Gurugram CJM Court declares arrest is illegal by GST Officer

The Learned Chief Judicial Magistrate, Gurugram (“CJM”) in the case of Central Goods and Service Tax v. Mr. Yogesh Gupta [CNR No. HRGR03-005388-2025 dated January 17, 2025] declared the arrest by the GST officer illegal as the ground of arrest not informed in a proper manner and merely a formality was done by the prosecution by providing grounds of arrest in writing. The Court noted that the prosecution was under obligation to comply with the provisions of Section 41, 41A of the Criminal Procedure Code, 1973 (“the Cr.PC”)/Section 35 of the Bharatiya Nagarik Suraksha Sanhita Act, 2023 (“the BNSS Act”) before arresting the accused but the same has not been complied and as such, arrest of accused cannot be termed as legal.

Facts:

Mr. Yogesh Gupta (“the Accused”) was produced before the Court in custody. He has filed an application for seeking judicial remand under Section 167 of the Cr.PC read with Section 187 of BNSS Act, 2023 for 14 days moved on the behalf of the Department (“the Complainant”).

Further, an application was filed on behalf of the Accused for rejecting the prayer of the complainant seeking remand and enlarge the accused on the terms and conditions as fixed by the Court.

The Accused contended that the offence was punishable under Section 132(1) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) for which the sentence is 5 years. Further, the grounds of arrest were not communicated properly to the Accused and just formality was made by the Complainant in the name of informing the grounds of arrest and as such, the grounds of arrest as provided by the prosecution is not sufficient to understand the nature of the case.  The compliance of Section 41A of the Cr.PC/ Section 35 of the BNSS Act was not made because issuance of notice prior to arrest of the Accused was necessary before arresting him as the offence involved in the present case is punishable not exceeding 7 years. Hence, arrest of the Accused was illegal and he may be released from the custody.

The Complainant contended that the Accused was arrested under Section 69 of the CGST Act. The Accused was arrested under special Act and hence provisions of Section 41, 41A of the Cr.PC/ 35 of the BNSS Act will not be applicable in the case in hand. Hence, the Complainant requested to dismiss the application filed by the Applicant. 

Issue

Whether arrest will be illegal if the grounds of arrest are not informed to the Accused in proper manner?

Held

The Learned CJM in CNR No. HRGR03-005388-2025 held as under:

• Noted that, the Accused had acknowledged in the arrest memo that the grounds of the arrest were informed and explained in writing.
• Relied on, the case of Arnesh Kumar v. State of Bihar (Criminal Appeal No. 1273 of 2014) Hon’ble Supreme Court made it mandatory to follow the provisions of Section 41 & 41A of Cr.PC for the offence which are punishable upto 7 years.
• Observed that, the Complainant contended that the Accused has been arrested under Section 69 of the CGST Act and hence provisions of Section 41 and Section 41A of the Cr.PC/ 35 of BNSS Act are not applicable. However, the Court did not find any force in the arguments of the Complainant.
• Relied on Akhil Krishan Maggu and Another v. Deputy Director and Ors. [CWP No. 24195 of 2019 dated November 15, 2019] where the Hon’ble Punjab and Haryana High Court held that the provisions of the CGST Act are not subject to the exclusion of Cr.PC rather Section 67(10) of the CGST Act as well as Section 69(3) of the CGST Act borrows provision from Cr.PC. As per Section 41(1)(b) as amended by the Code of Criminal Procedure (Amendment) Act, 2008 applicable w.e.f. November 01, 2010, as a person may be arrested if has committed a cognizable offence with imprisonment which maybe arrested if has committed a cognizable offence punishable with imprisonment which may be less than 7 years or may extend to 7 years if conditions specified therein are satisfied. As per Section 41A of the Cr.PC Act, a notice shall be issued to the person against whom complaint has been made or credible information has been received or reasonable suspicion exists and he shall not be arrested if he complies with the notice.
• Relied on the case of The State of Gujarat etc. v. Choodamani ParmeShwaran Iyer and another (Criminal Appeal No.s of 2023 (Arising out of SLP (Crl.) No. 4213 of 2019) dated July 17, 2023) wherein the Hon’ble Supreme Court observed that in view of Section 69(3) of the CGST Act, the petitioners cannot fall back upon the limited protection against arrest, found in Section 41 and 41A of the Cr.PC Act may not be correct.   
• Held that, the Complainant was under obligation to comply with the provisions of Section 41, 41A of Cr.PC/ Section 35 of the BNSS Act before arresting the accused but same has not been complied and as such, arrest of the Accused cannot be termed as legal. Hence, the application filed by the Accused was allowed. Hence, the Accused was released from the custody. However, the Department was given the liberty to re-arrest the Applicant after following the procedure prescribed in Section 41, 41A of CrPC read with 35 of BNSS Act and Section 70(1) of the CGST Act.

Our Comments

Section 41 of the CrPC Act talks about “when police may arrest without warrant”. It states that any police officer may without an order from a Magistrate and without a warrant, arrest any person—

1. who commits, in the presence of a police officer, a cognizable offence;
2. 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:—
   • the police officer has reason to believe on the basis of such complaint, information, or suspicion that such person has committed the said offence;
   • the police officer is satisfied that such arrest is necessary—
     • to prevent such person from committing any further offence; or
     • for proper investigation of the offence; or
     • to prevent such person from causing the evidence of the offence to disappear or tampering with such evidence in any manner; or
     • 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
     • 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.;

iii. 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;

iv. who has been proclaimed as an offender either under this Code or by order of the State Government; or

v. 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

vi. who obstructs a police officer while in the execution of his duty, or who has escaped, or attempts to escape, from lawful custody; or

vii. who is reasonably suspected of being a deserter from any of the Armed Forces of the Union; or

viii. 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 (h) who, being a released convict, commits a breach of any rule made under sub-section (5) of section 356; or

ix. 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.

Subject to the provisions of section 42, 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.

Section 41A of the CrPC Act talks about “Notice of appearance before police officer”. It states that the police officer shall, in all cases where the arrest of a person is not required under the provisions of section 41(1) of the CrPC Act, 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. Its further states that 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. Furthermore, 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. Lastly, 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.

In furtherance of the same, CBIC released an Instruction No. 1/2025-GST dated January 13, 2025 stating the guidelines for arrest and bail in relation to offences punishable under the CGST Act. It referred to the Delhi High Court judgment of Kshitij Ghildiyal v. Director General of GST Intelligence, Delhi (W.P. (CRL) No. 3770/2024 dated December 16, 2024) held that the grounds of arrest have to be communicated in writing to the arrested person. The Court further relied on the case of Pankaj Basanl v. Union of India [Criminal Appeal No.s 3051-3052 of 2023 dated October 3, 2023] and Prabir Purkayastha v. State (NCT of Delhi), Criminal Appeal [D. No. 42896/2023 dated May 15, 2024] where the Hon’ble Apex Court made a distinction between ‘reasons for arrest’ and ‘grounds of arrest’.

Watch Our video on ‘Gurugram CJM Court Declares Arrest is Illegal by GST Officer || CA (Adv) Bimal Jain’ by CA (Adv) Bimal Jain at: https://www.youtube.com/watch?v=RzWIF4Rloqs

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