GST ITC Fraud Accused in Custody for 5 Months despite Case being Triable by Magistrate: P&H HC Grants Bail [Read Order]

The Punjab &Haryana High Court has granted regular bail to an accused booked under the Central Goods and Services Tax Act, 2017 (CGST Act) for allegedly availing wrongful input tax credit (ITC) of ₹26.19 crore through fake invoices, noting that he had remained in custody for over five months and that the case was triable by a Magistrate.

The petitioner Saurabh Bansal is a trader, and contended before the court that he had placed orders for goods to the broker and he was not aware of the source of such goods that were to be supplied.

The allegations leveled against the petitioner is that he had availed ITC of ₹26.19 crore by producing fake invoices issued by non-existent or bogus firms without any actual supply of goods.

During the hearing, Senior Counsel Bipan Ghai and Nikhil Ghai for the petitioner submitted that the petitioner had participated in the investigation proceedings and had appeared before the department whenever summoned.

It was contended that despite cooperation, he was taken into custody on 18.09.2025 after a lapse of over one and a half years. The complaint was filed on 15.11.2025 and pre-charge evidence was yet to be led. Accordingly, it was submitted that the petitioner had already undergone custody of more than five months in a case triable by a Magistrate, despite no recovery proceedings being initiated so far or criminal liability determined.

Special Public Prosecutor Saurabh Goel, Himanshi Gautam and Geetika Sharma appearing for the respondent DGGI opposed the plea, contending that detailed investigation revealed generation of numerous fake invoices without movement of goods for wrongful ITC availment, and even included usage of non-existent vehicle numbers.

However, the DGGI counsel did not dispute that the petitioner had been in custody for over five months and that the matter was still at the pre-charge stage and was triable by a Magistrate Court.

The Bench of Justice Vinod S. Bhardwaj referred to the Supreme Court decision in Vineet Jain Vs. Union of India (2025) wherein the accused had similarly undergone actual custody

of 7 months without criminal antecedents; the case of the prosecution was based on documentary evidence and was triable by the Court of a Judicial Magistrate

The Supreme Court, in Vineet Jain noted that the maximum punishment prescribed under Section 132 (1) of the CGST Act is 5 years with fine, the Court observed that the accused should get bail unless there are some extra ordinary circumstances

Accordingly, the Punjab & Haryana High Court allowed the petition, directing that the petitioner be admitted to regular bail subject to furnishing of appropriate bail and surety bonds and clarified that the observations would not affect the merits of the trial.

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