Faridabad Court Denies Bail in Rs. 23.66 Crore GST Fraud Involving 9 Shell Companies

The Faridabad Sessions Court has recently rejected a bail application filed by an accused who was considered to be involved in setting up nine shell or fake firms and fraudulently claiming Input Tax Credit (ITC) worth Rs. 23.66 crores.

The GST department had summoned the bail applicant, Arun Garg, in January 2025 for the inquiry. However, even before the inquiry, he was arrested the very next day, and since then, he has been kept in judicial custody. A formal complaint was also filed against him in the Magistrate’s Court at Faridabad.

Represented by Ankur Gosain, the accused argued that only 5-6 labourers’ statements were recorded to allege his involvement in running these fake firms. He also argued that the GST department failed to substantiate its claims.

They also said that the prosecution’s witnesses were the officials of the GST department and that they could not be influenced. Therefore, the trial may take more time. Based on these submissions, the accused requested bail.

However, the public Prosecutor Ankit Chaudhry and the Senior Standing Counsel of the GST Department Jai Ahuja and Harpreet Singh opposed this bail. They contended that the applicant had set up nine shell firms without operating any real business just to wrongly claim ITC amounting to Rs. 23.66 crores. Additionally, it was also argued that the applicant’s brother was also involved in this fraud.

However, the investigation was still ongoing, and it was believed that if he would be granted bail, the accused might tamper with evidence, influence witnesses, or run away, which could affect the course of justice.

Additional Sessions Judge Jyoti Lamba noted that the allegations showed a planned economic offence aimed at causing loss to the government and illegal gain to the accused and his associates.

Mentioning P. Chidambaram vs. Directorate of Enforcement (2019), the court said economic offences are serious and impact the country’s financial system.

The Sessions Court said that granting bail must balance individual liberty and society’s interest. It noted that just because the accused has been in custody for a long time doesn’t mean bail should automatically be given.

The court also referred to Inderjeet Singh @ Laddy vs. Punjab (2014), stating that there can’t be fixed rules in criminal cases.

Observing that releasing the accused on bail could seriously harm the course of justice, the Sessions Court rejected Arun Garg’s bail application.