Punjab and Haryana High Court Grants Bail To Company Director In Fraudulent ITC Availment Case

The Punjab and Haryana High Court has granted bail to a GST accused after noting the challenge that the grounds of arrest were not furnished in writing. The Court reiterated that failure to give written grounds violates statutory safeguards and weakens an accused's right to seek bail.

Justice Surya Partap Singh granted bail to Baldeep Singh Sapra, Director of PMI Smelting Private Limited. He was arrested by the Directorate General of GST Intelligence (DGGI) in a case alleging fraudulent availment of Input Tax Credit (ITC) of about Rs30.21 crore.

The court relied on the Supreme Court's ruling in Radhika Agarwal v. Union of India (2025). It reiterated that the grounds of arrest must be communicated to the arrestee in writing before he is produced before a magistrate.

The court observed that denying written grounds of arrest deprives the accused of statutory safeguards under the GST law (Section 104(1), CGST Act). It also affects the accused's right to seek bail under criminal procedure and violates the constitutional guarantee to be informed of the grounds of arrest (Article 22(1), Constitution).

The petitioner approached the High Court seeking bail on multiple grounds. He alleged that the prosecution was founded on an illegal and doubtful search. He claimed that the search was conducted at premises that did not belong to him.

He further argued that the panchnama recorded the presence of a person described as a manager who was never his employee. According to the petitioner, this vitiated the search proceedings.

The petitioner also contended that no notice under the CGST Act was issued before the search, investigation, or arrest. This, he said, denied him an opportunity for a hearing or defense.

He further alleged that he was detained from the evening of May 26, 2025, and that his arrest was shown only on May 28, 2025, resulting in detention beyond 24 hours before he was produced before the magistrate.

The Department opposed the bail plea. It argued that there was sufficient incriminating material showing the petitioner's involvement in offences under the GST law (Sections 132(1)(b) and (c) read with Sections 132(1)(i) and 135(5) of the CGST Act). It submitted that the case involved serious economic offences causing substantial loss to the state exchequer.

The court, however, noted that the offences are triable by a judicial magistrate and carry a maximum punishment of five years' imprisonment. It also recorded that the investigation was complete, the complaint had been filed, and nothing remained to be recovered from the petitioner.

Holding that continued incarceration would serve no useful purpose, the Court allowed the petition. The petitioner was released on bail, subject to conditions including furnishing bonds, depositing a security bond equivalent to the tax and penalty claimed by the Department, and not leaving India without prior permission of the court.

Case Title: Baldeep Singh Sapra v. State (Directorate General of GST Intelligence), Chandigarh

Citation: 2026 LLBiz HC (PNH) 2

Case Number: Criminal Mis. No. M-47385 of 2025

Counsel for Petitioner: Advocates Anil Mehta and Livleen Brar

Counsel for Respondent: Advocates Sourabh Goel, Senior Standing Counsel with Deify Jindal