Custody Unwarranted Once Complaint Filed: Delhi HC Grants Bail for Offence u/s 132 in ₹11.5Cr Fake ITC Case [Read Order]

The applicant, Nrendra Kumar, was arrested by GST authorities for allegedly availing and passing on fake input tax credit amounting to ₹11.5 crore through a network of shell entities. The prosecution alleged that the accused had fraudulently issued invoices without the actual supply of goods, causing substantial loss to the exchequer.

Based on this, an offence was registered under Section 132(1)(b) and(c) of the CGST Act, which prescribes imprisonment of up to five years for offences involving tax evasion exceeding ₹5 crore.

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Following the arrest, the accused was remanded to judicial custody. A complaint was subsequently filed before the jurisdictional Magistrate. The applicant then sought regular bail under Section 483 of the Bharatiya Nagarik Suraksha Sanhita (“BNSS”) read with Section 439 of the CrPC, contending that since the investigation had concluded with the filing of the complaint, further detention served no purpose.

Counsel for the applicant argued that the entire case rests on documentary and electronic evidence already seized by the department. The applicant had cooperated with the investigation, and there was no risk of tampering with evidence or influencing witnesses, as the material records were in official custody.

It was further submitted that the alleged offences, though non-bailable, are triable by a Magistrate, and do not justify prolonged incarceration once the complaint is filed.

The defence relied heavily on the Delhi High Court’s earlier decision in Vineet Jain v. Directorate General of GST Intelligence and the Supreme Court’s observations in Ratnambar Kaushik v. Union of India, both of which held that custody in documentary-based tax offences becomes unnecessary after the complaint or charge sheet is filed.

The prosecution opposed the bail plea, arguing that the magnitude of the alleged evasion,₹11.5 crore, demonstrates the gravity of the offence. It contended that economic offences should be viewed seriously and that release at this stage could impede ongoing proceedings against other co-accused. However, it conceded that the complaint had already been filed and the investigation had concluded.

The single bench of Justice Neena Bansal Krishna of the Delhi High Court examined whether continued detention was necessary after the filing of the complaint.

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The Court noted that Section 132 of the CGST Act, while prescribing stringent punishment, does not alter the principle that bail is the rule and jail the exception, particularly where the material evidence is documentary and the accused poses no flight risk.

Referring to Vineet Jain (2024), the Court observed that once a complaint or charge sheet has been filed, the need for custodial interrogation ceases, and further detention would be punitive rather than investigative.

The Court also relied on Ratnambar Kaushik (2024), where the Supreme Court underscored that in cases based on documents already in the department’s possession, bail should not ordinarily be denied.

The Court further noted that the accused had no previous criminal antecedents, and there was no material to suggest interference with the trial. Concluding that all relevant documents had been seized and the department had completed its probe, the Court held that “there exist no extraordinary circumstances to deny bail to the applicant.”

Granting bail, the Delhi High Court directed the applicant’s release on furnishing a personal bond and surety, subject to conditions such as cooperation with the trial and non-tampering with evidence.