Punjab and Haryana High Court Upholds Liberty in GST Prosecution: Grants Bail in Rs. 18.22 Crore Alleged Fake ITC Matter

The intersection of stringent tax enforcement and the fundamental right to personal liberty often becomes a focal point in judicial proceedings concerning economic offences. In a significant judicial determination, the Punjab and Haryana High Court recently granted regular bail to an assessee accused of fraudulently availing Input Tax Credit (ITC). The case, titled Arvind Kumar Vs Directorate General of GST Intelligence, underscores the judiciary's commitment to the constitutional safeguards enshrined under Article 21 of the Constitution of India, even in matters involving substantial revenue implications.

This article provides a comprehensive analysis of the High Court's order, exploring the factual background, the statutory framework invoked, the arguments presented by both sides, and the deep jurisprudential principles relied upon by the Court to grant relief to the assessee.

Factual Matrix of the Dispute

As per the order dated, the proceedings were initiated under Section 483 of the BNSS of 2023, seeking regular bail for the petitioner. The case was registered under endorsement No. DGGI/INT/MISC/53/2025-Gr-B-O/0 DD-DGGI-RU, Amritsar.

The core of the dispute revolved around alleged violations of Section 132(1) of the CGST Act, 2017, read alongside the corresponding provisions of the Punjab GST Act, 2017, and Section 20 of the IGST Act, 2012.

Allegations Against the Assessee

According to the allegations documented in the judicial order, the assessee, Arvind Kumar, is the proprietor of Bhumi Steel Traders. The business entity operates with the GSTIN 03APLPK2516FIZA and is situated at 370-A, Sector 20A, Harchand Mill Road, Mandi Gobindgarh, District Fatehgarh Sahib.

The Directorate General of GST Intelligence (DGGI) alleged that the assessee had wrongfully availed fake Input Tax Credit based on bogus invoices. It was claimed that these fictitious invoices were generated by non-existent or shell firms allegedly created and operated by two other individuals, identified as Dipanshu Srivastav and Mohit Kumar. The investigative agency asserted that these coordinated actions resulted in a loss to the State Exchequer amounting to Rs. 18.22 crore.

Submissions by the Rival Parties

During the bail hearings, both the defense and the prosecution presented their respective stances on the necessity of continued incarceration versus the right to liberty.