Deepak Garg vs. The Union Of INDIA And 2 Ors.

Held

The Court held that the arrest of the petitioner was illegal due to violations of statutory provisions and guidelines. Firstly, it was established that the offence alleged is punishable with imprisonment for five years, making the issuance of notice under Section 35(3) of the BNSS, 2023, mandatory as per the Apex Court's ruling in Arnesh Kumar Vs. State of Bihar. The Court found that while the authorization for arrest mentioned potential witness influence and evidence tampering, it failed to provide written reasons based on specific material, as required by Section 35(1)(b)(ii) of the BNSS, 2023. This mechanical reproduction of conditions without documented justification constitutes a violation. The Court also noted the petitioner's compliance with summons and cooperation with the investigation, further undermining the necessity of arrest. Consequently, the Court concluded that the petitioner was entitled to be released on bail on these grounds alone. The petitioner was granted bail with conditions including cooperation with the investigation, appearing when required, not influencing witnesses, providing contact details, not leaving the state without permission, and not committing any offence while on bail.

Facts

The petitioner, Deepak Garg, filed a bail application after being detained on August 20, 2025, in connection with a Directorate General of Goods and Services Tax Intelligence (DGGI) investigation. The DGGI received information about tax evasion on coke supply, leading to a search of the petitioner's premises on August 19, 2025. During the search, mobile phones and documents were seized. The petitioner was summoned under Section 70 of the CGST Act, 2017. Allegations include the petitioner being part of a syndicate providing fake invoices to coal suppliers for tax-free supply of coal from Assam to Bihar, with tax evasion estimated at Rs. 6.93 Crore between December 2022 and July 2025. The petitioner claims the complaint is yet to be filed, the search was based on suspicion, and he cooperated with the investigation before his arrest.

Key Issues

1. Whether the arrest of the petitioner is illegal due to non-compliance with Section 35(3) of the BNSS, 2023, which mandates issuing notice for offences punishable with imprisonment up to five years? 2. Whether the arrest is illegal for failure to record written reasons for satisfaction regarding the conditions in Section 35(1)(b)(ii) of the BNSS, 2023, before arrest? 3. Whether the arrest is illegal for violating CBIC instructions dated August 17, 2022, regarding guidelines for arrest and bail under the CGST Act, 2017? Petitioner's Arguments: The petitioner argued that since the alleged offence is punishable with imprisonment up to five years, a notice under Section 35(3) of the BNSS, 2023, was mandatory, citing Arnesh Kumar Vs. State of Bihar. The arresting authority failed to record written reasons for satisfaction regarding the conditions in Section 35(1)(b)(ii) of the BNSS, 2023, making the arrest illegal. Furthermore, the arrest violated CBIC guidelines, as the petitioner had cooperated with the investigation and complied with summons, negating the need for arrest. Reliance was placed on Anuj Mahesh Gupta, Manish Kumar, Rahul, and Radhika Agarwal. Revenue's Arguments: The revenue opposed the bail, stating sufficient incriminating materials indicated the petitioner's involvement in providing fake invoices. The arrest was made following all procedural requirements, with the Additional Director General having reason to believe the petitioner committed an offence under Section 132(1)(b) of the CGST Act, 2017, and exercising powers under Section 69 of the CGST Act, 2017. The investigation being at an initial stage and the need for the petitioner's physical presence necessitated the arrest.