Fake GST ITC Allegations: Rajasthan HC grants Bail to accused Considering Dept has not calculated tax liability [Read Order]

The Rajasthan High Court has granted bail to an accused arrested in connection with allegations of availing fake input tax credit ( ITC ) worth crores under the GST ( Goods and Services Tax ), noting that the tax department has not yet quantified the alleged tax liability.

The petitioner, Amit Singhal, was arrested for allegedly operating bogus firms to wrongfully claim ITC using fake invoices without any actual supply of goods. The department alleged that this caused substantial loss to the state exchequer, invoking offences under Section 132 of the Rajasthan Goods and Services Tax Act, 2017.

During the hearing, the petitioner’s counsel argued that the case was triable by a magistrate and that the maximum punishment prescribed was five years’ imprisonment. It was contended that although a complaint had already been filed against the accused, the department had not determined the actual tax liability to date.

Additionally, it was asserted that the accused had no past criminal history of this kind and that he had been detained since November 26, 2024, with minimal possibility of an early trial.

The petitioner relied on the Supreme Court’s observations in Rajiv Jindal v. State of UP, and submitted that in the absence of serious prior offences and with the alleged crime being bailable by a magistrate, continued detention would be unjustified.

Opposing the plea, the state contended that tax frauds of this scale pose a serious threat to the economy and demanded continued custody to safeguard the investigation.

Justice Anil Kumar Upman observed that the non-determination of actual tax liability by the department was a relevant factor. The Court also noted the low rate of convictions in such cases and the accused’s lack of criminal antecedents.

Without commenting on the merits of the allegations, the Court found no compelling reason to deny bail and directed that the accused be released on furnishing a personal bond of ₹50,000 along with two sureties.

However, the High Court made it clear that the accused must not influence witnesses or tamper with evidence in any manner, failing which the prosecution would be free to seek cancellation of bail.

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