Bail Granted in Fake ITC Case Despite No Procedural Lapse in Arrest

Centax Editorial Board

February 12, 2026

• 2 min. read

Case Details: Shashi Kumar Choudhary vs. Union of India (2026) 39 Centax 93 (S.C.)

Judiciary and Counsel Details

M.M. Sundresh & Nongmeikapam Kotiswar Singh, JJ.
S/Shri Vinay Saraf, Mahesh Agarwal, Ankur Saigal, Ms Stuti Gujral, Ms Vidushi Sabharwal, Vipin Kumar, Abhinabh Garg, Ms Sukriti Bhatnagar, Arjun V. Harihar, Advs. & E.C. Agrawala, AOR, for the Petitioner.
S/Shri S.V. Raju, A.S.G., Gurmeet Singh Makker, AOR, Zoheb Hussian, Hitarth Raja & Annam Venkatesh, Advs., for the Respondent.

Facts of the Case

The respondents-accused were arrested by officers of the Directorate General of Goods and Services Tax Intelligence (DGGI), alleging fraudulent availment of input tax credit (ITC). A case was registered, the accused persons were arrested and produced before the Chief Judicial Magistrate (CJM), and bail applications were filed. Bail was granted on the grounds that the notices issued to relatives did not state the grounds of arrest and that there was no mention of the headings under section 47, read with section 48, of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). The department challenged the bail order, contending non-application of judicial mind and misinterpretation of the statutory mandates under the CGST Act, Assam GST Act and BNSS. The High Court noted that although intimation of arrest had been given, detailed grounds of arrest were not mentioned in the notice to relatives, while also recording that arrest memos along with annexures were served on the accused and acknowledged, stating that the grounds of arrest were explained, and that the accused and their family members were aware of the grounds and were represented by counsel during the bail proceedings. The matter was accordingly placed before the Hon’ble Supreme Court.

Supreme Court Held

The Hon’ble Supreme Court held that the grounds of arrest, along with relevant documents, were served on the appellants and duly acknowledged. The Court held that no procedural lapse causing prejudice was established so as to vitiate the arrest. The Court further held that the arresting authority had complied with the statutory mandates under section 69 read with section 132 of the CGST Act and the Assam GST Act, as well as section 47 read with section 48 of the BNSS. The Court held that the order granting bail on the alleged procedural lapses was not sustainable; however, considering the nature of the allegations and the personal circumstances, the Court restored the bail granted by the CJM in respect of the son, and in respect of the father permitted limited custodial interrogation for specified consecutive days with a direction to release him thereafter on conditions to be imposed by the Trial Court.