Case Summary
Case Title: Varun Goyal v. State of Assam & Ors.
Court: Gauhati High Court
Case No.: Crl.Pet./699/2025
Judgment Date: 25.06.2025
Relevant Sections: Section 132(1)(b), 132(1)(c), 132(4), and 69 of the Assam GST Act, 2017; Section 35(3) BNSS, 2023 (corresponding to Section 41A CrPC).
Category: Bail – Input Tax Credit Fraud
Facts (Paras 2–10)
The petitioner, Varun Goyal, proprietor of M/s Shiv Traders, was arrested on 10.06.2025 under Section 69 of the AGST Act for allegedly availing ineligible Input Tax Credit (ITC) of ₹4.6 crores and issuing invoices worth ₹5.3 crores without supply of goods, aggregating to ₹9.9 crores. The arrest was authorized by the Commissioner without furnishing detailed “reasons to believe.” The petitioner challenged the arrest and sought bail, arguing that (i) no notice under Section 35(3) BNSS was served, (ii) there was no actual supply of goods, hence no tax evasion, and (iii) Circular No. 171/03/2022 clarified that no tax arises absent supply. He relied on Arnesh Kumar v. State of Bihar (2014), Satender Kumar Antil v. CBI (2022), and Radhika Agarwal v. Union of India (2025).
Questions for Consideration (Paras 11–13)
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Whether arrest under Section 69 of the AGST Act was valid without recording and communicating “reasons to believe.”
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Whether non-issuance of notice under Section 41A CrPC/Section 35(3) BNSS rendered the arrest illegal.
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Whether the petitioner should be released on bail in absence of custodial interrogation demand.
Observations (Paras 20–24)
The Court noted that while the grounds of arrest were communicated, the “reasons to believe” forming the basis of authorization were never disclosed, violating the safeguard emphasized in Radhika Agarwal. It reiterated that GST law is not a complete code for arrest, and CrPC safeguards apply unless expressly barred. The absence of notice under Section 41/41A CrPC (Section 35(3) BNSS) was a procedural infirmity. Further, since the petitioner was already in custody for 15 days without any prayer for custodial interrogation, continued detention was not justified.
Judgment (Paras 25–26)
The Gauhati High Court held that:
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The arrest suffered from procedural infirmity due to non-communication of “reasons to believe.”
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Non-compliance with Section 41A CrPC safeguards vitiated the arrest process.
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As custodial interrogation was not required, interim bail was justified.
Accordingly, Varun Goyal was granted interim bail on furnishing a bond of ₹1,00,000 with one surety, subject to conditions:
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To appear for interrogation when required.
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Not to threaten or influence witnesses.
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Not to leave jurisdiction without prior permission.
The matter was listed post-vacation for further hearing.
Table of Cases Referred
| Case | Court & Citation | Verdict / Ratio |
|---|---|---|
| Arnesh Kumar v. State of Bihar | SC, (2014) 8 SCC 273 | Arrest guidelines; notice under Sec. 41A mandatory. |
| Satender Kumar Antil v. CBI | SC, (2022) 10 SCC 51 | Bail principles; compliance with Sec. 41/41A is binding. |
| Radhika Agarwal v. UOI | SC, WP(Crl.) 336/2018, 27.02.2025 | Reasons to believe must be recorded & communicated; GST not complete code—CrPC applies. |
| Arnab Goswami v. State of Maharashtra | SC, (2021) 2 SCC 427 | Liberty is paramount; Sec. 482 CrPC safeguards against misuse. |
| Daulat Samirmal Mehta v. UOI | SC, (2025) 139 GSTR 165 | GST arrest must comply with constitutional safeguards. |
| Deep Jyoti Nath v. State of Assam | Gau HC, 2023 SCC Online Gau 667 | Arrest under GST must follow CrPC procedures. |
Between Fine Lines
This ruling reinforces that GST arrests cannot bypass procedural safeguards under the CrPC. Businesses accused of fake ITC must note that unless “reasons to believe” are formally recorded and communicated, arrests can be challenged. The High Court emphasized liberty over mechanical detention, granting relief where investigation did not demand custody.
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