Interim Bail Granted in GST Evasion Case on Ground That Arrest Must Be Based on Valid Reasons to Believe | HC

Case Details: Natwar Kumar Jalan vs. Union of India - [2025] 171 taxmann.com 112 (Gauhati)

Judiciary and Counsel Details

• Soumitra Saikia, J.
• Dr. A. Saraf, A. Goyal, & A. Choudhury, Advs. for the Petitioner.

Facts of the Case

The petitioner was accused of GST evasion by fraudulently claiming input tax credit (ITC) and was subsequently arrested and detained. The case was registered under Section 132(1)(c) of the Central Goods and Services Tax (CGST) Act, 2017.

The petitioner argued on the grounds that his detention was unwarranted as he had fully cooperated with the investigation, no final assessment of the alleged tax evasion had been made and there was no evidence suggesting that he would abscond or tamper with evidence. He further contended that his arrest under Section 69 of the CGST Act was premature.

The respondent maintained that the arrest was justified under Section 69 of the CGST Act, as the Commissioner had ‘reasons to believe’ that the petitioner had committed an offense under Section 132(1)(c).

High Court Held

The Gauhati High Court observed that the authorities had not yet determined the petitioner’s tax liability, that the petitioner had complied with investigation proceedings and summons, and that there was no material evidence indicating the likelihood of absconding or tampering with evidence.

The Court subsequently held that while Section 69 of the CGST Act empowers authorities to arrest, this power should be exercised only when there are valid ‘reasons to believe’ that an offense under Section 132 has been committed. Accordingly, the Court granted interim bail to the petitioner.