily on witness statements and alleged that the accused was the central figure in the scam. They further argued that the accused had failed to appear before the authorities when summoned and tried to evade investigation, thus complicating the probe into the fraudulent ITC network.
Despite the gravity of the allegations, the Jharkhand High Court found that the prosecution’s case lacked solid documentary evidence. Justice Subhash Chand pointed out that while witness statements were included, no direct documents supporting the claims of fake ITC were presented in court. The prosecution’s reliance on a general list of documents, without specific annexures or proofs of the alleged transactions, significantly weakened their case.
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The court also took into account that the accused had been in custody since June 2024, and with no imminent conclusion to the trial, it would be unjust to keep him detained based on insufficient evidence. Furthermore, there was no indication that the accused posed a flight risk or that he could tamper with evidence if released.
While granting bail, the High Court imposed several stringent conditions to ensure the accused’s continued cooperation with the investigation. These include:
1. The accused must furnish a bail bond of ₹1,00,000 with two sureties of the same amount.
2. He must surrender his passport to the court and cannot leave the country without court permission.
3. He is prohibited from threatening witnesses or tampering with evidence.
4. Any violation of these conditions could lead to the cancellation of his bail.
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Bail granted in this high-profile GST case aligns with the undeniable importance of concrete evidence in financial fraud investigations. While the prosecution alleged a massive ITC fraud involving multiple shell companies, the lack of documentary proof ultimately led the court to favour the bail.
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