Bail granted despite allegations of fraudulent input tax credit exceeding Rs. 31 crores under stringent conditions to ensure cooperation with ongoing investigation.
In a significant legal development, the Karnataka High Court has granted anticipatory bail to Sri Akram Pasha, who faces allegations of fraudulent input tax credit utilization under the Central Goods and Services Tax (CGST) Act, 2017. The decision was delivered by Mr. Shivashankar Amarannavar, J., on December 19, 2025, in Criminal Petition No.15066 of 2025. The case has attracted attention due to the alleged economic offences involving the wrongful availment of input tax credit amounting to over Rs. 31 crores.
The petitioner, Akram Pasha, is accused of issuing invoices without actual supply of goods or services, thereby wrongfully availing input tax credit in violation of Sections 132(1)(b) and (c) of the CGST Act. Despite the grave nature of the allegations, the court emphasized the principle of "bail, not jail," highlighting that the offences under the CGST Act are compoundable and do not necessitate custodial interrogation.
The court meticulously analyzed various legal precedents and statutory provisions before arriving at its decision. It recognized the importance of safeguarding personal liberty under Article 21 of the Constitution while balancing the interests of investigation. The judgment cited several Supreme Court rulings that stress the importance of granting bail unless there are compelling reasons to deny it, even in cases involving economic offences.
The court imposed stringent conditions for granting bail, including a personal bond of Rs. 5 lakhs, cooperation with the investigation, and restrictions on the petitioner's movement. The petitioner is required to surrender his passport and is prohibited from leaving the country without prior permission.
The court's decision reflects a nuanced approach to economic offences, acknowledging the compoundable nature of CGST violations and the non-necessity of detention in judicial custody for offences not warranting imprisonment beyond five years. The judgment underscores the significance of maintaining a balance between ensuring cooperation in investigations and upholding the personal liberty of the accused.
The Karnataka High Court's ruling in this case reinforces the judicial trend of granting anticipatory bail in economic offences under the CGST Act, provided stringent conditions are met to facilitate ongoing investigations.
Bottom Line:
Anticipatory bail granted to petitioner accused of economic offences under CGST Act, 2017, considering the lack of necessity for custodial interrogation and the compoundable nature of offences under the Act.
Statutory provision(s): Sections 69, 70, 132, 138 of the Central Goods and Services Tax Act, 2017
Sri Akram Pasha v. Senior Intelligence Officer DGGI, (Karnataka) : Law Finder Doc Id # 2825695
