Supreme Court Rulings on GST Bail: Pre-Trial Detention Deemed Unnecessary When Evidence is Documentary and Seized

The balance between safeguarding the public exchequer and protecting the personal liberty of an assessee is a critical subject of judicial scrutiny. In a significant development concerning the Central Goods and Services Tax Act, 2017, the Supreme Court of India has reinforced the principle that continued incarceration pending trial is unwarranted when the investigation has substantially concluded, and the evidence is primarily documentary.

The Apex Court, in the case of Gulam Fareed Vs State of Rajasthan, set aside an order by the Rajasthan High Court, thereby granting bail to the appellants. The judgment provides vital clarity on the parameters for granting bail in economic offences, specifically under Section 132 of the CGST Act.

Background of the Proceedings

The legal controversy originated from a judgment delivered by the Rajasthan High Court, Jaipur Bench, on 7 August 2025. The High Court had dismissed the bail applications of the appellants, who were implicated in offences under Section 132 of the Central Goods and Services Tax Act, 2017.

The Allegations

The prosecution, led by the Directorate General of GST Intelligence (DGGI), alleged that the appellants were key players in a sophisticated network executing large-scale tax evasion in the iron scrap trade. The specific accusations involved:

  • Clandestine supply of goods.
  • Operations conducted without the issuance of requisite invoices or bills.
  • Movement of goods without e-way bills.
  • Causing substantial financial loss to the government revenue.

The appellants were taken into custody on 19 February 2025. Following the investigation, a police report (charge sheet) was filed on 17 April 2025 under Section 193 of the Bharatiya Nyaya Suraksha Sanhita, 2023. While the primary investigation had concluded with the filing of this report, the prosecution maintained that further investigation was ongoing and a supplementary charge sheet might be introduced later.