‘Bail is a Rule, Bail Rejection is an Exception’: Allahabad HC Grants Bail in ₹185 Crore GST ITC Case [Read Order]
The High Court held that even though economic offences form a distinct category, this cannot justify the denial of bail in every such case, especially where the accused has been in custody for a considerable time, and the maximum punishment prescribed is limited
“Bail is a rule and bail rejection is an exception”, said the Allahabad High Court while granting bail to an accused in a ₹185 crore fake Input Tax Credit ( ITC ) case under Goods and Services Tax ( GST ) Act.
“Further, law is settled that unless proven guilty an accused is deemed to be innocent and bail is a rule while bail rejection is an exception and bail application should not be dismissed either for punitive or preventive purposes” said the single bench Justice Sameer Jain.
The applicant, Chhatar Pal Sharma was accused of forming multiple shell companies to fraudulently avail and pass on fake ITC exceeding ₹180 crore. The prosecution alleged that Sharma, by dishonest means, defrauded the government and caused substantial loss to the exchequer.
The counsel for the CGST Department, opposing the bail plea, argued that given the gravity of the allegations and their impact on society, the applicant should not be released, even though the maximum punishment under the Act is five years.
The Court noted that the investigation in the matter was complete, the complaint had already been filed, and the trial had not progressed beyond the initial stage, as not even a single prosecution witness had been examined. The applicant had also been in custody for nearly a year and had no prior criminal record.
Justice Jain also stated the recent Supreme Court ruling in Vineet Jain v. Union of India (2025), where the Apex Court remarked that denial of bail in cases under the CGST Act, involving documentary evidence and limited punishment, is unwarranted, observing that “these are the cases where in normal course, the accused should get bail unless there are extraordinary circumstances…”
The High Court held that even though economic offences form a distinct category, this cannot justify the denial of bail in every such case, especially where the accused has been in custody for a considerable time, and the maximum punishment prescribed is limited.
Consequently, the Court ordered the release of the accused on bail upon furnishing a personal bond and two sureties, subject to conditions that he shall appear before the trial court on scheduled dates, refrain from tampering with evidence, and not engage in any criminal activity by warning that violation of these conditions would lead to cancellation of bail.
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