TaxTMI 
TaxTMI 
TaxTMI 
2025 (3) TMI 1022
X X X X Extracts X X X X
X X X X Extracts X X X X
....). 1.1. Furthermore, the petitioner seeks the consequential relief of quashing the order of remand dated 31.01.2025 (Annexure B, pp. 67-69) passed by the Special Court in Crime No. 03/2025, as well as quashing the application for remand of the arrestee-petitioner dated 31.01.2025 (Annexure A). 1.2. The petitioner, as of the date of this order, has been in judicial custody for over 40 days pursuant to the impugned remand order of the Learned Special Court. 2. The petitioner challenges his arrest on the grounds that there was non-compliance with the statutory requirement for the issuance of a notice under Section 35 (3) of BNSS, 2023 (i.e., the Section 41-A notice under CrPC, 1973). 3. The factual matrix of the case is as follows: The petitioner, a proprietor of two entities-M/s. JMG Enterprises/Heena Enterprises (bearing GSTIN No. 27AQMPG1606J1ZV) and M/s. Heena International-is alleged by the respondent to have raised fake invoices for purported supplies of goods and services in order to avail inadmissible input tax credit (ITC) without actually supplying the Fast Moving Consumer Goods (FMCG). This scheme purportedly resulted in wrongful ITC to the tune of Rs.5.10 crores throug....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ourt's inherent powers. 5.2. In addition, the learned Senior Counsel contended that the petitioner's arrest by the respondent also violates Section 74 (1) of the CGST Act, 2017, which mandates that a notice be issued by the proper officer at least six months before the expiry of five years from the date of wrongful availment of ITC, directing such assessee to show cause as to why the specified amount should not be paid. In support, reliance is placed on: 1. Arnesh Kumar v. State of Bihar, (2014) 8 SCC 273; 2. Sandeep Goyal v. Union of India, DHC; 3. Satender Kumar v. CBI, (2022) 10 SCC 51; 4. Sanjay Chandra v. CBI, (2012) 1 SCC 40; 5. P. Chidambram v. ED, (2020) 13 SCC 791; and 6. Sourabh Agarwal v. Union of India, High Court of Chhattisgarh, MCRC No. 2729, 2023. 6. Per contra, Sri Madhu N. Rao, learned counsel for the respondent - DG GST Intelligence, argued that the instant petition is not maintainable under Section 528 of BNSS, 2023 (i.e., Section 482 of CrPC, 1973), and further contended that a review of the memorandum of the petition fails to reveal any grounds warranting a writ petition under Articles 226 and 227, so as to grant extraordinary constitutional rem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itioner had 'sufficient knowledge' regarding the investigation into the wrongful availment of ITC (as evidenced by the prior issuance of a summons under Section 70 of the CGST Act), the requirement for a separate notice of appearance under BNSS need not be strictly enforced. Furthermore, the learned counsel argued that the petitioner cannot contend that his arrest was vitiated on account of non-issuance of a notice of appearance under Section 35 (5) of BNSS, given that the Sanhita does not apply to criminal proceedings arising from self-contained statutes such as the CGST Act, 2017. 6.3. Additionally, the learned counsel for the respondent produced the arrest memo dated 05.03.2025 and reiterated the gravity of the alleged offences committed by the petitioner, arguing that continued incarceration is necessary to conclude the investigation. In support, reliance was placed on: 1. Guidelines for Arrest and Bail in Relation to Offences Punishable under the GST Act, 2027 - Instruction No. 2 of 2023; 2. Instruction No. 01/2025-GST; 3. Radhika Agarwal v. Union of India (2025) 27 Centax 425 (S.C.) [27.02.2025]; 4. PV Ramana Reddy v. Union of India, 2019 (25) GSTL 185 (Telangana) [....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vind Kejriwal v. Directorate of Enforcement, 2024 INSC 512; and Radhika Agarwal v. Union of India, 2025 INSC 272), requires that the justifiability of any state action curtailing liberty be examined against the following parameters: (i) Whether the impugned state action serves a legitimate aim or purpose; (ii) Whether the restrictions imposed have a rational nexus with the stated aim and objective; (iii) Whether less restrictive, yet equally effective, alternatives were available to minimize the impairment of liberty; and (iv) Whether an appropriate balance is struck between the individual's liberty and the pursuit of the public purpose. 9.1. It is needless to state that any determination based on the above factors must be made after a careful consideration of the unique facts and circumstances of the case, with due regard to the need for a judicious exercise of discretion. 9.2. As regards the grant of bail, it is pertinent to advert to the following judicial pronouncements: 9.2.1. In the case of P Chidambaram v. Directorate of Enforcement, 2020 13 SCC 791, the Apex Court has observed as follows: "23. ... the basic jurisprudence relating to bail remains the same inasmu....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the trial, and at the same time, to keep the accused constructively in the custody of the court, whether before or after conviction, to assure that he will submit to the jurisdiction of the court and be in attendance thereon whenever his presence is required. (emphasis supplied) 9.2.3. In the case of Satender Kumar Antil v. CBI (2022 Live Law (SC) 577), the Apex Court observed in respect of grant of bail to persons accused of offences punishable with less than seven years of imprisonment that "one would expect a better exercise of discretion on the part of the court in favour of the accused". 10. In addressing the maintainability of the instant petition under Section 528 of BNSS (or Section 482 of the CrPC, 1973), it is necessary to determine whether the provisions of BNSS, 2023 (or the CrPC, 1973) apply to criminal proceedings arising under the CGST Act, 2017. A perusal of Sections 4 and 5 of the BNSS, 2017-which deals with the trial of offences under BNSS, 2023 and under other laws, along with the relevant saving provisions-is instructive. The provisions read as follows: Section 4: (1) All offences under the Bharatiya Nyaya Sanhita, 2023 shall be investigated, inquired i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tances: (a) to give effect to any order under this Code; (b) to prevent the abuse of the process of any court; and (c) to otherwise secure the ends of justice. The power under Section 528 of BNSS is meant to achieve real and substantial justice-particularly where the court is of the opinion that non-interference would result in a failure of justice, where grave injustice has occurred and must be remedied, or where the required statutory provision has not been complied with. (See, Sanapareddy Maheedhar Seshagiri v. State of Andhra Pradesh AIR 2008 SC 787; Mast Ram v. Smt Shanti Devi 2002 CrLJ 1616 (1617) HP.) 13.3. The inherent powers of a High Court are not negated by any overlap with the judicial review powers conferred under Articles 226 and 227. Writs are extraordinary constitutional remedies and operate independently of the statutory right under Section 528 to address grievances not specifically provided for in the Sanhita. 13.4. The High Court may, at its discretion, entertain a petition under Article 227 of the Constitution or under Section 528 of BNSS to address a substantial question of law that goes to the root of the matter or the genesis of the prosecution. (See....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e learned Senior Counsel further argued that non-compliance with this requirement, as in the case at hand, vitiates the arrest of the petitioner. Section 35 of BNSS, 2023 which deals with the arrest of persons without a warrant, is reproduced below: 35. (1) Any police officer may, without an order from a Magistrate and without a warrant, arrest any person: (a) who commits, in the presence of a police officer, a cognizable offence; (b) against whom a reasonable complaint has been made, or credible information has been received, or there exists reasonable suspicion that he has committed a cognizable offence punishable with imprisonment for a term that may be less than seven years or up to seven years (with or without fine), if the following conditions are satisfied: (i) the police officer has reason to believe on the basis of such complaint, information, or suspicion that the person has committed the said offence; and (ii) the police officer is satisfied that such arrest is necessary: (a) to prevent the person from committing any further offence; or (b) for the proper investigation of the offence; or (c) to prevent the person from causing the evidence of the offence t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hout a warrant by the officer who issued the requisition. (2) Subject to the provisions of Section 39, no person involved in a non-cognizable offence, or against whom a complaint has been made, or credible information has been received, or where there exists reasonable suspicion of such involvement, shall be arrested except under a warrant or an order of a Magistrate. (3) The police officer shall, in all cases where the arrest of a person is not required under sub-section (1), issue a notice directing the person-against whom a reasonable complaint has been made, or credible information has been received, or where there exists reasonable suspicion that he has committed a cognizable offence-to appear before him or at such other place as may be specified in the notice. (4) When such a notice is issued, the person is duty-bound to comply with its terms. (5) If the person complies and continues to comply with the notice, he shall not be arrested in respect of the offence referred to therein unless, for reasons recorded in writing, the police officer deems arrest necessary. (6) If, at any time, the person fails to comply with the terms of the notice or is unwilling to identify ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2018 SCC OnLine Bom 21184], at this stage, we are not inclined to interfere with the same. However, we make it clear that High Courts, when entertaining such requests in the future, will bear in mind that this Court, by its order dated 27-5-2019 in P.V. Ramana Reddy v. Union of India [P.V. Ramana Reddy v. Union of India, (2021) 2 SCC 784], had dismissed the special leave petition filed against the judgment and order [P.V. Ramana Reddy v. Union of India, 2019 SCC OnLine TS 3332] of the Telangana High Court in a similar matter, wherein the Telangana High Court took a view contrary to that expressed in the present case. Having heard the learned counsel for the petitioner and perused the relevant material, we are not inclined to interfere. The special leave petition is accordingly dismissed." (emphasis supplied) 20. The learned counsel for the respondent has placed reliance on the decision of the Division Bench of the High Court of Telangana in the case of PV Ramana Reddy v. Union of India, 2019 (25) GSTL 185 (Telangana): DD 18.04.2019, wherein the High Court had refused grant of anticipatory bail to the summoned-petitioners therein who were accused to have engaged in circular trad....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 70 of the said Act deems every such inquiry conducted under sub-section (1) of Section 70 of the Act to be a judicial proceeding, within the meaning of Section 193 of IPC, 1860 (which deals with punishment for false evidence) and Section 228 of IPC, 1860 (which deals with intentional insult or interruption to public servant sitting in Judicial Proceeding). 20.4. Furthermore, the the three-Judge Bench of the Apex Court in the case of Vijay Madanlal Choudhary v Union of India and Ors, 2022 INSC 757, has elucidated the distinction between the stages of inquiry deemed to be judicial proceeding, and an investigation under the PML Act, 2002, wherein those summoned before inquiry would not be entitled to avail the fundamental right contained in Article 20 (3) of the Constitution i.e., the right against self-incrimination, for the reason that at the stage of inquiry, "the recording of statement for the purpose of inquiring into the relevant facts in connection with the property being proceeds of crime is, in that sense, not an investigation for prosecution as such; and in any case, there would be no formal accusation against the noticee. Such summons can be issued even to witnesses in th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (Section 41-A(4) of CrPC, 1973). 22. A further perusal of the decision of the High Court of Telangana in PV Ramana Reddy (supra), reveals affirmation of the principle of mandatory issue of notice against accusations of commission of offences under CGST Act. Paragraph no. (61) of the judgment and order reads thus - "In view of the above, despite our finding that the writ petitions are maintainable and despite out finding that the protection under Sections 41 and 41-A of Cr.P.C., may be available to persons said to have committed cognizable and non-bailable offences under this Act and despite our finding that there are incongruities within Section 69 and between Section 69 and 132 of CGST Act, 2017, we do not wish to grant relief to the petitioners against arrest, in view of the special circumstances which we have indicated above". 22.1. It is pertinent to note that the accused-petitioners in the above case law were denied the pre-arrest bail on account of possible failure of the accused to compound the offence by meeting the huge liability of INR 225 crores raised by the concerned Department, and furthermore, on the grounds that "acts complained of against the petitioners const....