Facts of the Case

The petitioner, Mohammed Kamran, proprietor of M/s M.K. Traders dealing in iron and steel scrap, was arrested on 16.09.2025 by the Directorate General of GST Intelligence (DGGI), Bengaluru, under Section 69(1) of the CGST Act, 2017 for offences under Section 132(1)(c) alleging fraudulent availment and passing of fake Input Tax Credit exceeding Rs. 100 crore through a chain of non-existent supplier firms. State GST authorities had earlier issued a notice to the petitioner on 17.06.2025 on similar discrepancies before the DGGI's intelligence-based investigation commenced. Investigation revealed obstruction of search proceedings, absconding of key persons, and destruction of digital evidence at the petitioner's residence. A prosecution complaint was filed on 13.11.2025, and the petitioner subsequently obtained regular bail from a coordinate Bench. The petitioner then sought quashing of the arrest, remand order and cognizance order as illegal and an abuse of process.

Issues Involved

  1. Whether the proceedings instituted by the Central GST authorities, arising after a State GST notice on similar discrepancies, amounted to impermissible parallel proceedings on the same subject-matter under Section 6(2)(b) of the CGST Act.
  2. Whether the petitioner's arrest was in violation of law, warranting quashing of the arrest, remand and cognizance orders.

Petitioner's Arguments

  • The petitioner was subjected to parallel investigation in violation of Section 6(2)(b) of the CGST Act, since State GST authorities had already commenced inquiry into the same discrepancies before DGGI's investigation began.
  • Relying on Armour Security (India) Ltd. vs. Commissioner, CGST, the petitioner argued that parallel proceedings should not be instituted by another tax administration once one administration has initiated proceedings.
  • The arrest was effected without furnishing grounds of arrest either orally or in writing, violating Article 22 of the Constitution and Section 47 of BNSS, and without informing any relative before production before the Magistrate.
  • Filing of a partial investigation report was resorted to in order to deny the petitioner statutory bail under Section 187(3) of the BNSS.

Respondent's Arguments

  • The arrest was necessitated by the petitioner's non-cooperation, prior absconding during search proceedings, and credible intelligence establishing him as the mastermind of a fake-invoice ITC racket involving four interconnected non-existent supplier entities.
  • The grounds of arrest were duly furnished in writing, acknowledged by the petitioner, and his mother was informed of the arrest; no notice is required before search proceedings based on specific intelligence.
  • The State's inquiry and the DGGI's intelligence-based enforcement action, per Armour Security itself, concerned different considerations, and the State's pending investigation was in any event transferred to the Central authorities.

Court Order / Findings

  • Applying the twofold test from Armour Security, the Court held that the State's notice and the DGGI's intelligence-based action did not share an identical or overlapping "subject-matter", and in any case the State investigation stood transferred to the Central authority, so no impermissible parallel proceedings under Section 6(2)(b) were established.
  • On the legality of arrest, the Court found that the grounds of arrest were furnished in writing and acknowledged by the petitioner, satisfying Instruction No. 01/2025-GST and the safeguards laid down by the Supreme Court in Radhika Agarwal vs. Union of India and Vihaan Kumar vs. State of Haryana.
  • Given credible material showing the petitioner as the mastermind of a fake ITC syndicate exceeding Rs. 100 crore, his obstruction of search and destruction of evidence, the Court held the arrest under Section 69(1) read with Section 132(1)(c)/(5) was neither illegal nor an abuse of process.
  • Finding no merit in either ground urged, the petition was dismissed.

Important Clarification

  • Following Armour Security, the bar on parallel GST proceedings under Section 6(2)(b) applies only where two proceedings target an identical or overlapping tax liability/subject-matter as crystallised in a show cause notice; mere overlap of an inquiry or summons with another authority's ongoing investigation does not attract the bar.
  • An arrest under Section 69 CGST Act is valid where reasons and grounds of arrest are recorded and furnished in writing and acknowledged by the arrestee, in compliance with Instruction No. 01/2025-GST and the Supreme Court's rulings in Radhika Agarwal and Vihaan Kumar, particularly where the arrestee's own conduct (absconding, destruction of evidence) demonstrates necessity for custodial interrogation.

Sections Involved

  • Section 69, CGST Act, 2017 - power to arrest.
  • Section 132, CGST Act, 2017 - punishment for specified offences, including fraudulent ITC availment.
  • Section 6(2)(b), CGST Act, 2017 - bar on initiation of parallel proceedings on the same subject-matter.
  • Section 67, CGST Act, 2017 - power of inspection, search and seizure.

Decision – In Favour of

Decided in favour of the department; the writ petition challenging the arrest and prosecution was dismissed.

Case Details

  • Court: High Court of Karnataka at Bengaluru
  • Case No.: Writ Petition No.38771 of 2025 (GM-RES)
  • Coram: Justice M. Nagaprasanna
  • Date: Reserved 13.03.2026, Pronounced 07.07.2026

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