Supreme Court Sets Aside Bail Condition To Deposit Rs 70 Lakhs In Case For Wrongfully Claiming ITC

The Supreme Court has overturned a bail condition imposed by the High Court that a person accused of illegally claiming Input Tax Credit must deposit deposit Rs. 70 lakhs, the alleged amount of improperly claimed ITC.

The petitioner contended that there was no final assessment in respect of the wrongful availment of ITC under the GST Act. Hence, it cannot be presumed that the appellant is under a legal obligation to pay the amount.

Additional Solicitor General of India KM Nataraj fairly stated that such a condition cannot be imposed while granting bail. Considering these factors, the bench of Justices Krishna Murari and BV Nagarathna set aside the bail condition. 

The appellant has challenged the order dated June 21, 2022, passed by the High Court of Chhattisgarh granting bail to the appellant subject to conditions. One of the conditions was that the appellant shall deposit a sum of Rs. 70 lakhs under protest, in favor of the Principal Commissioner, CGST, Raipur, within a period of 45 days from the date of his release.

The appellant contended that the condition to deposit Rs. 70 lakhs within 45 days from the date of the release as a prerequisite condition for the bail is not sustainable as the first information report was in respect of wrongfully availing the input tax credit of Rs. 6,95,32,472.

Case Title: Subhash Chauhan Versus UOI

Citation: 2023 LiveLaw (SC) 61

Counsel For Appellant: AOR Himanshu Tyagi

Counsel For Respondent: A.S.G. K.M. Nataraj

Headnotes -Supreme Court overturned a bail condition imposed by the High Court that a person accused of illegally claiming Input Tax Credit must deposit deposit Rs. 70 lakhs, the alleged amount of improperly claimed ITC- Centre conceded that such a condition is unsustainable when final assessment has not taken place.

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