Bail Conditions Eased for Accused in Alleged Shell-Company ITC Racket: Supreme Court

In three orders, a Bhubaneswar Special Court granted bail and the Orissa High Court and the Supreme Court relaxed its surety terms for a GST accused unable to secure release.

The Supreme Court has modified bail conditions for a person accused under Section 132 of the CGST Act of helping run a network of shell companies that passed on fake input tax credit, after he stayed in custody for months because he could not furnish the required sureties. The orders were passed in three stages by the trial-level Special Court, the Orissa High Court and the Supreme Court [Nilesh Yogesh Jagiwala v. Union of India, 2026-juristway.com-3238-D&SC(Bhubaneswar)-GST; Nilesh Yogesh Jagiwala@nilesh Jagiwala@neil v. Union of India (CGST), 2026-juristway.com-3237-HC(Orissa)-GST; Nilesh Yogesh Jagiwala @ Nilesh Jagiwala @ Neil v. Union of India (CGST), 2026-juristway.com-3236-SC-GST].

Special Court. The prosecution alleged that 51 shell companies were sold through a racket, and that 21 of them passed on ITC of ₹94.06 crore after the change of directors. The ADJ-cum-Special Judge (C.B.I.-II), Bhubaneswar, granted bail under Section 483 of the BNSS on 17 Jun 2026 on the principle of parity, as co-accused had been released by the High Court and the petitioner had been in custody for a long period. The bond of ₹5,00,000 required two sureties, one a family member and one a local person.

Orissa High Court. Unable to produce a family member as surety, the petitioner remained in custody. Justice Aditya Kumar Mohapatra held that an accused “cannot be denied the benefit of bail only because of his inability to furnish the bail bond”, as that affects his rights under Article 21. On 24 Sep 2026 the Court substituted two local solvent sureties and a cash security of ₹5,00,000 to be kept in an interest-bearing account.

Supreme Court. The petitioner could arrange only one local surety. On 28 Oct 2026 Justice Manoj Misra and Justice Manmohan directed that one local surety would suffice, with the other to the Magistrate’s satisfaction. Since the passport was already with CGST Belapur, proof of deposit and an undertaking not to seek its release without the Trial Court’s permission would replace a fresh deposit.

The petitioner is to be released under the bail order once the modified conditions are met. The other bail conditions imposed by the Special Court continue to apply.

2026-juristway.com-3238-D&SC(Bhubaneswar)-GST | 2026-juristway.com-3237-HC(Orissa)-GST | 2026-juristway.com-3236-SC-GST