Gujarat High Court Grants Bail To Accused In ₹42 Crore GST ITC Fraud Case

The Gujarat High Court has granted regular bail to Keyur Dipakkumar Shah, accused of allegedly availing and passing on fraudulent input tax credit (ITC) of around Rs 42 crore under GST laws, noting that he has no criminal antecedents and faces a maximum sentence of five years.

“Without discussing the evidence in detail, prima facie, this Court is of the opinion that this is a fit case to exercise the discretion and enlarge the applicant on regular bail,” Justice Nikhil S. Kariel said while allowing his plea. 

Shah was arrested on January 21, 2026, for offences under Sections 132(1)(b) and 132(1)(c) of the Central Goods and Services Tax Act, 2017, along with Section 69 of the Gujarat Goods and Services Tax Act, 2017. The case stems from allegations that he availed input tax credit without actual supply of goods and passed it on, causing a loss of about Rs 42 crore to the exchequer.

Opposing the plea, the State argued that the nature of the offence and the role attributed to him did not justify granting of bail. The court, however, noted that the charge sheet had already been filed and found that the prosecution's apprehensions could be addressed by imposing suitable conditions.

The absence of any prior criminal record weighed with the Court, as did the fact that the alleged offences carry a maximum punishment of five years. It also recorded that the department is empowered to recover dues and impose penalties under the GST framework.

The Court further noted that it had taken into consideration the Supreme Court's ruling in Sanjay Chandra v. Central Bureau of Investigation.

Shah was ordered to be released on bail on furnishing a bond of Rs 1 lakh with one surety of the like amount. Other conditions include surrender of passport, a bar on leaving Gujarat without prior permission, periodic appearances before authorities, and responding to notices issued by the investigating officer.

For Applicant: Senior Advocate Devang Nanavaty with Chetan K Pandya

For Respondent: J K Shah, APP