Fake ITC Claim of Over ₹40 Crore under CGST Act: Chhattisgarh HC Grants Bail noting Prolonged Custody and Pending Trial [Read Order]

The High Court of Chhattisgarh granted bail to the applicant in a case involving alleged fake Input Tax Credit (ITC) claims of over ₹40 crore under the Central Goods and Service Tax ( CGST ) Act,2017 and noted that the applicant had been in custody since June 10, 2025, the investigation was complete, and the trial was likely to take more time

Aman Kumar Agrawal,applicant-assessee, was alleged to have availed Input Tax Credit of ₹26.09 crore in the name of M/s Agastya Enterprises without actual receipt of goods. He was further accused of claiming ₹14.08 crore ITC through M/s Agrawal Enterprises by showing purchases from non-existent businesses.

On the basis of a complaint filed by the Deputy Commissioner of State Tax, New Raipur Division, offences under Sections 69 and 132(1)(b)(c) of the CGST Act were registered against him.

The applicant maintained that he was falsely implicated and argued that the essential requirements of Sections 69 and 132 were not satisfied. He submitted that neither assessment nor quantification of tax liability was made, no real loss of ₹40.14 crore was caused to the Government, and the maximum punishment under the Act was limited to five years.

He further pointed out that the safeguards prescribed by the Supreme Court in Arnesh Kumar, Satender Kumar Antil, and Vineet Jain were ignored.

It was also contended that no benefit was shown to have been retained, no unexplained cash was recovered, and all offences were compoundable under Section 138, indicating that the Act was fiscal in nature.

Reliance was placed on decisions of the Bombay, Calcutta, and Andhra Pradesh High Courts, which had held that arrest under the CGST Act could not be sustained without assessment, notice, and opportunity of hearing.

Since the investigation was complete, the complaint had already been filed, no recovery remained pending, and he had cooperated with the authorities, the applicant being a permanent resident with no chance of absconding, sought regular bail by offering to furnish security and comply with conditions imposed by the Court.

The non-applicant counsel opposed the bail plea but admitted that the complaint had already been filed against the applicant.

Justice Ramesh Sinha heard both sides and reviewed the case diary. It noted that the complaint had been filed, the applicant had been in jail since 10.06.2025, and the trial would take more time. The Court held that the applicant was entitled to bail and allowed the application.

It directed that on furnishing a personal bond of ₹1,00,000 with one solvent surety, the applicant be released on bail in Crime No. Arr. 01/2025 for offences under Sections 69 and 132(1)(b)(c) of the CGST Act, 2017. The order was to remain effective until the case was decided.

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