S.69 CGST Act | Commissioner Must Specify Necessity Of Arrest In Addition To 'Reasons To Believe' That Assessee Committed Offence: Gauhati HC

The Gauhati High Court has held that Section 69 of the Central Goods and Services Tax Act 2017, which confers power to arrest on a Commissioner under the Act, requires the authority to not only record 'reasons to believe' that an assessee committed the specified offence but also specify the necessity to arrest.While dealing with a writ petition challenging Petitioner's arrest, Justice Soumitra Saikia observed, “The requirement under Sub-section (1) of Section 69 is to have “reasons to believe” that not only a person has committed any offence as specified but also as to why such person needs to be arrested.”In the case at hand, the bench found that other than reference to the requirements of Section 41 of CrPC, no concrete incident was mentioned by the Principal Additional Director General recording any act or attempts of tampering of evidence by the petitioner or threatening/ inducing any witness besides not co-operating with the investigation. In such circumstances, the Court said, the officer could not have formed a reason to believe that the petitioner should be arrested.The Petitioner was in custody since December 12, 2024 for alleged evasion of GST by falsely claiming ITC of over ₹9 crore.Challenging the proceedings as well as his detention, the Petitioner submitted that though there is power of detention under Section 69, considering that the actual quantum of demand had not been determined till date, the assessments not having been finalized, the detention of the petitioner was uncalled for.It was further submitted that the petitioner had cooperated with the authorities concerned and therefore, there was no need or necessity to keep him under detention.The Standing Counsel appearing for the GST Department on the other hand submitted that an authorization was duly issued by the Commissioner towards the arrest and detention of the petitioner and the grounds of arrest had also been communicated to the petitioner. He also referred to the Apex Court judgment in State of the Gujarat Vs. Choodamani Parmeshwaran Iyer & Ors, (2023) to submit that powers under Article 226 of the Constitution is ordinarily not required to be invoked seeking release of a person from detention.FindingsAt the outset, the High Court observed, “While there is no quarrel with the proposition that Section 69 does confer power on the Commissioner to order arrest in case any of the specified offences under Section 132 of the CGST Act, the question remains is whether arrest or detention is called for merely because is power is available on the authority to do so.”It cited Arnab Manoranjan Goswami Vs. State of Maharastra (2021) where the Supreme Court held that while considering an application for the grant of bail, High Courts must consider factors like possibility of securing the presence of the accused, apprehension of the accused tampering with the witnesses, whether prima facie the ingredients of the offence are made out, etc.In the case at hand, the Court noted that the Petitioner was summoned and he had been extensively questioned and his statements were also recorded by the investigating authority. “There is no prima facie finding seen from the records produced at this stage that the detention of the petitioner is necessary to prevent tampering of the evidence or that he is likely to cause any interference with the investigations carried on,” Court said and granted him interim bail.The Respondent-authority has been directed to file its response in 4 weeks.The matter is next listed on February 12.Appearance: For Petitioner : Mr. B K Mahajan, Mr. P Mahanta,Mr. P K Das,Mr. N Mahajan,Mr. D Bora,Mr. A Chaudhury Advocate; For Respondent : Standing Counsel, GSTCase title: Dharmendra Agarwal v. The Union Of India And 2 Ors.Case no.: WP(C)/6963/2024Click here to read order

S.69 CGST Act | Commissioner Must Specify Necessity Of Arrest In Addition To 'Reasons To Believe' That Assessee Committed Offence: Gauhati HC

Kapil Dhyani

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