Custodial Interrogation Not Needed as Investigation Complete: Chhattisgarh HC Grants Bail in Rs. 11.44 Crore Fake GST ITC Case [Read Order]

In a recent ruling, the Chhattisgarh High Court granted regular bail to an accused involved in a Goods and Service Tax (GST) fraud case involving the alleged fraudulent availment of Input Tax Credit (ITC) amounting to Rs. 11.44 crores.

Santosh Wadhwani, the Applicant, who was arrested in connection with Crime No. 158/GST/2025-2026 for offences punishable under Section 132(1)(c) of the CGST Act, 2017. The prosecution alleged that the Applicant had fraudulently availed ITC without the actual supply of goods through transactions with four firms M/s. Aksha Trading, M/s. M.K. Enterprises, M/s. Dishankar Trading, and M/s. Giridhar Gopal Impex Pvt. Ltd. which were found to be non-existent or non-operational during the departmental inquiry.

Counsel for the Applicant argued that he had been falsely implicated and that the prosecution had not determined the alleged tax liability, which can only be finalized through assessment proceedings. It was contended that the case was based purely on documentary evidence, no recovery was pending, and the arrest memo failed to specify the exact clause under Section 132(1), reflecting a non-application of mind.

The Respondents opposed the bail, highlighting the gravity of the economic offence and the substantial loss to the public exchequer. They argued that the Applicant was the key beneficiary of the fraud, had been non-cooperative, and was also implicated in a separate bank fraud case of approximately Rs. 61 crores.

The Bench of Chief Justice Ramesh Sinha observed that the allegations pertained to offences under the CGST Act, which were primarily based on documentary evidence already in the possession of the prosecution. The Court noted that the complaint had been filed and the investigation, insofar as the Applicant was concerned, appeared to be substantially complete.

It was further observed that the maximum punishment prescribed under Section 132 is up to five years and the offences are compoundable in nature. In view of these findings, the High Court held that no further custodial interrogation was shown to be necessary and that the prosecution had not demonstrated any specific apprehension that the Applicant would tamper with evidence or influence witnesses.

The Court allowed the bail application and directed that the Applicant be released upon furnishing a personal bond of Rs. 1,00,000 with one solvent surety.

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