Wrongful GST ITC Availment Amounting To ₹17.8Cr: Chattisgarh HC Grants Anticipatory Bail [Read Order]
The High Court struck a balance between the right to personal liberty and the GST enforcement in a documentary-based ITC fraud investigation, where custodial interrogation was deemed unnecessary.
The Chhattisgarh High Court allowed anticipatory bail to Harish Wadhwani for the offence of wrongful utilization of Input Tax Credit (ITC) of about ₹17.83 crores under the CGST Act, 2017. The Court observed that there was no need for custodial interrogation as the offense was mainly documentary in nature and punishable with a maximum term of five years.
The GST department initiated search proceedings under Section 67 of the CGST Act at the applicant’s business premises in May 2025, based on the information that there were fraudulent claims of ITC. During the course of the search, documents and business records were seized, and the GST department alleged fraudulent availment and transfer of ITC to the tune of ₹17.83 crore through suspicious transactions with certain entities.
Several summons were sent to the applicant between June 2025 and January 2026, requiring his presence. Subsequently, proceedings were initiated under Sections 69 and 132 of the CGST Act and the applicant approached the High Court fearing arrest.
The applicant alleged that the anticipatory bail plea was maintainable even without the registration of an FIR on the basis of the settled jurisprudence of the Supreme Court of India. It was further submitted that the investigation was purely document-based, where all the relevant documents were already seized by the department and as such there was no need for custodial interrogation.
The applicant also submitted that the offenses under Section 132 of the CGST Act were fiscal and regulatory in nature, compoundable, and punishable with a maximum term of five years. The applicant also submitted that the blocking of ITC to the tune of nearly ₹28.87 crores has already caused severe financial hardship to him, and as such, further coercive measures would unjustifiably curtail his personal liberty.
The State opposed the bail application on the grounds that the applicant had not cooperated fully with the investigation despite repeated summons. It was submitted that the scale of the alleged ITC fraud and the number of entities involved necessitated drastic measures such as custodial interrogation to uncover the tax evasion ring.
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The Court observed that the allegations rested mainly on documentary and digital evidence already in the department’s possession. Emphasising that the maximum punishment prescribed is only five years, the Court held that the offence did not fall within the category of heinous crimes warranting pre-trial incarceration.
The Court of Mr. Justice Ramesh Sinha, Chief Justice,noted that one co-accused had already been granted bail in a connected matter. Balancing the interests of investigation with the applicant’s fundamental right to liberty under Article 21 the Court concluded that anticipatory bail was justified.
Accordingly, the applicant will be released on bail in the event of arrest, subject to strict conditions ensuring cooperation with the GST investigation and non-interference with evidence.
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