P&H HC Grants Bail to Accused in alleged ₹27 Crore Fake GST ITC Availment Case [Read Order]

In a recent ruling, the Punjab and Haryana High Court granted bail to an accused in a case involving alleged fake GST Input Tax Credit (ITC) of about Rs. 27.35 crore. The court observed that the petitioner was already in custody for months and the case mainly based on documents which were already with the department.

King Raj, the petitioner, filed a petition seeking regular bail under Section 483 of the Bharatiya Nagarik Suraksha Sanhita in a case registered by the Directorate General of GST Intelligence under Sections 132(1)(b), 132(1)(c) and 132(5) of the Central Goods and Services Tax Act, 2017 read with Section 20(xv) of the Integrated Goods and Services Tax Act, 2017.

The department alleged that the petitioner was linked with KH Traders and fraudulently availed ITC of around Rs. 27.35 crore against taxable value of about Rs. 152 crore between April 2023 and March 2025 without actual supply of goods, which caused loss to government revenue.

The petitioner’s counsel argued that he was falsely implicated and he was not the real owner of the firm. He argued that the firm was actually run by Abhishek Sharma and he was only working there as an employee getting a salary of Rs. 25,000 per month.

He further argued that nothing incriminating was recovered from his personal search and the case mainly based on documents already with the department. He also pointed out that he was in custody since 03 November 2025 and keeping him in jail further will serve no purpose.

The department’s counsel argued that during investigation it was found that only one bank account of M/s KH Traders was declared with Yes Bank, Mandi Gobindgarh branch. On checking the account, it was found that payments matching the invoices were not made, which suggested that the transactions were not genuine.

Justice Manjari Nehru Kaul observed that the allegations relate to fraudulent ITC of about ₹27.35 crore without actual supply of goods. The court also observed that the CGST Act provides separate proceedings for recovery of such amounts.

The court further observed that the case was mostly based on documentary evidence already with the department and the petitioner was in custody since 03 November 2025. The court explained that further custodial interrogation will not serve any useful purpose and the trial may take a long time because of the many documents involved.

In view of these facts, the High Court granted regular bail to the petitioner subject to furnishing bail and surety bonds before the concerned court. The court also clarified that the observations made in the order should not affect the merits of the case and the trial court should decide the matter according to law.

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