Introduction
The Delhi High Court, in Kshitij Ghildiyal v. Director General of GST Intelligence, Delhi[i], addressed the legality of the arrest and detention procedures under the Central Goods and Services Tax Act, 2017 (‘CGST Act’). In the present case, the Court adjudicated upon the validity of an arrest made in defiance of procedural safeguards and established legal precedent as mandated under s. 69(2) of the CGST Act and a. 22(1) of the Constitution of India (‘Constitution’).
Background
A Director of M/s Wee-Pro Resource Recovery Solutions Pvt. Ltd. (‘Petitioner’) was engaged in the business of e-waste management. He was subjected to a search by the GST department (‘Respondent’) on 28.11.2024 under s. 67 of the CGST Act at the company’s principal place of business. The primary allegation against the Petitioner was that he had fraudulently availed ITC worth approximately Rs. 10.76 crores by procuring fake invoices without actual supply of goods through entities allegedly operated by Shri Ayyub Malik, a co-accused, thereby violating s. 132(1)(c) of the CGST Act.
Following the search, the Petitioner contended that he was detained by the Respondent at their office without being informed of the grounds of arrest. The Respondent disputed this claim, asserting that the Petitioner was free to leave and returned voluntarily the next day. On 30.11.2024, the Petitioner was formally arrested and produced before the Chief Judicial Magistrate (‘CJM’), where the Respondent sought a 14-day judicial remand.
The CJM, after hearing arguments, remanded the Petitioner to 13 days of judicial custody despite his objections.
Aggrieved by the remand order, the Petitioner filed the present writ petition, contending that the arrest and remand were illegal due to the Respondent's failure to provide written grounds of arrest, as required under s. 69(2) of the CGST Act, thus violating a. 22(1) of the Constitution.
The Petitioner further alleged procedural irregularities, including delayed generation of the document identification number (‘DIN’) on the summons and backdated signatures by officers, in violation of CBIC guidelines.
Issue
Whether the arrest of the Petitioner without written grounds as mandated under s. 69(2) of the CGST Act violated a. 22(1) of the Constitution.
Held
The Court declared the petitioner’s arrest on 30.11.2024 as illegal. It set aside the remand order, holding that the Respondent's failure to furnish written grounds of arrest violated both s. 69(2) of the CGST Act and a. 22(1) of the Constitution of India. The Court made the following observations:
The Court held that s. 69(2) mandates that the officer authorized to make an arrest must inform the person of the grounds of arrest. The Respondent failed to comply with this statutory requirement, as no written grounds were furnished to the petitioner either at the time of arrest or prior to his remand. The Court ruled that oral communication did not satisfy the statutory obligation to provide written grounds of arrest.
The Court emphasized that a. 22(1) of the Constitution guarantees that an arrestee shall be informed of the grounds of arrest ‘as soon as may be.’ The Court stressed that such communication must be clear, categorical, and in writing to ensure that the detainee is provided a meaningful opportunity to seek legal recourse and challenge the arrest. Non-compliance with this constitutional mandate was held to vitiate the legality of the arrest.
The Court also observed procedural irregularities in the issuance of summons under s. 70 of the CGST Act, including delayed generation of document identification numbers (‘DINs’) and backdated signatures on the summons. This non-compliance with the guidelines issued by the CBIC on 05.11.2019 indicated that the Respondent had failed to follow established procedural safeguards, further undermining the legality of the petitioner's detention.
The Court rejected the Respondent’s contention that furnishing the remand application to the petitioner during the court hearing constituted compliance with s. 69(2). The Court observed that procedural safeguards under s. 69(2) of the CGST Act and a. 22(1) of the Constitution are sacrosanct and cannot be bypassed even in cases involving serious economic offenses.
Relying on established judicial precedents[ii], the Court reiterated that procedural safeguards for arrest are essential to protect personal liberty. The Respondent's failure to adhere to these safeguards rendered the arrest and subsequent detention of the petitioner legally untenable.
The Court directed the petitioner’s immediate release from judicial custody, unless required in any other case, and clarified that its decision was limited to reviewing the legality of the arrest and remand without expressing any opinion on the merits of the case.
Our Analysis
The judgment underscores the importance of procedural safeguards under the CGST Act, particularly s. 69(2), and constitutional protections enshrined under a. 22(1) of the Constitution. The Court emphasized that compliance with s. 69(2) is not a mere formality but a sacrosanct requirement designed to uphold transparency, accountability, and the protection of personal liberty. It held that meaningful communication of grounds of arrest in writing is essential to ensure that the accused has a fair opportunity to seek legal recourse and challenge the arrest.
The judgment reaffirms that statutory and constitutional safeguards are fundamental, even in cases involving serious economic offenses. Procedural violations, such as non-compliance with CBIC guidelines and failure to provide written grounds of arrest, cannot be justified under the pretext of enforcement.
End Notes
[i] 2024 SCC OnLine Del 8949 dated 16.12.2024.
[ii] Arvind Kejriwal v. Directorate of Enforcement, 2024 INSC 512, V. Senthil Balaji v. State, 2023 SCC Online SC 934.
Authored by Ritik Kumar Jha, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinions.