Allahabad High Court Allows Bail in CGST Fake ITC Matter — Javed Akhtar Vs Union of India

Background and Overview

The Allahabad High Court, in Criminal Misc. Bail Application No. 15340 of 2026, decided on 11 August 2026, granted bail to the applicant Javed Akhtar, who had been lodged in custody since 29 January 2026. The case was registered as Case Crime No. 486 of 2021 at Police Station D.G.G.I. Zonal Unit, Meerut, and the charges were framed under Section 132(1)(c) and Section 132(1)(i) of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017).

The core allegation was that the applicant had fraudulently availed Input Tax Credit (ITC) on the basis of invoices raised by firms that did not actually exist. The Court, after examining the facts, settled legal principles, and precedents from the Supreme Court, concluded that the applicant had established a valid case for grant of bail.

Factual Matrix

Contentions Advanced by the Applicant

Learned counsel for the applicant placed the following submissions before the Court:

  • The transactions in question pertained to the year 2020, whereas searches were carried out only in 2021 — a gap of more than one year.
  • The applicant had not created any fictitious or forged firm; the transactions were genuinely commercial in nature.
  • Investigation in the matter had been fully completed.
  • The maximum punishment prescribed under the relevant provision is five years.
  • The applicant had one prior criminal case under the CGST Act, which was explained in paragraph 22 of the affidavit.
  • The applicant had been continuously incarcerated since 29 January 2026 and expressed willingness to cooperate with trial proceedings if released.

Opposition by the Respondent

The Union of India, as the opposite party, resisted the bail application on the following grounds:

  • The applicant had a criminal history, specifically Case Crime No. 181 of 2023.
  • During the COVID-19 period, the applicant had been released pursuant to a direction of the Supreme Court but had failed to surrender within the period stipulated by the Court.

Analysis by the Allahabad High Court

On Criminal Antecedents

The Court engaged in a detailed examination of whether prior criminal history alone could be a ground to deny bail. It referred to:

Ash Mohammad Vs. Shiv Raj Singh, (2012) 9 SCC 446, where the Supreme Court observed:
"We may hasten to add that when we state that the accused is a history-sheeter we may not be understood to have said that a history-sheeter is never entitled to bail. But, it is a significant factor to be taken note of regard being had to the nature of crime in respect of which he has been booked."

Prabhakar Tewari Vs. State of U.P. and another, 2020 (11) SCC 648, where the Supreme Court held that pendency of multiple criminal cases against an accused cannot, by itself, be made the sole basis for denial of bail.

The Court found that the opposite party had not placed any material on record to indicate that the applicant would tamper with evidence, intimidate witnesses, or attempt to evade legal process. No exceptional circumstances linked to criminal antecedents were demonstrated. Accordingly, the Court declined to refuse bail merely on the ground of prior criminal history.

On Non-Initiation of Proceedings Under Sections 73 and 74

A significant observation made by the Court was that proceedings under Section 73 and Section 74 of the CGST Act, 2017 — which are assessment proceedings in respect of alleged violations — had not been initiated against the applicant. The Court noted that under these provisions, a show cause notice may be issued to the assessee, and while criminal prosecution under Section 132 is independent and not barred by the non-initiation of assessment proceedings, a finding in assessment proceedings that the assessee had not violated the law could have a material bearing on the criminal prosecution.

On Personal Liberty, Presumption of Innocence and Right to Speedy Trial

The Court reaffirmed that the liberty guaranteed under Part III of the Constitution encompasses not merely procedural fairness but also access to justice and the right to a speedy trial. It emphasized: