Interim Bail Granted Despite Section 69 CGST Arrest Power; No Risk Found in GST Evasion Case

The HC held that while the Commissioner has the power under Section 69 of the CGST Act to authorize arrest for specified offences under Section 132, mere availability of this power does not justify detention. The petitioner, accused of evading GST by falsely claiming ITC, cooperated with the investigation and no material indicated risk of absconding or non-compliance. Additionally, no determination of liability had been made at this stage. Consequently, the court found continued detention unnecessary and granted interim bail subject to furnishing personal and surety bonds of Rs. 1 Lakh each and compliance with conditions imposed by the CJM, Kamrup (M).

---

---

Issues Involved:

1. Legality of the arrest and detention under Section 132 (1) (c) of the CGST Act, 2017.
2. Application of Article 226 of the Constitution for release from detention.
3. Compliance with procedural requirements under Section 69 of the CGST Act.
4. Consideration of precedents regarding arrest and bail under GST law.

Detailed Analysis:

1. Legality of the Arrest and Detention:

The petitioner challenged the proceedings initiated under Section 132 (1) (c) of the CGST Act, 2017, concerning alleged GST evasion by falsely claiming Input Tax Credit (ITC) amounting to Rs. 10.29 crore. The petitioner argued that the arrest and detention were unwarranted as the quantum of demand had not been assessed, and the petitioner had cooperated with the authorities. The court noted that the allegations involved fraudulent availing of ITC without actual receipt of goods, which is punishable under Section 132 (1) (c) with imprisonment and fine if the amount exceeds Rs. 500 Lakhs. However, the court observed that the investigation was ongoing, and the actual determination of liability had not been completed.

2. Application of Article 226 for Release from Detention:

The petitioner sought release from detention under Article 226 of the Constitution. The court considered precedents, including the Apex Court's judgment in State of Gujarat Vs. Choodamani Parmeshwaran Iyer, which highlighted that while the power under Article 226 is available, it should be exercised sparingly. The court noted that the petitioner was produced before a competent court and remanded to custody, with an application for extension of detention filed. The court emphasized that the power to issue a writ of mandamus should compel statutory duties and not prevent officers from performing statutory functions.

3. Compliance with Procedural Requirements:

The court examined the procedural compliance under Section 69 of the CGST Act, which allows the Commissioner to authorize arrests if there are "reasons to believe" an offence has been committed. The records showed the authorization for arrest was issued, and the grounds of arrest were communicated to the petitioner. However, the court found no concrete evidence of tampering with evidence or non-cooperation by the petitioner, questioning the necessity of detention. The court emphasized the need for a balance between the power to arrest and the justification for its exercise, referencing the Apex Court's guidance in Siddharth Vs. State of Uttar Pradesh.

4. Consideration of Precedents:

The court referred to several precedents, including the Bombay High Court's judgment in Daulat Samirmal Mehta, which interfered with detention orders under similar circumstances. The Apex Court had upheld the bail granted in that case, modifying certain conditions. The court also considered the principles from Arnab Manoranjan Goswami's case, which outlined factors for granting bail under Article 226, such as the nature of the offence, potential for witness tampering, and the accused's cooperation with the investigation. The court concluded that the petitioner's continued detention was not justified and granted interim bail, subject to conditions ensuring cooperation with the investigation and preventing interference with evidence.

Conclusion:

The court directed the release of the petitioner on interim bail, subject to specific conditions, emphasizing the need for cooperation with the investigation and non-interference with evidence. The matter was listed for further proceedings, allowing the respondents to complete their instructions and file necessary affidavits. The decision underscored the careful application of arrest powers under the GST Act, balancing statutory authority with individual liberty.

---