Bail Denied in GST Fake ITC Fraud Case | HC

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GST fake ITC fraud bail

Case Details: Hari Shankar Sharma vs. Union of India - [2026] 184 taxmann.com 86 (Allahabad)

Judiciary and Counsel Details

  • Samit Gopal, J.
  • Anand Mani Tripathi, Arun Kumar Shukla, Mohit Singh, Shad Azam, Anil Kumar Bajpai & Ankit Kumar Pal for the Applicant.
  • Dhananjay Awasthi, Anurag Sharma, Parv Agarwal & Krishna Agarawal for the Respondent.

Facts of the Case

The applicants sought bail in criminal proceedings initiated under GST law alleging fraudulent availment and circulation of Input Tax Credit (ITC). The prosecution alleged that the applicants, acting as directors, proprietors, and karta of entities, created inter-linked dummy firms and generated fictitious invoices without actual supply of goods to fraudulently avail and pass on large amounts of ITC. The allegations were stated to involve offences punishable, relating to fraudulent ITC claims and arrest powers of the tax authorities. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that offences involving fraudulent availment and circulation of ITC through fictitious entities constitute serious economic offences attracting stringent standards for grant of bail. It was observed that Section 132 of the CGST Act treats fraudulent availment of ITC without actual supply of goods as a punishable offence, while Section 69 of the CGST Act empowers the jurisdictional officer under GST to authorise arrest where such offences are committed. It was held that such conduct amounted to a grave economic offence affecting public revenue. It was concluded that no grounds were made out for grant of bail and accordingly rejected the bail applications.

List of Cases Referred to

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied