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TMI Blog2025 (3) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... n the part of the court in favour of the accused". The Apex Court, in Ashok Munilal Jain and Anr. v. Assistant Director, Directorate of Enforcement [2017 (3) TMI 1642 - SUPREME COURT] held that the procedure prescribed under the Criminal Procedure Code (CrPC), 1973 is equally applicable to criminal proceedings arising under the CGST Act, 2017. The inherent powers of a High Court are not negated by any overlap with the judicial review powers conferred under Articles 226 and 227. Writs are extraordinary constitutional remedies and operate independently of the statutory right under Section 528 to address grievances not specifically provided for in the Sanhita - The High Court may, at its discretion, entertain a petition under Article 227 of the Constitution or under Section 528 of BNSS to address a substantial question of law that goes to the root of the matter or the genesis of the prosecution. A perusal of Section 69 (3) (a) of CGST Act, 2017 reveals that the said Act envisages that the arrestee charged with a cognizable and non-bailable offence as under Section 132 (4) of the said Act shall be forwarded to the custody of the Magistrate, in default of bail. The statute does not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial cases under Section 64, and audit under Sections 65 and 66. It is undisputed that while a prosecution can be launched prior to conduct of summary assessment or special audit determining liability, no offence can be said to be made out in respect of purported discrepancies in the furnished returns, until completion of the said audits.
In light of the fact that the petitioner-arrestee was arrested against the offence punishable with no more than five years of imprisonment plus fine, but without the issuance of notice of appearance directing him to appear before the officer authorised under Section 69(1) of the CGST Act, and the fact that the petitioner has been incarcerated since 30.1.2025, coupled with the settled bail jurisprudence to exercise discretion in favour of accused of such nature, it is deemed fit that the petitioner be enlarged on bail.
Conclusion - The petitioner's arrest is vitiated due to non-compliance with Section 35 (3) of BNSS.
Petition is granted bail subject to fulfilment of conditions imposed - application allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... oiced goods to other entities in the open market without issuing corresponding invoices in the names of the recipient companies, thereby enabling those companies to claim wrongful ITC. A review of the application for the petitioner's remand reveals a specific allegation that the petitioner-accused No. 3 attempted to influence individuals into providing false statements to authorities regarding those who orchestrated the fake invoicing scheme, and further, that he destroyed evidence by deleting WhatsApp messages, thus misleading or hampering the investigation. Submissions 5. Learned Senior Counsel Shri MT Nananiah, appearing for the petitioner, primarily submitted that the petitioner's arrest is vitiated on the ground of non-compliance with Section 35 (3) of BNSS, which mandates the issuance of a notice of appearance to any person accused of an offence punishable with imprisonment of up to seven years. Non-compliance with this statutory requirement, he contended, is contrary to settled law as affirmed by the Apex Court in Arnesh Kumar v. State of Bihar (2014) 8 SCC 273 and Satender Kumar Antil v. CBI (2022) 10 SCC 51. He further noted that this Court has opined in MakeMyTrip (Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply to criminal proceedings initiated under the CGST Act. Thus, if an offence punishable under Section 131 of the CGST Act, 2017 is registered and an order remanding the petitioner to judicial custody is issued by the Commissioner of Central Tax, the petitioner cannot invoke the inherent powers of this Court under Section 528 of BNSS (or Section 482 of the CrPC). 6.2. In rebuttal to the contention of non-compliance with the issuance of a notice of appearance under Section 35 (3) of BNSS, 2023, the learned counsel produced the Memo of Documents dated 10.03.2025, which contains a summons issued to the petitioner under Section 70 of the CGST Act, 2017 on 02.01.2025. He argued that the issuance of such summons thereunder for the purpose of tendering evidence satisfies the requirement of a notice of appearance under Section 35 (3) of BNSS, as the summons indicates a threshold higher than mere reasonable suspicion, as stipulated under Section 35 (3) of BNSS, 2023. 6.2.1. The learned counsel further submitted that since the petitioner had already tendered evidence in the investigation into the wrongful availment of ITC by a syndicate of individuals and companies-and had admitted during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent powers of this Court under Section 528 of BNSS, 2023 (i.e., Section 482 of the CrPC, 1973) to challenge the non-compliance with the mandatory issuance of a notice of appearance under Section 35 (3) of BNSS (i.e., Section 41-A of the CrPC)? 7.1.2. Do the provisions of the CGST Act, 2017, render it a self-contained law, thereby excluding the applicability of BNSS, 2023 (and by extension, the CrPC, 1973) in criminal proceedings instituted under the CGST Act? 7.2. Can the issuance of a summons under Section 70 of the CGST Act, 2017, be equated with the notice of appearance that must be mandatorily issued under Section 35 (3) of BNSS, 2023? 7.3. Whether the arrest of the petitioner for an offence punishable with imprisonment for a maximum term of less than seven (7) years, without issuance of notice of appearance, as stipulated under Section 35 (3) of BNSS, 2023 (i.e. Section 41A of CrPC, 1973) is vitiated? 8. For convenience, all issues are addressed together. The scope of this adjudication is limited solely to determining whether the petitioner's arrest-as accused No. 3 in the case registered by the respondent-is vitiated on account of non-compliance with the provisions of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it has been held that even economic offences would fall under the category of "grave offence" and in such circumstance while considering the application for bail in such matters, the Court will have to deal with the same, being sensitive to the nature of allegation made against the accused. One of the circumstances to consider the gravity of the offence is also the term of sentence that is prescribed for the offence the accused is alleged to have committed. Such consideration with regard to the gravity of offence is a factor which is in addition to the triple test or the tripod test that would be normally applied. In that regard what is also to be kept in perspective is that even if the allegation is one of grave economic offence, it is not a rule that bail should be denied in every case since there is no such bar created in the relevant enactment passed by the legislature nor does the bail jurisprudence provide so. Therefore, the underlining conclusion is that irrespective of the nature and gravity of charge, the precedent of another case alone will not be the basis for either grant or refusal of bail though it may have a bearing on principle. But ultimately the consideration w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trary, affect any special or local law currently in force, or any special jurisdiction or power conferred, or any special form of procedure prescribed by any other law in force. 11. The Apex Court, in Ashok Munilal Jain and Anr. v. Assistant Director, Directorate of Enforcement (2018) 16 SCC, held that the procedure prescribed under the Criminal Procedure Code (CrPC), 1973 is equally applicable to criminal proceedings arising under the CGST Act, 2017. 12. This ratio was reaffirmed by a three-judge Bench of the Apex Court in Radhika Agarwal v. Union of India (2025) SCC OnLine SC 449. In that decision, the Apex Court held that the provisions of BNSS, 2023 (i.e., the CrPC, 1973) are applicable to proceedings arising under the Customs Act, 1962 and the CGST Act, 2017, because the provisions in the former complement those in the latter, unless a specific provision to the contrary exists in the latter. The Court further referred to its earlier decision in AR Antulay v. Ramdas Sriniwas Nayak and Anr. (1984) 2 SCC 500, noting that the Code of Criminal Procedure (now BNSS, 2023) is the 'parent statute' that governs the investigation, inquiry, and trial of cases by criminal courts of vario ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has a non-bailable warrant been issued to secure his presence. The proceedings initiated under the provisions of the PMLA against the petitioner's brother form the basis for issuing the LOC, and any action taken or order passed under the PMLA may be challenged by invoking the inherent jurisdiction under Section 482 Cr.P.C. or under Article 226 read with Section 482 Cr.P.C. to prevent abuse of the process of law or to secure the ends of justice." 15. Furthermore, a perusal of Section 69 (3) (a) of CGST Act, 2017 reveals that the said Act envisages that the arrestee charged with a cognizable and non-bailable offence as under Section 132 (4) of the said Act shall be forwarded to the custody of the Magistrate, in default of bail. The statute does not provide for custody of the arrestee to either police or the proper officer. Therefore, the authority of the Magistrate to, either admit the said arrestee on bail or remand him to judicial custody, is to be necessarily exercised in accordance with the provisions of the BNSS, 2023 (i.e. CrPC, 1973). 15.1. Accordingly, the instant petition is maintainable under Section 528 of BNSS, 2017, particularly where the grounds of challenge to the ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrest is not required under this sub-section, the police officer shall record in writing the reasons for not making the arrest. (c) against whom credible information has been received that he has committed a cognizable offence punishable with imprisonment for a term that may extend to more than seven years (with or without fine or with a death sentence), and the police officer has reason to believe on the basis of that information that such person has committed the said offence; (d) who has been proclaimed as an offender either under this Sanhita or by order of the State Government; or (e) in whose possession anything is found that may reasonably be suspected to be stolen property and who may reasonably be suspected of having committed an offence in connection with such property; or (f) who obstructs a police officer in the execution of his duty, or who has escaped, or attempts to escape, from lawful custody; or (g) who is reasonably suspected of being a deserter from any of the Armed Forces of the Union; or (h) who is reasonably suspected of having been involved in, or against whom a reasonable complaint has been made, or credible information has been received, or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a warrant by a police officer for a cognizable offence punishable with imprisonment of up to seven years must satisfy not only the requirement of having 'reason to believe' that the arrestee has committed the alleged offence but also that the arrest is necessary for one or more of the purposes enumerated in sub-clauses (a) to (e) of clause (1) of Section 41 CrPC (with Section 35(1) of BNSS corresponding to Section 41 CrPC). As to the issue of notice of appearance under Section 35 (3) of BNSS (i.e., Section 41-A of CrPC), the Court observed that such notice must be served on the accused within two weeks from the date of institution of the case, with an extension by the Superintendent of Police possible for reasons recorded in writing. This ratio was recently affirmed in Satender Kumar Antil v. CBI, (2022 Live Law (SC) 577). 18. A coordinate Bench of this Court in Make My Trip (India) Pvt. Ltd. v. State of Karnataka (2022) has ruled in favor of the mandatory issuance of a notice of appearance under Section 35 (3) of BNSS, in economic offences (See also, Sandeep Goyal v. Union of India (2021)) 19. In Union of India v. Sapna Jain (2021) 2 SCC 782, while referring the matter to a thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 41-A (1)) did not afford an absolute irrevocable guarantee against arrest of persons without warrant. 20.1. Rebutting the contention of the impugned arrest herein being vitiated, the learned counsel for the respondent submitted that the issuance of notice of appearance under Section 35 (3) of BNSS (or Section 41-A of CrPC, 1973) may be dispensed with when the arrestee under Section 69 of CGST Act, 2017 Act was earlier issued summons under Section 70 of the said Act to tender evidence or depose statements. 20.1.1. The learned counsel placed reliance on the above decision, more particularly, paragraph no. 41 thereof, wherein the High Court opined, "in fact, the duty imposed upon a Police Officer under Section 41A(1) of Cr.P.C. to summon a person for enquiry in relation to a cognizable offence, is what is substantially ingrained in section 70 (1) of the CGST Act. Though section 69 (1) which confers powers upon the Commissioner to order the arrest of a person does not contain the safeguards that are incorporated under Section 41 and 41A of Cr.P.C., we think section 70 (1) of the CGST, Act takes care of the contingency". 20.2. The learned counsel therefore, submitted that as lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ED official, the consequences of Article 20 (3) or Section 25 of the Evidence Act may come into play to urge that the same being in the nature of confession, shall not be proved against him". 20.5. Therefore, in view of the above, and the legal protection of right against self-incrimination accorded to individuals at the stage of investigation vis-a-vis lack thereof at the stage of inquiry - the primary purpose of which is ascertainment of facts, I am of the opinion that issuance of summons under Section 70 of the CGST Act cannot be equated with the issuance of notice of appearance under Section 35 (3) BNSS, 2023 (Section 41-A of CrPC, 1973), as the latter is issued at the stage of investigation when a formal accusation, in form of a reasonable complaint or credible information has been received or a reasonable suspicion exists as to the commission of the cognizable offence, thereby warranting an arrest. 20.6. In the case at hand, the petitioner however, is an arrestee, who has been in custody since 30.01.2025 who had tendered evidence and cooperated with the conduct of inquiry, and thus, had compiled with the summons issued on 02.01.2025 - under Section 70 of the CGST Act, 2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file returns under Section 62, assessment of unregistered persons under Section 63, summary assessment in special cases under Section 64, and audit under Sections 65 and 66. It is undisputed that while a prosecution can be launched prior to conduct of summary assessment or special audit determining liability, no offence can be said to be made out in respect of purported discrepancies in the furnished returns, until completion of the said audits. 24. In light of the fact that the petitioner-arrestee was arrested against the offence punishable with no more than five years of imprisonment plus fine, but without the issuance of notice of appearance directing him to appear before the officer authorised under Section 69(1) of the CGST Act, and the fact that the petitioner has been incarcerated since 30.1.2025, coupled with the settled bail jurisprudence to exercise discretion in favour of accused of such nature, I deem it fit that the petitioner be enlarged on bail. 24.1. At the risk of repetition, it may be observed that this Court expresses no opinion on the registration of the impugned case against the petitioner, or the purported guilt of the petitioner in the alleged offences. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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