Gurugram Court Grants Bail in Rs. 7.13 Crore GST ITC Fraud Case as Alleged Individual Gains Fall Below Rs. 5 Crore Threshold [Read Order]

In a recent ruling, a Gurugram court granted bail to two accused in a Rs. 7.13 crore GST Input Tax Credit (ITC) fraud case, primarily on the ground that their alleged individual gains fell below the Rs. 5 crore threshold required to attract non-bailable provisions under the CGST Act.

Rahul Dhingra and Virender Gupta were arrested on 25.02.2025 for allegedly being part of a conspiracy to fraudulently avail and pass on ineligible ITC through bogus firms, including M/s Kanvas and Cosmos International.

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According to the prosecution, fake invoices and e-way bills were generated to create a fictitious supply chain. Dhingra was alleged to have managed the day-to-day affairs of Kanvas, while Gupta, proprietor of Cosmos International, was claimed to be a key beneficiary.

The prosecution argued that Dhingra and Gupta conspired to show supplies between the two firms and onward to Pahel Enterprises without any actual movement of goods. These transactions were allegedly used to avail and transfer fake ITC worth Rs. 7.13 crore. The department further argued that the arrests were legally valid and that both accused posed a flight risk.

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The defence counsel argued that the arrest process was marred by procedural lapses, including failure to notify relatives and recording of statements under coercion. They further argued that Gupta’s alleged benefit amounted to 25% of the total ITC and Dhingra's to just 7%, both of which were below the Rs. 5 crore threshold mentioned in Section 132 of the CGST Act for making the offence non-bailable.

Additional Chief Judicial Magistrate Amit Gautam observed that the only material on record to establish their involvement was their own statements recorded at the time of arrest, with no corroborative evidence such as bank transactions or digital communications.

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The court referred to precedents from the Supreme Court, including Sanjay Chandra vs. CBI and P. Chidambaram vs. Directorate of Enforcement and stated that even in cases involving economic offences, bail could not be denied solely on the seriousness of the allegations especially where the trial is yet to begin and custodial interrogation is no longer required.

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Considering the duration of custody (23 days), lack of recovery pending, individual share of alleged benefit, medical conditions, and absence of prior criminal history, the court granted regular bail to both applicants.

The bail was granted on furnishing a bond of Rs. 50,000 with one surety of the same amount. The court clarified that its findings were limited to the bail stage and would not influence the merits of the case during trial.

To Read the full text of the Order CLICK HERE

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