Section 132 of the CGST Act, 2017--- Bail —Conditions of deposit through credit ledger - The petitioner challenged the order dated 9th July, 2021 passed by the learned CMM, Patiala House Courts whereby the bail granted to the petitioner vide order dated 23rd December, 2019 was cancelled by the learned CMM. It is alleged that the petitioner is behind devising a mechanism of availing ITC on the strength of bills of various suppliers which were non-existing and fictitious and availed fraudulent ITC worth Rs.27.05 crores. The petitioner was granted regular bail on 23rd December, 2019 on the conditions that he shall deposit the amount of Rs.2,70,00,000/- by 06.01.2020. The petitioner deposited Rs.1.10 crores through cash ledger and Rs.1.60 crores by way of debiting/reversals through electronic ITC ledger. The respondent submitted that the petitioner could not have furnished Rs.1.60 crores by reversal of the ITC as a condition of bail, as the availed ITC was under cloud. The counsel for the petitioner submitted that form GST-DRC-03 issued under Rule 142(2) and 142(3) of the GST Rules permit deposit of amount through cash/credit of the ITC ledgers. Further Section 49 permits availing of the amount in electronic ledger for making any payments towards output tax. The court observed that the petitioner has to his credit ITC worth Rs.260 crores and the investigation does not show that beyond approximately Rs.42 crores ITCs rest are fraudulent till now. Hence the reversal of the ITC credit for depositing the part amount of Rs.2.70 crores with the department as directed by the learned Trial Court cannot be said to be illegal or unwarranted, warranting cancellation of the bail granted to the petitioner. The petitioner having fulfilled the condition of deposit of the amount partly by cash ledger and partly by debit ledger of the ITC it cannot be said that the petitioner has failed to fulfil the conditions imposed on him.

Held that:- The Hon’ble High Court set aside the impugned order dated 9th July, 2021 passed by the learned CMM, Patiala House Court.