Coercive arrest under GST adjudication must await statutory process; bail granted as custody nears default-bail threshold.

Section 74 of the CGST Act was treated as requiring notice, opportunity to show cause, and adjudication before coercive recovery or arrest is used. The analysis emphasises that investigative steps should not bypass the statutory procedure merely because proceedings are pending, and coercive arrest was therefore viewed as impermissible before that process ran its course. On bail, the petitioner's substantial custody, the proximity of the default-bail threshold, and the absence of an immediate filing assurance supported grant of bail, subject to cooperation with investigation.

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Issues: (i) Whether arrest or other coercive action could be taken before completion of proceedings under Section 74 of the Central Goods and Services Tax Act, 2017. (ii) Whether the petitioner was entitled to bail in the facts of the case.

Issue (i): Whether arrest or other coercive action could be taken before completion of proceedings under Section 74 of the Central Goods and Services Tax Act, 2017.

Analysis: The order treated Section 74 of the Central Goods and Services Tax Act, 2017 as a provision analogous to the earlier service tax regime and noted that the statutory scheme contemplates notice, opportunity to show cause, and adjudication before any recovery by coercive means. Reliance was placed on the view that arrest is not to be used casually and that the investigative process and adjudication procedure cannot be bypassed merely because proceedings are underway.

Conclusion: Coercive arrest was not treated as permissible before the statutory procedure under Section 74 had run its course.

Issue (ii): Whether the petitioner was entitled to bail in the facts of the case.

Analysis: The petitioner had already undergone substantial custody, and the Court noted that default bail would in any event become available on completion of the statutory period if the charge-sheet was not filed. In those circumstances, and in the absence of any positive assurance that the charge-sheet would be filed immediately, the Court held that bail should be granted, with conditions to ensure cooperation in investigation.

Conclusion: The petitioner was entitled to bail.

Final Conclusion: The petition succeeded and interim liberty was granted, with the petitioner directed to cooperate with investigation while remaining on bail.

Ratio Decidendi: Where the tax statute requires completion of the prescribed notice and adjudication process, arrest or coercive recovery should not be used to bypass that procedure, and bail may be granted where custody is nearing the statutory default-bail threshold.

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