GST arrest safeguards and unlawful clubbing of distinct evasion allegations led to quashing of remand and custody.

The Allahabad HC noted that undervaluation, linked to Section 122(1)(i) and requiring determination under Section 74 of the CGST Act, was not shown to be legally interchangeable with clandestine removal under Section 132(1)(a), and that the remand order mixed the two allegations mechanically without proper consideration of the defence. It also found non-compliance with mandatory arrest safeguards, including supply of grounds of arrest, intimation to a relative or friend, recording of the place of arrest, and DIN-related requirements. On that basis, the article states that the arrest, remand and custody were illegal, and that the remand order and consequential proceedings were quashed, with liberty to proceed afresh in accordance with law.

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Issues: (i) Whether the detention, arrest, remand and custody of the petitioner were illegal for clubbing the allegation of undervaluation with the offence of clandestine removal under the GST law. (ii) Whether the arrest procedure, including supply of grounds of arrest, intimation to relatives or friends, place of arrest, and generation of DIN, complied with the mandatory safeguards.

Issue (i): Whether the detention, arrest, remand and custody of the petitioner were illegal for clubbing the allegation of undervaluation with the offence of clandestine removal under the GST law.

Analysis: The Court found that the respondents did not adequately explain why undervaluation, which was linked to Section 122(1)(i) of the Central Goods and Services Tax Act, 2017 and required determination under Section 74 of that Act, was treated as part of the offence under Section 132(1)(a). The first remand application had separated the two heads of evasion, while the second remand application mixed them together. The Court held that the two allegations were not shown to be legally interchangeable and that the remand order was passed mechanically without proper consideration of the defence objections.

Conclusion: The clubbing of undervaluation with clandestine removal was not justified, and the arrest, remand and custody were held illegal.

Issue (ii): Whether the arrest procedure, including supply of grounds of arrest, intimation to relatives or friends, place of arrest, and generation of DIN, complied with the mandatory safeguards.

Analysis: The Court found violations in the manner of arrest, including non-compliance with the requirement of supplying grounds of arrest in the manner prescribed, failure to properly intimate a relative or friend, absence of the place of arrest in the arrest memo, and non-compliance with the circular and instructions relating to DIN generation. The Court also noted that the safeguards recognised in the governing law and binding precedent were not followed.

Conclusion: The arrest procedure was held to be non-compliant with mandatory legal safeguards.

Final Conclusion: The remand order and all consequential proceedings were quashed, and the petition succeeded, while leaving it open to the respondents to proceed afresh in accordance with law.

Ratio Decidendi: Where allegations under distinct GST provisions are unlawfully clubbed and mandatory arrest safeguards are not complied with, the resulting arrest and remand are liable to be quashed as illegal.

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