Regular Bail Granted as Arrest Authorization Lacked Statutory Reasons to Believe under Section 69
Regular Bail Granted as Arrest Authorization Lacked Statutory Reasons to Believe under Section 69
Issue
Whether a petitioner arrested under Section 69 for alleged tax evasion offences under Section 132 of the CGST/BGST Act is entitled to regular bail when the arrest authorization and memo omit the mandatory statutory “reasons to believe,” investigation is complete, and the charge sheet is filed.
Facts
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Arrest and Charges: The petitioner was arrested in connection with a complaint case filed by CGST under Section 132 for alleged tax evasion involving fake invoices without actual supply of goods, fraudulent availment of Input Tax Credit (ITC), and falsification of accounts.
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Custody Period: The petitioner remained in judicial custody from May 26, 2026.
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Completion of Investigation: The investigation in the case was completed and the charge sheet was formally filed by the prosecution.
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Grounds for Bail: The petitioner submitted that he was falsely implicated based solely on suspicion, without any recorded reasons to believe, and that continued detention served no purpose given the lack of risk of tampering with evidence.
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Defect in Arrest: The authorization of arrest and the arrest memo lacked the mandatory statutory “reason to believe” regarding tax evasion or the existence of conditions specified under Section 132.
Decision
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The court held that under Section 69, recording a clear “reason to believe” regarding tax evasion or conditions specified under Section 132 is a mandatory prerequisite for arrest, which was absent in the arrest authorization and memo.
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Considering the completion of the investigation, the filing of the charge sheet, and the period of custody already served, the court held that further incarceration was unwarranted.
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The petitioner was directed to be enlarged on regular bail upon furnishing a bail bond of ₹10,000 with two sureties of the like amount. [Paras 15 and 22]
Key Takeaways
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Mandatory Statutory Requirement: An arrest under Section 69 of the CGST/BGST Act is invalid if the authorization and arrest memo fail to explicitly state the “reason to believe” required under the law.
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Effect of Charge Sheet Filing: Once the investigation is complete and a charge sheet has been filed, continued pre-trial detention serves no legal purpose if there is no apprehension of evidence tampering.
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Bail as standard post-investigation: Absence of recorded statutory grounds for arrest coupled with a finalized charge sheet provides strong grounds for granting regular bail in revenue offence proceedings.
HIGH COURT OF PATNA
Jaswant Singh @ Rolly Babu
v.
Union of India
Ashok Kumar Pandey, J.
CRIMINAL MISCELLANEOUS No. 55304 of 2026
AUGUST 24, 2026
D.V. Pathy, Sr. Adv. and Sadashiv Tiwari, Adv. for the Petitioner. Amit Pandey, Sr. SC and Ankit Kr. Singh, Jr. S.C. for the Respondent.
ORDER
1. Heard Mr. D.V. Pathy, the learned Senior learned counsel for the petitioner and Mr. Amit Pandey, the learned Senior Standing Counsel for the Union of India.
2. The petitioner has prayed for regular bail in a case registered for the offence punishable under sections 132(1) of the Central Goods and Service Tax Act (CGST), 2017 under Clause (a) or Clause (b) or Clause (c) or Clause (d) of the Said Section.
3. The case of the prosecution in short is that the petitioner has committed an offence specified in clause (a) or clause (b) or clause (c) or clause (d) of Sub-Section (1) of Section 132 of the CGST Act 2017 which is punishable under clause (i), or (ii) of Sub-Section (1), or sub-Section (2) of the said Section.
4. On the basis of summon the or interrogation, the petitioner was arrested for the offence under the above sections for evasion of taxes in the complaint case filed by the CGST. It includes the allegation against the petitioner regarding issuance of invoices without the actual supply of goods under section 132 (1) (b), of the CGST Act, fraudulent availment of input tax credit under section 132 sub-clause (i) sub-clause (c), falsification of accounts and financial record under section 132 sub-clause (i) sub-clause (f), and abetment and operation of shell entities under section 132 sub-clause 1 (i).
5. The petitioner supplied the tax invoices to multiple beneficiaries firms without any actual physical movement or supply of goods, fraudulently availed input tax credit without actual receipt of goods or services, and without any corresponding e-way bills for this supply to the petitioner.
6. It is alleged that the petitioner engaged in falsification of accounts and financial records without any supporting evidence required for trading in commodities such as cement and machinery and also abetted and operated shell entities regarding controlling of GST credentials, banking operations, passwords, and compliance activities of shell entities. There is revenue implication involved in the fraud approximately to the tune of Rs. 73.75 crores.
7. Learned counsel for the petitioner submits that the petitioner is innocent and has committed no offence. He has falsely been implicated in this case. Learned counsel for the petitioner has submitted that from the bare perusal of the complaint case and the arrest memo, it is clear that the petitioner was arrested only on the basis of suspicion and without any reason to believe as there is no evasion of taxes by the petitioner and the statements of other persons without cross examination of the same. There has been only one allegation made against the petitioner on the basis of statement of proprietor of other firms and statement of co-accused in this case.
8. The allegation regarding issuance of invoices without actual supply of goods or services is not correct because this allegation needs proper investigation. It is the specific case of the petitioner regarding abetment and operation of shell entities that the petitioner has never controlled any password or GST credentials of other firms and also made the statement before the prosecution during the recording of statement that he never controlled the GST credentials of the other firms.
9. The allegation of the prosecution is only on the basis of the statements of proprietors of the other firms on the basis of which the petitioner was summoned and needed a cross examination before leveling the allegation against the petitioner, but the opportunity of cross examination was not provided to the petitioner.
10. It has further been submitted that the allegation regarding controlling of GST credentials for the firm is not correct as during the search at the residence of the petitioner no incriminating material was found and also no notebook or diary was found at the residence of the petitioner.
11. It is the story of the prosecution regarding abetment and operation of other firms because before such an allegation seizure of some document is required which substantiate the allegation of the prosecution. The statement of proprietors of other firms is not enough to make an allegation against the petitioner.
12. It is submitted that the allegation regarding banking transaction between the petitioner and other individuals as an illicit network is completely misleading and without investigation. It has further been submitted that after the registration of the firm of the petitioner, the filing of the returns and other forms was made by the accountant and that the accountant is responsible for that purpose. The petitioner was not well conversant with the filing procedure and the accountant is responsible for all misdeeds by the firms. The prosecution needs investigation of IP address of that electronic device from which the return was filed during that period and without any such evidence, the leveling of allegation against the petitioner is not as per law and also against criminal jurisprudence.
13. Learned counsel for the petitioner has further submitted that after reading of section 69 of Central GST Act 2017, there must be a reason to believe that a person has committed an offence which is as under:-
69. Power to arrest.
(1)Where the Commissioner has reasons to believe that a person 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 (ii) of sub-section (1), or subsection (2) of the said section, he may, by order, authorise any officer of central tax to arrest such person.
(2) Where a person is arrested under sub-section (1) for an offence specified under subsection (5) of section 132, the officer authorised to arrest the person shall inform such person of the grounds of arrest and produce him before a Magistrate within twenty-four hours.
(3) Subject to the provisions of the Code of Criminal Procedure, 1973,–
(a) where a person is arrested under subsection (1) for any offence specified under subsection (4) of section 132, he shall be admitted to bail or in default of bail, forwarded to the custody of the Magistrate;
(b) in the case of a non-cognizable and bailable offence, the Deputy Commissioner or the Assistant Commissioner shall, for the purpose of releasing an arrested person on bail or otherwise, have the same powers and be subject to the same provisions as an officer-in-charge of a police station.
14. After reading of section 132 of CGST Act 2017 which is as follows:- (1) Whoever commits any of the following offences, namely:-
| (a) | supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made thereunder, with the intention to evade tax; |
| (b) | issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax; |
| (c) | avails input tax credit using such invoice or bill referred to in clause (b); |
| (d) | collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due; |
| (e) | evades tax, fraudulently avails input tax credit or fraudulently obtains refund and where such offence is not covered under clauses (a) to (d); |
| (f) | falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information with an intention to evade payment of tax due under this Act; |
| (g) | obstructs or prevents any officer in the discharge of his duties under this Act; |
| (h) | acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with, any goods which he knows or has reasons to believe are liable to confiscation under this Act or the rules made thereunder; |
| (i) | receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder; |
| (j) | tampers with or destroys any material evidence or documents; |
| (k) | fails to supply any information which he is required to supply under this Act or the rules made thereunder or (unless with a reasonable belief, the burden of proving which shall be upon him, that the information supplied by him is true) supplies false information; or |
| (l) | attempts to commit, or abets the commission of any of the offences mentioned in clauses (a) to (k) of this section, shall be punishable- |
| (i) | in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five years and with fine; |
| (ii) | in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds two hundred lakh rupees but does not exceed five hundred lakh rupees, with imprisonment for a term which may extend to three years and with fine;( |
| (iii) | in the case of any other offence where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds one hundred lakh rupees but does not exceed two hundred lakh rupees, with imprisonment for a term which may extend to one year and with fine; |
| (iv) | in cases where he commits or abets the commission of an offence specified in clause (f) or clause (g) or clause (j), he shall be punishable with imprisonment for a term which may extend to six months or with fine or with both. |
15. From a conjoint reading of sections 69 and 132 of the CGST Act, 2017, it is clear that there must be a reason to believe of tax evasion or the conditions specified in Section 132 for the arrest of such a person under the act and such reason to believe was not mentioned in the authorization of arrest and arrest memo.
16. The petitioner further submits that the monetary limit which is specified in section 132 regarding period of conviction as per amount of tax evasion but has not been specified in the arrest memo. It means that the arrest of petitioner is merely on the basis of suspicion and there is nothing concrete in this case.
17. Learned counsel for the petitioner has relied various judgments of the Hon’ble Apex Court. Firstly, he has referred para ’11’ of Arnesh Kumar v. State of Bihar [Criminal Appeal No. 1277 OF 2014, dated 2-7-2014] and the same is being reproduced hereunder:-
11. Our endeavour in this judgment is to ensure that police officers do not arrest accused unnecessarily and Magistrate do not authorise detention casually and mechanically. In order to ensure what we have observed above, we give the following direction:
11.1. All the State Governments to instruct its police officers not to automatically arrest when a case under Section 498-A of the IPC is registered but to satisfy themselves about the necessity for arrest under the parameters laid down above flowing from Section 41, Cr.PC;
11.2. All police officers be provided with a check list containing specified sub- clauses under Section 41(1)(b)(ii);
11.3. The police officer shall forward the check list duly filed and furnish the reasons and materials which necessitated the arrest, while forwarding/producing the accused before the Magistrate for further detention;
11.4. The Magistrate while authorising detention of the accused shall peruse the report furnished by the police officer in terms aforesaid and only after recording its satisfaction, the Magistrate will authorise detention;
11.5. The decision not to arrest an accused, be forwarded to the Magistrate within two weeks from the date of the institution of the case with a copy to the Magistrate which may be extended by the Superintendent of police of the district for the reasons to be recorded in writing;
11.6. Notice of appearance in terms of Section 41A of Cr.PC be served on the accused within two weeks from the date of institution of the case, which may be extended by the Superintendent of Police of the District for the reasons to be recorded in writing;
11.7. Failure to comply with the directions aforesaid shall apart from rendering the police officers concerned liable for departmental action, they shall also be liable to be punished for contempt of court to be instituted before High Court having territorial jurisdiction.
11.8. Authorising detention without recording reasons as aforesaid by the judicial Magistrate concerned shall be liable for departmental action by the appropriate High Court.
18. Learned counsel for the petitioner has further relied on the judgment of Hon’ble Apex Court in paragraph ’17’ in the case of Satender Kumar Antil v. CBI [SLP(Crl.) No. 5191 of 2021, dated 11.7.2022] wherein the Hon’ble Apex Court has taken a similar view as in the case of Arnesh Kumar (supra) the same is being reproduced hereunder:-
17. An arrest, being an act done by a police officer in furtherance of an investigation, is discretionary and optional to be applied on the facts of a particular case. Section 35 of the BNSS, 2023 provides for situations where a person may be arrested by a police officer, without a warrant.
Section of the.BNSS, 2023
“35. When police may arrest without warrant.— (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; or |
| (b) | against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists that he has committed a cognizable offence punishable with imprisonment for a term which may be less than seven years or which may extend to seven years whether with or without fine, if the following conditions are satisfied, namely:— |
| (i) | the police officer has reason to believe on the basis of such complaint, information, or suspicion that such person has committed the said offence; |
| (ii) | the police officer is satisfied that such arrest is necessary— |
| (a) | to prevent such person from committing any further offence; or |
| (b) | for proper investigation of the offence; or |
| (c) | to prevent such person from causing the evidence of the offence to disappear or tampering with such evidence in any manner; or |
| (d) | to prevent such person from making any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the Court or to the police officer; or |
| (e) | as unless such person is arrested, his presence in the Court whenever required cannot be ensured, and the police officer shall record while making such arrest, his reasons in writing: |
Provided that a police officer shall, in all cases where the arrest of a person is not required under the provisions of this sub-section, record the reasons in writing for not making the arrest; or
| (c) | against whom credible information has been received that he has committed a cognizable offence punishable with imprisonment for a term which may extend to more than seven years whether with or without fine or with death sentence and the police officer has reason to believe on the basis of that information that such person has committed the said offence; or |
| (d) | who has been proclaimed as an offender either under this Sanhita or by order of the State Government; or |
| (e) | in whose possession anything is found which may reasonably be suspected to be stolen property and who may reasonably be suspected of having committed an offence with reference to such thing; or |
| (f) | who obstructs a police officer while in the execution of his duty, or who has escaped, or attempts to escape, from lawful custody; or |
| (g) | who is reasonably suspected of being a deserter from any of the Armed Forces of the Union; or |
| (h) | who has been concerned in, or against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists, of his having been concerned in, any act committed at any place out of India which, if committed in India, would have been punishable as an offence, and for which he is, under any law relating to extradition, or otherwise, liable to be apprehended or detained in custody in India; or |
| (i) | who, being a released convict, commits a breach of any rule made under sub-section (5) of Section 394; or |
| (j) | for whose arrest any requisition, whether written or oral, has been received from another police officer, provided that the requisition specifies the person to be arrested and the offence or other cause for which the arrest is to be made and it appears therefrom that the person might lawfully be arrested without a warrant by the officer who issued the requisition. |
(2) Subject to the provisions of Section 39, no person concerned in a non- cognizable offence or against whom a complaint has been made or credible information has been received or reasonable suspicion exists of his having so concerned, shall be arrested except under a warrant or 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 a reasonable suspicion exists that he has committed a cognizable offence, to appear before him or at such other place as may be specified in the notice.
(4) Where such a notice is issued to any person, it shall be the duty of that person to comply with the terms of the notice.
(5) Where such person complies and continues to comply with the notice, he shall not be arrested in respect of the offence referred to in the notice unless, for reasons to be recorded, the police officer is of the opinion that he ought to be arrested.
(6) Where such person, at any time, fails to comply with the terms of the notice or is unwilling to identify himself, the police officer may, subject to such orders as may have been passed by a competent Court in this behalf, arrest him for the offence mentioned in the notice. (7) No arrest shall be made without prior permission of an officer not below the rank of Deputy Superintendent of Police in case of an offence which is punishable for imprisonment of less than three years and such person is infirm or is above sixty years of age.”
(emphasis supplied)
19. Learned counsel for the petitioner has also relied on some judgments of Hon’ble Apex Court as well as Hon’ble High Courts which are as follows:-
| (i) | State of Punjab v. Davinder Pal Singh Bhullar [2011] 14 SCC 770. |
| (ii) | Radhika Agarwal v. UOI 95 GSTL 225 (SC)/WP (Cri) No. 336 of 2018 (SC). |
| (iii) | Andaman Timber Industries v. CCE MA No. 2034 of 2022. |
| (iv) | Mukesh Agarwal v. UOI [Bail Application No. 3440 of 2025, dated 24-10-2025]. |
| (v) | Sanket Mittal v. Central GST Department 114 GST 104 (Punjab & Haryana)/CRM-M- 44925 of 2025 (P & H). |
20. Learned counsel for the petitioner has submitted that in this case, the charge sheet has been filed and keeping the petitioner behind the bars after the completion of investigation, will not serve any purpose and there is no any chance of tampering evidence. Moreover, the petitioner is languishing in judicial custody since 26.05.2026.
21. Countering this, learned Senior Counsel for the Union of India has vehemently opposed the bail and has submitted that this is an economic offense which shatters the economy and that it should be dealt with stern hands. Section 132 sub-clause (1) (ii) provides with an imprisonment for a term which may extend up to three years and fine, where the wrongly availed or utilised or amount of refund wrongly taken exceeds two hundred lakh rupees (2 crores) but does not exceed five hundred lakhs rupees (5 crores) and in case the amount exceeds five hundred lakh rupees (5 crores), the punishment may extend up to five years in view of Section 132 Sub-clause 1 (i) of the Act.
22. Having heard learned counsel for the parties and considering the facts and circumstances of the case, this court is inclined to enlarge the petitioner on bail. The above named petitioner is directed to be released on bail in connection with Complaint Case No. 49 of 2026 on furnishing bail bond of Rs.10,000/- (ten thousand) with two sureties of the like amount each to the satisfaction of learned Special Judge, Economic Offence, Patna/ Concern Court, Patna.