Facts of the Case

The applicant, Narender Kumar, was arrested on 04.06.2025 by the Directorate General of GST Intelligence, Delhi Zonal Unit, in connection with File No. DGGI/INT/14/2024-Gr I, for alleged offences under Section 132(1)(c) of the CGST Act, 2017 relating to fraudulent availment and utilization of input tax credit. The prosecution alleged involvement in creation and operation of bogus firms using dummy proprietors for generating fake invoices, e-way bills and availing fraudulent ITC amounting to approximately ₹11.50 crore.

The applicant claimed that he was arrested without prior service of summons or notice, that the arrest memo and grounds of arrest were supplied after considerable delay, and that statements recorded under Section 70 of the CGST Act were obtained under coercion. The prosecution complaint was filed on 30.07.2025, and the applicant remained in judicial custody since 04.06.2025.

Earlier bail applications before the learned CJM and the learned ASJ were dismissed. The present application was filed before the High Court seeking regular bail.

Issues Involved

Whether continued judicial custody of the applicant was justified after completion of investigation and filing of complaint, whether allegations under Section 132 of the CGST Act warranted denial of bail, whether the case involved extraordinary circumstances to override the normal rule of bail, and whether reliance solely on documentary evidence militated against prolonged incarceration.

Petitioner’s Arguments

The applicant contended that there was no incriminating material against him except statements recorded under Section 70 of the CGST Act, which were allegedly obtained under coercion and without corroboration. It was submitted that the applicant had no criminal antecedents, had been in custody for more than 65 days, and that the investigation was complete with the complaint already filed. It was argued that continued detention violated the principles laid down by the Supreme Court in Arnesh Kumar and subsequent GST bail jurisprudence. The applicant also relied upon medical and humanitarian grounds, stating that he was the sole breadwinner and responsible for dependent family members with serious medical conditions.

Respondent’s Arguments

The Revenue opposed the bail application, submitting that the applicant was involved in a serious economic offence involving fraudulent ITC of ₹11.50 crore through fake firms. It was argued that one of the masterminds was still absconding and that investigation was continuing in that regard. The Department asserted that the applicant’s conduct during earlier bail proceedings was questionable and that release on bail could prejudice the investigation.

Court Order / Findings

The Delhi High Court examined the scope of bail in offences under Section 132 of the CGST Act and relied upon the principles laid down by the Supreme Court in Vineet Jain v. Union of India and Ratnambar Kaushik v. Union of India, wherein it was held that GST offences punishable up to five years, based primarily on documentary evidence, do not ordinarily justify prolonged incarceration once investigation is complete and the complaint has been filed.

The Court observed that the applicant had been in judicial custody since 04.06.2025, the prosecution complaint had already been filed on 30.07.2025, and the evidence against the applicant was primarily documentary in nature. The Court further noted that there were no criminal antecedents, no likelihood of tampering with evidence or influencing witnesses, and no extraordinary circumstances warranting denial of bail. The pendency of investigation against an absconding co-accused was held not to be a valid ground to continue custody of the applicant.

Important Clarification

The High Court clarified that in GST offences under Section 132 of the CGST Act, once investigation is complete and the complaint is filed, bail should ordinarily follow unless exceptional circumstances exist. Documentary nature of evidence and absence of antecedents are significant factors favouring grant of bail.

Final Outcome

The bail application was allowed. The applicant, Narender Kumar, was granted regular bail subject to furnishing a personal bond of ₹25,000 with one surety of the like amount, along with standard conditions restraining contact with witnesses, tampering with evidence, and requiring disclosure of address and contact details. Pending applications were disposed of accordingly.

Source Link- https://delhihighcourt.nic.in/app/showFileJudgment/NBK08102025BA30652025_192920.pdf

 

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