No Direct Evidence of Personal Benefit in ₹8.57 Cr Fake GST ITC Case: Chhattisgarh HC Grants Bail to Accused [Read Order]

The Chhattisgarh High Court, granted bail to an individual accused of high-value GST ( Goods and Services Tax ) fraud involving the alleged generation of fake Input Tax Credit (ITC) worth ₹8.57 crore considering the prolonged custody.

The court found that the accused was on continued custodial detention and is not justified when the prosecution fails to provide direct evidence of personal financial gain and when the investigation is already largely complete.

The Directorate General of GST Intelligence (DGGI), Raipur, initiated the investigation in which arrested the applicant, Vikram Mandhani for alleged offenses under several sections of the CGST Act, 2017.

The prosecution claimed that the applicant conspired with others to operate multiple fictitious firms, using forged documents to issue bogus invoices and pass on fraudulent ITC.

During the investigation, authorities recovered digital evidence, including GST login credentials, SIM cards, and Aadhaar details, which they argued linked the applicant to the management of these shell entities.

The state contended that such activities constituted a grave economic offense resulting in a substantial loss to the public exchequer.

However, the applicant asserted that he had no direct role in the transactions and, crucially, had not derived any personal financial benefit from the alleged scheme.

The defense pointed out that criminal liability under Section 132 of the CGST Act is closely tied to the accrual of such benefits. It was further argued that the prosecution’s case relied on circumstantial evidence and that the actual beneficiaries of the fraud had not been clearly identified.

Since the charge sheet had already been filed and the applicant had been in custody since December 2025, the defense argued that further detention served no investigative purpose, especially as the trial had not yet commenced.

After hearing the matter, Chief Justice Ramesh Sinha, while pronouncing the judgment said that “this Court finds that though serious allegations have been made regarding issuance of fake invoices and wrongful availment of ITC, but the role of the applicant is primarily based on documentary evidence already seized by the prosecution, and the charge sheet has been filed.”

“The applicant is in jail since 20.12.2025, the trial is yet to commence, and no further custodial interrogation appears necessary. Moreover, the contention of the applicant regarding absence of direct evidence of personal gain and the case being largely based on circumstantial evidence cannot be ignored at this stage. In such circumstances, without commenting anything on merits of the case, I am inclined to grant regular bail to the applicant”, decided the court.

The court allowed the bail application upon a personal bond of ₹1 lakh and a solvent surety. It also clarified that these observations were made solely for the purpose of the bail application and would not influence the final determination of the case's merits during the upcoming trial.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates