TaxTMI 
TaxTMI 
2026 (8) TMI 410
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....5), District- Ghaziabad, Department - DGGI Ghaziabad). B. Direct the Respondents to release the Petitioner forthwith from judicial custody. C. Pass any other or further order(s) as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case. 3. The brief facts of the case are that the respondent authority called the petitioner to its office on 16.04.2026 through e-mail. The petitioner reached the office at about 02:00 P.M., where he was immediately taken into illegal custody. In the Arrest Memo dated 17.04.2026, the time of arrest of the petitioner is mentioned as 01:50 A.M. on 17.04.2026, and the place of arrest is shown as DGGI Ghaziabad Regional Unit, Sector-63, Noida. It is further submitted that, in the Arrest Memo dated 17.04.2026, it is specifically mentioned that the Grounds of Arrest, Arrest Memo, along with Jama Talasi and Reasons to Believe, were supplied to the wife of the petitioner at 03:05 A.M. on 17.04.2026. It is further submitted that the Arrest Memo clearly shows that the aforesaid documents were allegedly served upon the wife of the petitioner after effecting his arrest. On 17.04.2026, the petitioner was produce....
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....ic grounds of arrest have been mentioned in the Arrest Memo. It merely records that the grounds of arrest were explained to the arrestee. However, there is no recital therein to indicate that the Grounds of Arrest were supplied to the petitioner as an annexure to the Arrest Memo. Further, Columns (i) to (iv) of the Jama Talashi were kept blank, and the signatures of the petitioner were obtained thereon. 9. The learned Remand Magistrate failed to consider the aforesaid discrepancies and illegally granted the remand of the petitioner. Hence, the arrest and detention of the petitioner are illegal and liable to be declared illegal and arbitrary, and the petitioner is entitled to be released forthwith. 10. A perusal of the provisions of Section 132 of the CGST Act, 2017, provides punishment for contravention of the provisions enumerated therein. However, the case of the petitioner is not covered by any of the definitions or acts mentioned under Section 132 of the Act. 11. The complainant recorded the statement of the petitioner while he was in custody, which amounts to an extra-judicial confession under the BNSS, and such statements are not admissible in evidence, being contrar....
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.... Department, the conditions precedent to arrest are mentioned hereinafter: 3.1 Sub-section (1) of Section 132 of CGST Act, 2017 deals with the punishment for offences specified therein. Sub-section (1) of Section 69 gives the power to the 1 Commissioner to arrest a person where he has reason to believe that the alleged offender has committed any offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of Section 132 which is punishable under clause (i) or clause (ii) of subsection (1), or sub-section (2) of the Section 132 of CGST Act, 2017. Therefore, before placing a person under arrest, the legal requirements must be fulfilled. The reasons to believe to arrive H COURT at a decision to place an alleged offender under arrest must be unambiguous and amply clear. The reasons to believe must be based on credible material. 3.2 Since arrest impinges on the personal liberty of an individual, the power to arrest must be exercised carefully. The arrest should not be made in routine and mechanical manner. Even if all the legal conditions precedent to arrest mentioned in Section 132 of the CGST Act, 2017 are fulfilled, that will not, ips....
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....yments, were not linked with the GST registration and were deliberately created to evade GST and other taxes. These entities wrongly declared unrelated HSN codes (for example, IT design, online content, goods) instead of the applicable code for online gaming, and discharged GST at 18% on nominal/arbitrary commission value instead of 28% on the full face value (total pay-in amount), causing substantial revenue loss to the Government. 19. In the inquiry, it was found that the petitioner had bypassed the RBI regulations regarding the agreement with the gateway company and had camouflaged the transactions as commerce/software technical services. The petitioner was the main shareholder of the aforesaid company, namely M/s SRS Life Technologies Private Limited, and was the main person controlling the payment gateway. The petitioner was charging additional cash commission from the gaming companies, who were the masterminds, over and above the officially booked commission. 20. In this connection, during the inquiry, a number of documents were perused, and the authorities revealed that a total of 47 companies had received Rs. 16,44,96,47,476/- through the payment gateway "SabPaisa", w....
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....00 A.M. on her mobile phone from the mobile number of the investigating officer. It is also pertinent to mention that, after the intimation was given, she arrived at the respondent's office, where she was provided with a copy of the arrest memo on 17.04.2026 at 4:00 A.M. The wife of the petitioner arrived at the office, and her entry was also made in the visitor register. In this connection, the deponent brings on record a copy of the relevant portion of the visitor register evidencing the fact that the wife of the petitioner arrived at the respondent's office on 17.04.2026 at 4:00 A.M. 25. The petitioner also moved a bail application before the Additional District and Sessions Judge, which was rejected on 21.05.2026. Thereafter, he filed a Criminal Misc. Bail Application before this Hon'ble Court, bearing Bail Application No. 21215 of 2026, on 04.06.2026, and for the same cause, the present Habeas Corpus petition was also filed on 30.06.2026. Therefore, for the reasons stated above, the present Habeas Corpus petition is not maintainable before this Hon'ble Court. 26. The petitioner was arrested legally under the provisions of CGST Act, 2017, the arrest memo w....
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....cognizable and non-bailable offences under Section 132 of the CGST Act, 2017. 28. The petitioner has not approached this Hon'ble Court with clean hands and has suppressed and distorted material facts, thereby attempting to obtain relief by misleading this Hon'ble Court. Such conduct deserves to be viewed with the utmost seriousness. It is submitted that the grounds of arrest, arrest memo, and jama talashi were duly served upon the petitioner at the time of his arrest, and the petitioner himself acknowledged the same by affixing his signatures thereon. The petitioner was fully aware of the grounds and basis of his arrest and had also informed his wife telephonically from the mobile phone of the Investigating Officer (IO) immediately after the arrest proceedings. Further, as submitted in paragraph 7 above, the wife of the petitioner arrived at the office of the respondent authority, where she was provided with the arrest memo, grounds of arrest, and jama talashi by hand. It is further submitted that the entire arrest proceedings were conducted in the presence of independent witnesses and were duly recorded through a video recording device. The said video recording can be p....
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....ial benefits arising therefrom. Such material clearly discloses the commission of cognizable and non-bailable offences under Section 132 of the CGST Act, and accordingly, valid reasons to believe were formed by the competent authority before effecting the arrest under Section 69. It is further submitted that the applicant is selectively attempting to reinterpret the observations of the learned Court while ignoring the cumulative incriminating material collected during the investigation. Financial trail analysis has additionally disclosed the routing of funds to entities connected with the applicant and thereafter to his personal bank account. Such material clearly establishes his direct financial interest and retention of benefits arising from the transactions under investigation and prima facie attracts cognizable and non-bailable offences under Section 132 of the CGST Act. 32. The statements of the petitioner were recorded under Section 70 of the CGST Act, 2017 during the course of the inquiry, which is a statutory proceeding under the Act. The statements were made voluntarily without any coercion, threat, or inducement and were duly signed by the petitioner. The proceedings r....
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....ents recorded under Section 70 of the CGST Act, physical verification reports, and other documentary material revealing the involvement of the petitioner in cognizable and non-bailable offences under Section 132 of the CGST Act, 2017. It is further submitted that due authorization for the arrest of the petitioner was duly recorded by the competent authority in accordance with the prescribed procedure before effecting the arrest. The grounds/reasons for arrest were also supplied to the petitioner along with the arrest memo and were duly acknowledged by him. Therefore, the allegation that the respondents failed to demonstrate or furnish the "reasons to believe" is wholly baseless and contrary to the official record. 38. The inquiry conducted under Section 70 of the CGST Act, 2017 is a statutory proceeding governed by the provisions of the CGST Act itself. Section 70(2) of the CGST Act expressly provides that every such inquiry shall be deemed to be a "judicial proceeding" within the meaning of Sections 193 and 228 of the Bharatiya Nyaya Sanhita, 2023. Neither the CGST Act nor any provision of the BNSS mandates that statements recorded under Section 70 of the CGST Act must be on oa....
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....ucted in the presence of independent witnesses. Further, the entire arrest proceedings were also video recorded. The allegations regarding non-supply of grounds of arrest and defects in the Jama Talashi are, therefore, wholly baseless and contrary to the contemporaneous official records. The petitioner has himself acknowledged the same in writing under his dated signatures. It is further submitted that no incriminating or recordable articles were found on the person of the petitioner at the time of personal search, and therefore, the petitioner cannot draw any adverse inference from the entries made in the Jama Talashi Memo. 42. After hearing the rival submissions, this Court finds that regarding the arrest, Circular No. 02 of 2022-2023 dated 17.08.2022 issued by the CGST Department has been placed before this Court by learned counsel for the corpus-petitioner. Circular shows that the powder of arrest impinges on the personal liberty of an individual and therefore, it should not be made in routine and mechanical manner. Even if legal ingredients of the offence are made out, the Commissioner or the competent authority must consider. Whether there is credible information regarding....
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.... total pay-in amount deposited by players on their platform). (ii) Investigation has revealed that an amount of approximately 16,44,96,47,476/- has been routed through the SabPaisa gateway into the bank accounts of 47 such entities. These receipts represent the full-face value, which constitutes the taxable value under Rule 31B of the CGST Rules, 2017. (iii) The said 47 companies/firms, with the facilitation of SabPaisa, discharged GST only on an arbitrarily declared commission value and paid GST on mere amount @18%, instead of paying GST @28% on the full-face value, resulting in GST liability not paid/short paid. This clearly establishes deliberate undervaluation and contravention of provisions of CGST, Act, 2017. (iv) Statement dated 02.09.2025, 03.09.2025 and 04.09.2025 of Shri Brajeshwar Prasad, Manager (Merchant Service Delivery), M/s SRS Live Technologies Pvt. Ltd., revealed that he was responsible for handling merchant accounts and was in regular contact with the persons operating such entities. He categorically stated that a large number of such entities were transacting in high-volume, low-value transactions (mostly 100 denomination), which raise....
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....ere initially credited into escrow accounts maintained by M/s SRS Live Technologies Pvt. Ltd. (SabPaisa) and were thereafter diverted to non-escrow current accounts, including but not limited to Account No. 347505000009 maintained with ICICI, in contravention of RBI guidelines governing payment aggregators. Subsequently, such funds were routed to merchant entities such as M/s Dotone Infotech Pvt. Ltd., M/s Rishi Enterprises, M/s Progressfin Payment Technologies Pvt. Ltd., M/s Envirowheels Technologies Pvt. Ltd. and other similarly placed entities. This deliberate structuring of fund flow facilitated breaking of the audit trail, co-mingling of funds, and layering of transactions, thereby concealing the true nature and source of the transactions. (xi) Further, analysis of financial records and bank statements has revealed that funds originating from the aforesaid gaming entities were layered through multiple intermediary entities and accounts, and were ultimately transferred to entities linked with Shri Kumar Manish, including M/s Forty Two Parks Technologies LLP (A/c No. 347505001050), and subsequently to his personal bank account No. 054101504429 maintained with ICICI Bank....
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....xceeding Rs. 5 Crore and thus the same is categorized as cognizable and non-bailable offence under Section 132 (5) of CGST Act 2017. (xviii) In view of the magnitude of fraud, the deliberate and conscious role of Shri Kumar Manish as the mastermind, his wilful destruction of evidence, risk of flight, and the necessity of custodial interrogation to identify the complete network of beneficiaries and financial trails, the arrest of Shri Kumar Manish under Section 69 of the CGST Act, 2017 is fully justified and warranted. B. REASONS TO BELIEVE THAT SH. KUMAR MANISH HAS COMMITTED NON-BAILABLE AND COGNIZABLE OFFENCE (1) In view of the modus operandi being adopted in this case and quantum of GST evasion exceeding Rs. 5 Crore involved in this case, the offences committed by Sh. Kumar Manish is categorised as cognizable and non-bailable offence and by virtue of Section 69(1) of the CGST Act, 2017 which stipulates that where the officer making the arrest is satisfied that it is necessary in the following circumstances; (a) to prevent Shri Kumar Manish from committing any further offence (b) for fair and impartial investigation of the offence, ....