In a pivotal judgment, the Punjab & Haryana High Court has ruled that an accused in a GST fraud case cannot be denied bail under Section 132 of the Central Goods and Services Tax (CGST) Act solely on the basis that the investigation is still underway against a co-accused.
⚖️ Background of the Case
The case pertains to an alleged GST input tax credit (ITC) fraud amounting to Rs. 107 crore, involving fake invoices and bogus firms. The accused was charged under Section 132(1)(b) of the CGST Act, which deals with fraudulent availing of input tax credit and tax evasion.
Despite the seriousness of the allegations, the High Court emphasized that bail decisions must be made individually, based on the specific role and conduct of the accused, rather than the status of co-accused individuals in the investigation.
🧑⚖️ Key Observations by the Court
Justice Harpreet Singh Brar, delivering the judgment in Manish Kumar v. Directorate General, Goods & Services Tax Intelligence, Zonal Unit, Ludhiana, held that:
“An accused in a complaint under Section 132 of the CGST Act cannot be denied bail merely because the investigation is pending against a co-accused.”
The Court underscored that there had been no allegations of non-cooperation by the petitioners during investigation and the final report had already been filed against them following extensive interrogation.
It further questioned why no action had been taken against the co-accused, if the case against them was still strong. The delay, if caused due to lack of sufficient material to invoke arrest under Section 69 of the CGST Act, should be properly justified, the Court added.
📑 Evidence-Based Case Doesn’t Warrant Custodial Delay
The Court observed that the prosecution case was primarily based on documentary and electronic evidence, which is already in the possession of the investigating agency. Additionally, all prosecution witnesses are government officials, making the risk of evidence tampering negligible.
Justice Brar stated:
“It goes against reason and justice to keep an accused in custody just because the investigation is incomplete against another person. No evidence suggests that granting bail would hamper the ongoing probe.”
🏛️ Legal Precedents Cited
The Court relied on the Supreme Court’s judgment in Prahlad Singh Bhati vs. NCT, Delhi [(2001) 4 SCC 280] which reiterated that bail should be considered independently for each accused. It also cited the landmark case Ashutosh Garg vs. Union of India, where bail was granted in a Rs. 1000 crore GST fraud case, reinforcing the principle that individual rights override procedural delays.
🔍 Conclusion
While acknowledging the seriousness of economic offences, the Court emphasized that investigation agencies cannot override the fundamental rights of an accused person. The petitioners in this case had already spent over 9 months in custody without substantial progress in trial, justifying their release on bail.
📌 Case Summary:
- Case Title: Manish Kumar v. Directorate General, Goods & Service Tax Intelligence, Zonal Unit, Ludhiana
- Citation: 2025 LiveLaw (PH) 313
- Charges: Section 132(1)(b), CGST Act
- Amount Involved: ₹107 Crore
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Key Ruling: Bail cannot be denied due to pending probe against co-accused