Allahabad HC grants bail to Accused alleged of Committing Rs. 120 crores GST Fraud [Read Order]

The Allahabad High Court granted bail to a man accused of carrying out alleged GST ( Goods and Services Tax ) fraud of over ₹120 crore using fake firms and bogus supplies.

The bail was granted noting that the accused has already spent nearly one and a half years in custody and that the offences under the CGST Act, though serious, are triable by a Magistrate and carry a maximum sentence of five years with fine.

The GST Department alleged that Mukul Sharma, the bail applicant played a central role in creating fake supply chains through shell entities to generate fraudulent ITC and evade GST to the tune of over ₹120 crore.

The counsel asserted that the prosecution’s case was entirely based on documentary evidence, reducing risks of tampering or witness intimidation. It was also pointed out that the investigation was complete and the complaint had already been filed, negating any need for further custodial interrogation.

The High Court noted that, as per the records, the alleged GST evasion was around ₹99 crore, but all offences under Section 132(1) of the CGST Act remain triable by a Magistrate, with a limited maximum punishment.

The Court observed that the trial was likely to take considerable time owing to the documentary nature of evidence, indicating no likelihood of an early conclusion. The absence of criminal antecedents further weighed in favour of the applicant.

Justice Sameer Jain, referring to the Supreme Court case in Ratnambar Kaushik v. Union of India (2023) and Vineet Jain v. Union of India (2025) observed that in GST fraud cases where investigation is complete and evidence is primarily documentary, prolonged incarceration is unwarranted.

The Apex Court had earlier stated that such accused ordinarily should be granted bail, especially when maximum punishment is limited and allegations do not involve violence or threats.

The High Court also observed that an accused is presumed innocent until proven guilty, and bail cannot be denied for punitive or preventive reasons. Accordingly, the bail was granted to the accused.

Accordingly, the Court allowed the bail application and ordered to release the accused after furnishing a personal bond and two sureties.

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