Legal provisions involved: Central Goods and Services Tax Act, 2017 – Sections 70, 132 and 138; and Section 438 of Code of Criminal Procedure, 1973. (Section 482 of BNSS)

Judgement by: Karnataka High Court

Judge/Bench: Justice Shivashankar Amarannavar

Facts

Sri Akram Pasha, proprietor of M/s A.R. Steel was accused of wrongly claiming and passing on fake Input Tax Credit of about ₹31.62 crore by using bogus invoices without actual supply of goods or services. The GST department issued several summons and the petitioner feared arrest. He approached the High Court for anticipatory bail, stating that part of the demand was already decided and paid, the offence was compoundable, and the law does not bar anticipatory bail in GST cases.

Key legal provisions

Central Goods and Services Tax Act, 2017 – Sections 70, 132 and 138

Section 438 of Code of Criminal Procedure, 1973 (Section 482 of BNSS)

Issues raised

Whether arrest and custodial interrogation are necessary in every fake ITC case, and whether anticipatory bail can be granted in such matters.

Arguments of the case

The department argued that fake ITC cases are serious economic offences and require custodial interrogation. The petitioner argued that arrest is not compulsory, especially when the law allows compounding and the maximum punishment is limited.

Judgement

The Karnataka High Court held that arrest is not mandatory in every GST fake ITC case. Even though such offences are serious, custodial interrogation is not always required. The court granted anticipatory bail with strict conditions to ensure cooperation with the investigation.

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