The Punjab and Haryana High Court has ordered the immediate release of a Ludhiana-based trader arrested by Central GST authorities, finding prima facie lapses in the manner in which the arrest was carried out and discrepancies in the records produced before the Court.
A Bench comprising Chief Justice Ashwani Kumar Mishra and Justice Rohit Kapoor was hearing a plea filed by Kuldeep Goyal, who operates Ansh Steel Alloys, challenging the arrest memo and the authorization issued for his arrest.
The Court directed the Chief Judicial Magistrate, Ludhiana, to secure Goyal’s release, while making it clear that the order was an interim measure and that the matter would be taken up again on September 29.
The Bench also indicated that disciplinary proceedings may be recommended against Sugrive Meena, Principal Commissioner, CGST Commissionerate, Ludhiana, and Mohmad Saleem, Senior Intelligence Officer, CGST Commissionerate, Ludhiana. Notices were issued to both officers seeking an explanation for their conduct.
The dispute arose from a GST investigation concerning allegations that Ansh Steel Alloys had fraudulently availed Input Tax Credit of around ₹35 crore through allegedly fabricated invoices, besides passing on credit to other recipients.
The firm’s bank account had earlier been attached, prompting it to approach the High Court in May. At that stage, the GST authorities had alleged that Goyal was not cooperating with the investigation.
Goyal, however, maintained that he had supplied the documents sought by the authorities and had appeared before them on several occasions.
The proceedings took another turn on September 22, when his counsel informed the Court that Goyal would appear before the adjudicating authority at 11 am the following day. The Court thereafter fixed the firm’s petition for September 29 and directed the revenue authorities to report the status of the investigation.
Despite this, Goyal was detained on September 23 and subsequently arrested in the early hours of September 24.
His counsel later told the Court that he had effectively remained in detention from around 11 am on September 23, although the formal arrest was shown at 4:45 am the next day.
The Bench also took note of the fact that a summons issued under Section 70 of the Central Goods and Services Tax Act required Goyal to appear at 12:05 am, even though he had already appeared before the authorities at 11 am pursuant to the Court proceedings.
The GST authorities defended the arrest, arguing that there was no judicial order preventing it and that Goyal’s request for anticipatory bail had already been rejected. They also submitted that the arrest was necessary to prevent further offences and preserve evidence.
The Court, however, questioned why the authorities had proceeded without bringing the development to its notice while the matter remained pending.
The Bench observed that the authorities were expected to inform the Court about developments and, given the circumstances, proceed with appropriate permission when the matter was already listed for consideration.
The Court said the sequence of events, including Goyal’s detention on September 23 and arrest at 4:45 am on September 24, prima facie raised concerns regarding the safeguards guaranteed under Article 21 of the Constitution.
The Bench subsequently summoned the officers involved in authorising and executing the arrest.
During the afternoon hearing, the Court examined the records produced by the GST authorities and raised further questions about the summons issued to Goyal.
According to the Court, the summons carried a Document Identification Number (DIN) generated at 12:07 pm, while the document itself referred to an appearance time of 12:05 pm.
The Bench noted that if the summons required appearance at 12:05 pm, the DIN should ordinarily have been generated before that time. It consequently recorded a prima facie finding of manipulation in the summons.
The Court also questioned the basis for the arrest authorization, noting that Goyal had already appeared before the authorities and had brought the requested records with him.
The authorization, the Bench observed, did not take into account the ongoing court proceedings or Goyal’s appearance before the investigating authorities.
The Court said the manner in which the arrest authorization had been issued raised serious concerns and prima facie indicated an attempt to overreach proceedings pending before the High Court.
In view of these circumstances, the Bench ordered Goyal’s release. It clarified that the release was an interim arrangement and that the broader dispute would be considered further when the matter comes up on September 29.
Senior Advocate NS Boparai, along with Advocates JS Bedi, Aakriti and Umang Goyal, appeared for Goyal.
Senior Standing Counsel Naman Jain represented the revenue authorities, while Senior Standing Counsel Sourabh Goel, assisted by Advocate Himanshi Gautam, appeared for the other respondents.