Court rejects bail pleas of Ludhiana industrialist, son in Rs 436-crore GST scam. Read the key points, why it matters and what businesses should watch next.
Bail Denied in Ludhiana GST Case
The court of Additional Sessions Judge Dr Rajneesh has refused bail to Ludhiana industrialist Kewal Krishan Garg, who heads the All India Furnace Association, and his son Chetan Garg. The Directorate General of GST Intelligence (DGGI) alleges the two were part of a bogus billing network built on fake GST registrations and fraudulent input tax credit (ITC) transactions worth roughly Rs 436 crore.
The court described the allegations as serious and held that economic offences of this kind harm the economy and threaten society. It said releasing the accused at this stage could lead to interference with the investigation.
What the Department Alleges
The case centres on four companies linked to the KNL Group, said to be owned by the accused: KNL Drivelines Parts Private Limited, Ramya Balaji Alloy Private Limited, KNL Axles Private Limited and KNL MK Gears Private Limited. The prosecution claims these firms availed or used ITC of about Rs 21.81 crore based on invoices from suppliers where no goods were actually supplied or moved.
The investigation, according to the department, began with 44 suspected fake registrations covering transactions of about Rs 261 crore, and later widened to 76 registrations with the alleged fraudulent ITC network reaching around Rs 436 crore. The department relied on witness statements, WhatsApp chats said to show untaxed cash sales, and other material, and warned that witnesses could be influenced and evidence tampered with if bail were granted.
The defence argued that Garg was falsely implicated, questioned the legality of his arrest, and said the companies were genuine Ludhiana-based manufacturers. It submitted that no independent forensic, financial, banking or digital evidence tied him to the alleged supplier network. It also noted he has no prior criminal record, is a senior citizen with ailments, and has been in custody since August 19, 2026, and that no complaint under Section 132 of the CGST Act ha…
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