Supreme Court Remands GST Fraud Accused’s Bail Plea for Fresh Hearing Over Suppression of Material Facts:

The Directorate General of Service Tax Intelligence (now functioning within the GST intelligence framework) filed a complaint before the Special Court for Economic Offences, Bengaluru, alleging that Mohammed Kamran who is proprietor of M/s MK Traders and had issued invoices without supplying goods, fraudulently availed ITC, falsified documents and financial statements, and furnished false information to evade tax. The alleged loss to the exchequer was Rs 43,08,22,936. The accused was arrested on September 16, 2025. His successive bail applications before the trial court and the Sessions Court were rejected. He subsequently approached the Karnataka High Court seeking bail under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023.

While the bail petition was pending, the accused filed a writ petition challenging the legality of his arrest and seeking quashing of the complaint and the order taking cognizance. On December 22, 2025, his request for interim release in the writ proceedings was rejected. However, he subsequently sought urgent listing of his pending bail petition, which was heard during the High Court's winter vacation on December 26, 2025. The High Court granted him bail without being informed of the rejection of interim release in the separate writ proceedings.

The Court found the accused's conduct particularly concerning. He had pursued bail proceedings before the High Court while simultaneously approaching the Sessions Court and filing a writ petition challenging his arrest. Crucially, he failed to disclose that his request for interim release in the writ petition had been rejected before the bail petition was taken up for urgent hearing. The Court held that pursuing parallel remedies without adequate disclosure amounted to an abuse of the process of law. It characterised the accused's conduct as involving suppression of material facts and a lack of utmost good faith, which is relevant when seeking equitable and discretionary relief such as bail.

The Supreme Court also observed that the bail petition had been listed during the winter vacation on the accused's request, even though no specific vacation hearing date had previously been fixed by the High Court. In the circumstances, the Court considered that obtaining an expedited hearing without adequate notice to the investigating agency amounted to an attempt to gain an unfair advantage. Nevertheless, considering the overall circumstances, the Supreme Court declined to cancel the bail outright at that stage. Instead, it set aside the portion of the High Court's order disposing of the criminal petition and restored the bail proceedings for fresh consideration by the Single Judge.

The Court directed the investigating agency to file its counter-affidavit within two weeks and permitted the accused to file a rejoinder within one week thereafter. The High Court was requested to decide the bail petition on its own merits, preferably by the end of 2026. Until further orders, the accused was permitted to remain on interim bail on the existing terms and conditions.