Punjab & Haryana HC Grants Bail To GoMechanic Co-Founder In Light Of CBIC Direction Against Further GST Arrests

The Punjab and Haryana High Court has recently granted regular bail to GoMechanic co-founder Amit Bhasin in an alleged fraudulent Input Tax Credit (ITC) case, taking into account a CBIC instruction directing all Central GST field formations not to make further arrests under GST.

The instruction followed the GST Council's recommendation to withdraw arrest powers by omitting Section 69 of the Central Goods and Services Tax Act, 2017.

Justice Sanjay Vashisth observed that the instruction reflected a subsequent policy decision by the department against effecting further arrests under GST.

The court held, "Though said instruction does not, by itself, determine legality of petitioner's earlier arrest, it reflects a subsequent policy decision of respondent-Department against effecting further arrests under GST. This development, when considered along with completion of investigation, filing of complaint, absence of any demonstrated requirement of further custodial interrogation and bail granted to co-accused, weighs in favour of petitioner."

The case arose from allegations that Targetone Innovations Private Limited and Parcit Autocrazy Private Limited, along with a network of 28 shell/dummy firms, were involved in fraudulently availing, utilising and passing on ITC without corresponding receipt or supply of goods or services.

The prosecution alleged that Bhasin, a co-founder and director of Targetone Innovations, along with other directors, had directed the creation and operation of these entities. These allegations were based, among other things, on statements made by co-accused Sahil Chandna.

Bhasin's counsel argued that the arrest was illegal because the reasons necessitating it had been recorded by an Inspector/Investigating Officer rather than the GST Commissioner.

Reliance was placed on the Supreme Court's judgment in Radhika Agarwal v. Union of India. It was also submitted that the investigation had been completed and a complaint filed before the competent court on September 22, 2026.

The counsel further pointed out that co-accused Sahil Chandna had been granted bail after his arrest was declared illegal. CBIC Instruction No. 02/2026-GST dated October 30, 2026, was also relied upon.

The instruction records the GST Council's recommendation to withdraw arrest powers by omitting Section 69 of the CGST Act. It directs:

"All CGST field formations are accordingly directed that no further arrests may be carried out under GST."

The GST Department opposed bail. However, the court noted that its senior standing counsel could not advance any substantial argument demonstrating why further detention was necessary, particularly when the investigation had been completed and the complaint filed. The court also noted that the maximum punishment prescribed for the alleged offences was five years.

"In totality of aforesaid circumstances, particularly when investigation stands completed and further incarceration of petitioner is not shown to be necessary, this Court is of the considered view that continued detention of petitioner inside jail would not serve any useful purpose," the court observed.

The court accordingly granted Bhasin regular bail, subject to furnishing bail and surety bonds, if not required in any other case. It clarified that its observations would not be treated as an expression of opinion on the merits of the case.

For Petitioner: Senior Advocates Randeep S. Rai and Rahul Sharma, assisted by Advocates Arjun Dewan, Suhaan Mukarji, Arshiya Ghose and Kritik Sharma,

For GST Dept: Senior Standing Counsel Neha Awasthi