Chhattisgarh HC Grants Bail in ₹23 Cr Fake GST ITC Case, Notes No Tax Assessment or Recovery Proceedings by Dept. [Read Order]
The High Court noted that the Applicant had cooperated during investigation and interrogation and no evidence was collected from him and the complaint has been filed.
Chhattisgarh HC - Grants Bail - Fake GST - ITC - Tax Assessment - taxscan
Chhattisgarh HC - Grants Bail - Fake GST - ITC - Tax Assessment - taxscan
The Chhattisgarh High Court recently granted regular bail to a director accused in a case involving the availment of fake Input Tax Credit (ITC) racket involving approximately ₹23.05 crore on Goods and Services Tax (GST), observing that though a complaint had been filed, no statutory tax assessment or consequential recovery proceedings had been initiated by the department.
The bail was given against a Miscellaneous Criminal Case filed by Ankit Singh, director of M/s Mahavir Moulds India Pvt. Ltd., which is alleged to have managed and controlled a cluster of seven companies that purportedly claimed and availed ineligible or fake ITC totalling ₹23,05,66,216 from non-existent, registration-cancelled or suspected entities.
The offence was registered under Section 132(1)(b) and (c) of the Chhattisgarh SGST Act, 2017 with the crime having been registered at the office of the Deputy Commissioner of State Tax (BIU), Nawa Raipur Division. The applicant had been thus kept in custody since August 20, 2025.
Senior Advocate Manoj Paranjpe and Aditya Dhar Diwan, appearing for the applicant submitted that the statutory pre-conditions for invoking penal provisions, i.e, notice, assessment and determination of tax liability had not been completed. It was further contended that the quantum of tax allegedly involved remained unassessed and appealable. Accordingly, the applicant sought bail urging that investigation had concluded, the complaint was filed and no further custodial interrogation was necessary.
The counsel also referred to the Supreme Court decision in Vineet Jain v. Union of India (2025) where itas held that offences under Section 132(1) of the CGST Act that attract a maximum punishment of five years with fine, the accused should ordinarily be granted bail at the earliest stage.
Further reference was made to the decision of the Andhra Pradesh High Court in M/s Sree Constructions v. Assistant Commissioner (ST) (2021) where it was reiterated that statutory notice and assessment are mandatory preconditions before invoking penal provisions.
S.S. Baghel, appearing for the respondents opposed the bail plea on the grounds that the applicant had orchestrated a grand web to wrongfully claim and avail ITC, causing substantial loss to the Government exchequer.
Chief Justice Ramesh Sinha observed that offences under the SGST Act are essentially economic in character and compoundable under Section 138. Noting that no tax assessment, statutory notice or recovery action had been initiated, the investigation was deemed complete. As the applicant had fully cooperated, the Court concluded that continued detention would serve no useful purpose.
Without commenting on the merits of the case, the Chhattisgarh High Court allowed the bail petition and directed release subject to the personal bond of ₹1,00,000 with the bail order to remain in force until final disposal of the case.
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