Desk of CA Praveen Sharma – 927 Series (CAPS)

Punjab and Haryana High Court in the case of Jitender Saharan

The Punjab and Haryana High Court recently considered an application seeking anticipatory bail in a case registered by the Directorate General of GST Intelligence (DGGI), Chandigarh, involving allegations of large-scale fake Input Tax Credit (ITC) fraud under the CGST and IGST Acts.

The investigation was initiated through summons issued under Section 70 of the CGST Act. The authorities alleged that multiple GST-registered entities were created only on paper and were used to fraudulently avail and pass on ITC without any actual supply of goods or services. On analysis of GST returns and ITC records, the department claimed that excess ITC of about ?9.88 crore had been availed and utilised.

It was further alleged that several firms were found non-existent at their registered addresses, indicating a network of bogus entities created solely for circulation of fake ITC. The petitioner, being a partner or director in the concerned entities, was alleged to be actively controlling their financial and operational affairs.

The Court noted that digital and forensic evidence, including data recovered from electronic devices, prima facie indicated deliberate issuance of fake invoices. Considering the seriousness of allegations, the magnitude of revenue loss, and the early stage of investigation, the Court held that custodial interrogation was necessary.

Accordingly, the High Court declined to grant anticipatory bail, observing that there was a risk of non-cooperation and interference with the investigation. The Court clarified that its observations were limited to the bail proceedings and would not affect the merits of the case.

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CAPS