Supreme Court Grants Bail To Four Accused In Fake ITC Case After Consistent Trial Appearance

The Supreme Court recently granted bail to four persons accused of operating a network of fake firms to fraudulently avail Input Tax Credit (ITC) under the GST law. The top court held that their continuous appearance before the trial court amounted to “constructive custody” and that remanding them to jail would serve no useful purpose at this stage.

A bench of Justice Dipankar Datta and Justice Satish Chandra Sharma was hearing appeals filed by the accused, who were arrested in 2021 by the CGST Commissionerate, Meerut, for offences under the CGST Act.

Four complaints registered against them alleged that they had floated several fictitious firms in the names of relatives and associates and issued fake invoices without any actual supply of goods, thereby enabling wrongful availment of ITC.

The accused were released on interim bail in 2021 pursuant to the Supreme Court's COVID-19 decongestion directions. After those directions were withdrawn in March 2023, the concerned courts rejected their bail applications on the ground that they had not physically surrendered, even though they continued to appear before the trial court.

The apex court noted that their conduct in regularly appearing before the trial court, coupled with the absence of any allegation of misuse of liberty or violation of bail conditions, demonstrated that no meaningful purpose would be served by directing their incarceration at this stage:

"Even though the appellants were released on interim bail due to a benefit extended by this Court, keeping in view the conduct of the appellants in regularly appearing before the Trial Court and the fact that nothing has come forward showing that they have involved themselves in unlawful activities or have violated any of the bail conditions during the period of their release on interim bail, no meaningful purpose would be served by directing their incarceration at this stage."

Accordingly, the bench granted bail to the four accused, subject to conditions imposed by the trial court.

Case Title: Sanjay Jain v. Union of India & Anr

Citation: 2026 LLBiz SC 8