The Allahabad High Court granted bail to a firm’s partner held since July 2026 over ₹38 crore of allegedly fake input tax credit, noting a 30 October 2026 circular on arrest powers.
The Allahabad High Court has granted bail to a partner of Aarti Industry accused of offences under Sections 132(1)(b), 132(1)(c), 132(1)(f) and 132(1)(i) of the Central Goods and Services Tax Act, 2017 (CGST Act), taking into account a circular dated 30 Oct 2026 on the withdrawal of arrest powers [Gautam Sharma v. Union of India, 2026-juristway.com-3382-HC(Allahabad)-GST].
Justice Vikram D. Chauhan heard the application. The Directorate General of GST Intelligence (DGGI) alleged that nine suppliers of the firm were found to have wrongly availed fake input tax credit (ITC) of ₹38 crore. The applicant had been in jail since 26 Jul 2026, investigation was complete and a complaint had been filed before the Special Chief Judicial Magistrate, Meerut.
Counsel for the DGGI opposed bail but, the order records, “could not dispute the circular dated 30th October 2026”, which recommends withdrawal of arrest power under the GST provisions and directs that no arrest may be made.
The Court stressed that detention before conviction is not meant to be punitive, and that delay in the trial is a factor in favour of release. It relied on Sanjay Chandra v. CBI (2012) and on Supreme Court orders granting bail in GST prosecutions, including Atul Mehra v. Union of India (SLP (Crl) No. 20996 of 2025) and Vineet Jain v. Union of India (Criminal Appeal No. 2269 of 2025).
Applying these principles, the Court noted that the maximum punishment under Section 132 of the CGST Act is five years, that the case is triable by a Magistrate, and that no charge had been shown to be framed. Even if the trial began soon, it would not end within a year. The applicant had no criminal history, and nothing was shown to suggest that he would flee, tamper with evidence or intimidate witnesses.
Considering the period of detention and the circular dated 30 Oct 2026, the Court allowed bail on a personal bond and two sureties, with conditions against tampering with evidence, influencing witnesses and leaving India without permission.
2026-juristway.com-3382-HC(Allahabad)-GST