Petitioner to Be Released on Bail Since Formation of Fake Firms and E-Way Bills Lacked Adequate Evidentiary Support | HC

Case Details: Prem Sundar Chaudhary v. Union of India - [2025] 172 taxmann.com 849 (Patna)

Judiciary and Counsel Details

• Ashok Kumar Pandey, J.
• D.V. Pathy, Sr. Adv., Sadashiv Tiwari, Hiresh Karan, Ms Shivani Dewalla & Ms Prachi Pallavi, Advs. for the Petitioner.
• Sriram Krishna, Sr. Standing Counsel, Prabhat Kr. Singh, Shashank Shekhar, Ms Rashmi Ranjan, Advs. for the Petitioner

Facts of the Case

The petitioner was arrested under Section 132(1) of the CGST Act on allegations of transporting scrap using fake invoices and e-way bills and operating multiple bogus firms. The Directorate General of GST Intelligence claimed a tax evasion based on documents and devices seized during a search.

The petitioner sought bail, arguing that the arrest was made merely on suspicion without establishing the mandatory ‘reason to believe’ under Section 69 of the CGST Act. It was contended that the arrest memo did not specify the amount of tax evasion and that procedural guidelines, including those issued by the Finance Ministry, were not followed.

High Court Held

The High Court noted that the mandatory conditions under Section 69 for arrest were not fulfilled in this case, as no specific material indicating tax evasion or its quantum was presented. The arrest was made without proper justification and in violation of procedural safeguards. Relying on the Supreme Court’s guidelines for arrest, the Court held that there was no compelling reason to deny bail when arrest had been made solely on suspicion without establishing the statutory threshold. Accordingly, the Court directed that the petitioner be released on bail, subject to furnishing of a bail bond with two sureties.

List of Cases Reviewed

• Cr. APP. No. 838 of 2021 arising out of SLP (Crl.) No. 5442 of 2021, dated 16-8-2021, followed