A Pune sessions court has granted bail to Oves Malik, arrested in September for his alleged role in a fake GST invoice racket involving 58 shell firms and fraudulent input tax credit (ITC) worth ₹561.58 crore.
Additional sessions judge B V Wagh in an order passed on December 9 held that Malik, behind bars since September 13, is entitled to bail on grounds of parity with the co-accused who have already been released and because the maximum punishment for the alleged offence/s is five years. Malik has been ordered to furnish a ₹1 lakh personal bond with two solvent sureties; deposit his passport; refrain from leaving India without court permission; attend all future hearings; and comply with the conditions under section 480(5) of the BNSS.
The Directorate General of GST Intelligence (DGGI), Pune zonal unit, had accused Malik of creating and operating fictitious businesses in Pune and Hyderabad to generate fake invoices and e-way bills without any actual supply of goods. According to investigators, the racket enabled wrongful ITC flow to several entities, including Pune-based N L Traders; and involved the use of electronic devices, fake rubber stamps, and a network of 58 bogus firms shown as active or cancelled during e-way bill generation.
During the hearing, Malik’s counsel argued that the prosecution had relied on assumptions rather than a quantified allegation directly against the applicant. He submitted that Malik had been arrested on the basis of statements made by third parties, without any documentary proof that he created or controlled the allegedly fake firms. The defence highlighted that the applicant had no criminal background and cooperated with the investigation before his arrest. Citing judgments including Ashutosh Garg versus the Union of India and Pulkit versus the state (National Capital Territory/NCT of Delhi), the defence stressed that economic offences of this nature, where the maximum punishment is five years, do not warrant prolonged incarceration, especially when the co-accused in the same case are already out on bail.
Countering this, the special public prosecutor asserted that the investigation had revealed Malik’s central role in fabricating 58 shell entities used to route the fraudulent ITC. He argued that searches at Hyderabad and Pune uncovered substantial material, including gadgets, used to generate invoices, fake e-way bills, and stamps of multiple firms that could be traced back to the accused’s network. The prosecution maintained that the wrongful ITC claim had caused a massive revenue loss to the government, and insisted that releasing Malik at this stage could compromise the ongoing investigation, given the likelihood of tampering with evidence or influencing witnesses. A series of judgments, including Hira Gobind Bhatia versus the state of CGST and Sheetal Mittal versus the state of Rajasthan, were cited to oppose bail in large-scale GST fraud.
After hearing both sides, judge Wagh granted bail noting that the allegations demonstrate a prima facie case but that the offence carries a maximum sentence of five years, as examined by the Supreme Court in Vineet Jain versus the Union of India, making continued pre-trial incarceration unnecessary. The court held that the tax department remains entitled to recover the alleged dues through statutory channels, and that Malik deserves treatment similar to the co-accused already released on bail.
