Facts of the Case

Respondent Nos. 1 and 2, proprietors of M/s S.K. Enterprise and M/s Ankit Enterprises respectively, were arrested on 05.06.2025 by the Directorate General of GST Intelligence, Guwahati Zonal Unit, in Case No. DGGI/INV/GST/1208/2025, on allegations of fraudulently availing Input Tax Credit of Rs.8.27 crore and Rs.8.26 crore respectively in violation of Section 16(2)(c) of the CGST Act, 2017, an offence under Section 132(1)(c), punishable and made cognizable/non-bailable under Section 132(5). Arrested at Kolkata and produced before the CJM, Barasat (which rejected bail but permitted transit remand), they were later produced before the learned CJM, Kamrup(M), Guwahati, who by order dated 07.06.2025 granted bail principally on the ground that the headings "Section 47 BNSS" and "Section 48 BNSS" were not mentioned in the Grounds of Arrest and the Notice to the Relative, and that written Grounds of Arrest were not furnished to the relative. The Union of India, through DGGI, sought to have this bail order set aside in revision.

Issues Involved

  1. Whether a petition to set aside a bail order is maintainable in revision, as distinct from a petition for cancellation of bail.
  2. Whether non-mention of the statutory headings "Section 47 BNSS" and "Section 48 BNSS" in the Arrest Memo and Notice to Relative vitiated the arrest.
  3. Whether the arresting authority had otherwise complied with the CGST Act, 2017, the BNSS, 2023, and CBIC's Circular dated 17.08.2022 on arrest guidelines.

Petitioner's Arguments

  • All essential requirements of Sections 47 and 48 of the BNSS were substantively complied with; the respondents were given Arrest Memos with Authorization of Arrest, containing "reasons to believe" and Grounds of Arrest, duly acknowledged by signature.
  • Absence of specific statutory headings did not vitiate the arrest process or cause prejudice, relying on Radhika Agarwal v. Union of India (2025 SCC OnLine SC 449) and State of Karnataka v. Sri Darshan (2025 0 Supreme (SC) 1201) for a prejudice-oriented approach.
  • The learned CJM had committed an error apparent on the face of the order in granting bail on a purely technical ground, ignoring the seriousness of the alleged economic offence and the respondents' non-cooperation with the investigation.

Respondent's Arguments

  • Non-mention of Section 47/48 BNSS headings was not a mere technical defect but vitiated the arrest, as mandated in Radhika Agarwal and fortified by CBIC Circular No. 2/2022-23-GST (Investigation), which requires the Arrest Memo to reflect the precise provisions attracted.
  • Communication of Grounds of Arrest under Section 48 BNSS, as clarified in Vihaan Kumar v. State of Haryana (2025 SCC OnLine SC 269), must extend meaningfully to relatives, and its absence goes to the root of the arrest.
  • A petition to set aside a bail order could not be used as a substitute for cancellation of bail, and the CJM had considered all relevant factors.

Court Order / Findings

  • The Court held that a petition seeking to set aside an unjustified or perverse bail order is legally distinct from one seeking cancellation of bail on supervening circumstances, relying on Ranjit Singh v. State of M.P. and Puran v. Rambilas; the present revision, seeking to set aside the order, was maintainable.
  • Reconciling Vihaan Kumar and State of Karnataka v. Sri Darshan, the Court applied a prejudice-oriented test: since the Arrest Memos, Authorization to Arrest and Grounds of Arrest were duly furnished and acknowledged, and Notices to the Relative (wife/mother) were served within an hour of arrest, and the respondents were legally represented and applied for bail on the same day, no demonstrable prejudice arose from the missing statutory headings.
  • Examining the Authorization to Arrest, the Court found it recorded specific “reasons to believe” — ineligible ITC of Rs.8.27 crore and Rs.8.26 crore respectively availed in contravention of Section 16(2)(c) — in compliance with Section 132 of the CGST Act, 2017 and CBIC's Circular dated 17.08.2022.
  • The Court held that the arrest was not illegal or in violation of the CGST Act or BNSS, and that the learned CJM had erred in interpreting Sections 47 and 48 of the BNSS while granting bail. The impugned bail order dated 07.06.2025 was set aside and quashed, and the bail bonds of the respondents were cancelled, while leaving the respondents at liberty to seek bail afresh before an appropriate forum.

Important Clarification

  • Non-mention of specific BNSS section headings in an Arrest Memo or Notice to Relative issued under the CGST Act does not, by itself, vitiate an arrest; courts will apply a prejudice-oriented test and examine whether the substance of the Grounds of Arrest and reasons to believe were actually communicated and understood.
  • Where the Authorization to Arrest records a specific, quantified basis for alleging ineligible ITC availment under Section 16(2)(c) in compliance with CBIC's arrest guidelines, and the arrested person is promptly informed and legally represented, an arrest under Section 69 read with Section 132 of the CGST Act will be upheld as lawful even amid alleged procedural lapses in headings.

Sections Involved

  • Section 69 of the Central Goods and Services Tax Act, 2017 — power to arrest for offences under Section 132.
  • Section 132 of the CGST Act, 2017 — punishment for specified GST offences, including fraudulent availment of ITC, and conditions making the offence cognizable and non-bailable.
  • Section 16(2)(c) of the CGST Act, 2017 — condition of eligibility for Input Tax Credit alleged to have been contravened.
  • Sections 47 and 48 of the Bharatiya Nagarik Suraksha Sanhita, 2023 — communication of grounds of arrest to the arrested person and to a relative/friend.

Decision – In Favour of

Allowed in favour of the Department; the bail order was set aside on the ground that the CGST arrest complied with the statutory safeguards, with liberty to the respondents to seek bail afresh before the appropriate forum.

Case Details

Court: Gauhati High Court (High Court of Assam, Nagaland, Mizoram and Arunachal Pradesh)
Case No.: Crl.Rev.P./224/2025
Neutral Citation: 2025:GAU-AS:13167
Coram: Hon'ble Mr. Justice Anjan Moni Kalita
Date of Judgment: 24th September, 2025

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