2025 (10) TMI 1069 - HC - GST

Bail granted under Section 69 CGST Act after arrest; investigation largely complete, Rs 84 lakh deposit, no flight risk

The HC allowed the bail application and ordered the applicant's release on bail with conditions, finding absence of the requisite subjective satisfaction ... Seeking grant of regular bail - without subjective satisfaction and in absence of 'reason to believe' as required under section 69 of CGST Act, on 26.08.2025, applicant has been arrested - principles of natural justice - HELD THAT:- Following picture emerges on record:- (i) Substantial investigation is over. (ii) No past antecedent is registered qua the applicant. (iii) As submitted by learned advocate for the petitioner, the petitioner has deposited a sum of Rs. 84,00,000/- before the GST Department and produced on record the Payment Receipt (Universal Enterprises) which is ordered to be taken on record. (iv) The applicant has deep root in the society, no apprehension as to flee away or escape trial or tempering with the evidence /witnesses is expressed. (v) In view of above position emerging at the end of hearing, the application deserves consideration, but by imposing suitable condition to be observed by the applicant, pending investigation and trial. The applicant is ordered to be released on bail subject to fulfilment of the conditions that imposed - bail application allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether the applicant is entitled to regular bail under Section 483 of the Bharatiya Suraksha Sanhita, 2023 in respect of offences alleged under Section 132(1)(a), (b) & (c) of the Central Goods & Services Tax Act, 2017. 2. Whether the arrest made on 26.08.2025 (after issuance of witness summons under Section 70) was effected in absence of 'reason to believe' as required under Section 69 of the CGST Act, and whether that affects entitlement to bail. 3. What conditions are appropriate to impose when granting bail in the facts of this case (including deposit, surety, restrictions on travel, attendance for investigation and trial, and protection against misuse of liberty). ISSUE-WISE DETAILED ANALYSIS Issue 1 - Entitlement to regular bail under Section 483 BSS 2023 for alleged CGST offences Legal framework: Bail under Section 483 of the Bharatiya Suraksha Sanhita, 2023 is discretionary and is to be exercised by reference to the facts of the case, gravity of the offence, stage of investigation, risk of flight, risk of tampering with evidence, antecedents of the accused, and public interest. The alleged substantive offences fall under Section 132(1)(a),(b),(c) CGST Act, 2017 which concern evasion/contravention of GST obligations. Precedent Treatment: The Court did not rely upon or cite any earlier authorities; decision is based on statutory criteria and facts on record. Interpretation and reasoning: The Court examined objective facts relevant to bail: (i) substantial part of the investigation was complete; (ii) no past criminal antecedent of the applicant; (iii) applicant deposited Rs. 84,00,000/- with the GST Department and produced receipt; (iv) applicant has strong societal roots and there is no apprehension of fleeing or tampering with evidence. On this matrix, the Court concluded that the statutory discretionary power to grant bail should be exercised in favour of the applicant subject to appropriate conditions to safeguard investigation and trial. Ratio vs. Obiter: Ratio - Where substantial investigation is complete, no antecedents exist, demonstrable steps have been taken to assuage the fiscal grievance (monetary deposit), and no risk of flight or tampering is shown, the court may grant bail under Section 483, subject to conditions. Obiter - Observations about the consolidated manner of alleging amounts (to add seriousness) and factual comments on searches are background observations not forming binding ratio. Conclusion: Bail granted subject to conditions; the exercise of discretion was warranted on the facts disclosed. Issue 2 - Validity and consequence of arrest after issuance of witness summons (Section 70) and alleged absence of subjective 'reason to believe' under Section 69 CGST Act Legal framework: Section 69 (CGST Act) prescribes the conditions under which arrest may be made; Section 70 allows issuance of summons to a person treated as witness. Arrest in absence of requisite 'reason to believe' may affect fairness but does not automatically invalidate subsequent proceedings; it is a factor in the bail analysis. Precedent Treatment: No authorities were cited or applied; the Court considered the contention in light of the factual record. Interpretation and reasoning: The applicant contended arrest was made despite being treated as a witness and after issuance of witness summons, and without requisite subjective satisfaction under Section 69. The Court recorded the contention but proceeded to decide bail primarily on statutory bail criteria (investigation stage, antecedents, deposit, risk factors). The Court did not undertake an express judicial determination that the arrest violated Section 69, nor did it quash the arrest order; instead the alleged procedural infirmity contributed to the overall assessment favouring bail. Ratio vs. Obiter: Obiter - The Court's reference to the arrest despite prior summons and alleged absence of 'reason to believe' is an explanatory factor in the bail decision but not formulated as a conclusive legal ruling invalidating the arrest. The decisive ratio rests on the bail criteria applied. Conclusion: The alleged procedural defect in arrest was taken into account as a relevant circumstance weighing in favour of bail, but no formal order was made invalidating the arrest; bail was granted notwithstanding that factual contention. Issue 3 - Appropriate conditions to attach to bail and their legal effect Legal framework: When granting bail, the court may impose reasonable conditions to secure the investigation and trial, prevent misuse of liberty, and protect the prosecution's interests, including monetary security, appearance obligations, travel restrictions, surrender of passport, and restrictions on changing residence. Precedent Treatment: No precedent was cited; the Court applied standard bail-conditional principles to the facts. Interpretation and reasoning: The Court balanced liberty against investigative interests and imposed specific conditions: execution of a personal bond of Rs.10,000 with one surety of like amount; obligations not to misuse liberty or act injuriously to prosecution; prohibition on leaving India without prior permission and requirement to deposit passport; requirement to appear before IO when required and attend court; and requirement to furnish and not change residential address without prior permission. The Court also directed that release be subject to the applicant not being required in connection with any other offence at the time of release and authorized the Sessions Judge to modify conditions if appropriate. The Court expressly instructed the trial court not to be influenced by preliminary observations made while granting bail. Ratio vs. Obiter: Ratio - Conditions of bail listed (bond, surety, attendance, passport surrender, non-misuse clause, residence disclosure and restriction) are proper and proportionate measures to secure investigation and trial in the circumstances where bail is otherwise appropriate. Obiter - The Court's permissive direction allowing deletion/modification of conditions by the trial court is procedural guidance rather than a substantive legal principle. Conclusion: Bail is subject to enumerated conditions; release is conditional upon compliance and on the applicant not being wanted for other offences; breach empowers the Sessions Judge to take appropriate action. Cross-References and Procedural Directions 1. The Court recorded that the deposited amount (Rs.84,00,000/-) was taken on record and is a material circumstance favouring bail (see Issue 1 analysis). 2. The Court permitted direct service and made the Rule absolute to the extent of granting bail subject to conditions; the lower court is to ensure bail bond execution and may modify conditions in accordance with law. 3. The Court reiterated that interim/factual observations regarding evidence are of preliminary nature and must not influence the trial court's evaluation of evidence at trial.