The Gujarat High Court recently addressed a case involving the potential cancellation of bail in a GST evasion matter. The Superintendent of Central GST & Central Excise sought to revoke the bail of Virbhadrasinh Pratapsinh Chauhan, arguing that he had not fully complied with the bail conditions. Initially, Chauhan was granted bail on the condition that he would deposit ₹90 lakhs within seven days. The applicant claimed that although Chauhan credited the amount into his electronic cash ledger, he did not debit it using Form GST DRC-03, meaning the government had not received the funds.
Chauhan countered this argument by providing evidence that he had deposited the entire amount—₹45 lakhs each under CGST and SGST—before the deadline, supported by challans and electronic ledger entries. The court examined whether the failure to file Form GST DRC-03 constituted a breach of bail conditions. Referring to Section 49 of the CGST Act, 2017, and a precedent set by Arya Cotton Industries v. Union of India, the court concluded that any amount credited to the government's account is considered paid on the deposit date.
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The court found that Chauhan had indeed deposited the required ₹90 lakhs, which was reflected in the government portal, and determined there was no breach of bail conditions. The mere non-filing of Form GST DRC-03 did not imply non-compliance or bad faith. Therefore, the application to cancel the bail was rejected, affirming the original bail order. This decision underscores the importance of the actual credit of funds over procedural formalities in fulfilling bail conditions.
Order date: 25 Sept 2025
Parties: Superintendent (AE) through Arihant Kumar Jain v. Virbhadrasinh Pratapsinh Chauhan & Anr.
Facts –
- The applicant, Superintendent of Central GST & Central Excise, Gandhinagar, sought cancellation of bail granted to the accused under GST evasion proceedings.
- During the earlier bail hearing, the accused undertook to deposit ₹90 lakhs within seven days and was released on that assurance.
- The applicant contended that the accused failed to comply fully, having only credited the sum into his electronic cash ledger without debiting it via Form GST DRC-03, meaning the government exchequer had not actually received payment.
- The accused argued that the entire amount was deposited on 01.11.2024 — ₹45 lakhs under CGST and ₹45 lakhs under SGST — supported by challans and electronic ledger data, hence there was no violation of bail conditions.
Issue –
- Whether crediting an amount in the electronic cash ledger without filing Form GST DRC-03 constitutes non-compliance with a court direction to deposit the amount as a condition of bail?
Order –
- The Court observed that under Section 49 of the CGST Act, 2017, and in light of the Division Bench ruling in Arya Cotton Industries v. Union of India (2024) 164 Taxmann.com 2 (Guj.), any amount credited to the government’s account through challan is deemed paid on the date of deposit.
- The respondent had deposited ₹90 lakhs before the stipulated deadline; the records confirmed the payment was duly reflected in the Government portal.
- The Court held that there was no breach of bail conditions, and mere non-filing of DRC-03 did not negate payment or indicate mala fides.
- The application for cancellation of bail was rejected, and the earlier bail order was confirmed.
