Bail Denied in Fake ITC Case Given Absconding Co-Accused and Gravity of Offence | HC

Case Details: Mukesh Kumar vs. Additional Assistant Director, Directorate General of GST Intelligence, Coimbatore Zonal Unit, Coimbatore - [2025] 179 taxmann.com 606 (Madras)

Judiciary and Counsel Details

• K. Rajasekar, J.
• B. Kumar, Sr. Adv. & B. Sathish Sundar for the Petitioner.
• P. Vishnu, Special Public Prosecutor for the Respondent.

Facts of the Case

The petitioner was alleged to have managed three dummy firms to avail and pass on ineligible input tax credit (ITC) without actual supply. Investigations showed the petitioner controlled invoices, e-way bills, and banking via a mobile app, availing ineligible ITC. The petitioner was arrested and applied for bail, while the prosecution highlighted that a co-accused was absconding and the investigation into multiple fake ITC claims was incomplete. The legal question was whether bail could be granted, given the seriousness of the offences and risk of evidence tampering, and the matter was placed before the High Court.

High Court Held

The High Court held that bail could not be granted. It emphasised that Section 132, read with Section 69, of the CGST Act applied to the petitioner’s conduct in managing dummy firms and facilitating fraudulent ITC claims. The Court observed that the petitioner’s management of invoices, e-way bills, and banking reflected a deliberate intent, and that an ongoing investigation could be compromised due to the absconding co-accused and the risk of evidence tampering. It dismissed the bail petition, emphasising the seriousness of the ITC fraud and potential impact on revenue recovery.

List of Cases Referred to

• Radhika Agarwal v. Union of India [2025] 171 taxmann.com 832/95 GSTL 225 (SC) (para 3).