Case: Kumar Manish (Corpus) v. Union of India and 2 Others
Court: High Court of Judicature at Allahabad
Case No.: Habeas Corpus Writ Petition No. 913 of 2026
Judgment Date: 05 August 2026
Bench: Hon’ble Siddharth, J. and Hon’ble Vinai Kumar Dwivedi, J.
Relevant Provisions: Sections 69, 70 and 132 of the Central Goods and Services Tax Act, 2017
Result: Habeas corpus petition dismissed.
Background
The Allahabad High Court considered a habeas corpus petition challenging the arrest and continued judicial custody of the petitioner in proceedings initiated by the Directorate General of GST Intelligence concerning alleged offences under Sections 132(1)(a), 132(1)(f), 132(1)(i) and 132(1)(l) of the CGST Act.
The petitioner had appeared before the DGGI office on 16 April 2026 and was formally arrested during the early hours of 17 April 2026. He was subsequently produced before the Special Chief Judicial Magistrate, Meerut and remanded to judicial custody. The principal challenge was that the arrest was allegedly contrary to Section 69 of the CGST Act and procedural safeguards governing arrest and remand.
Issue Before the High Court
The central question was whether the petitioner’s arrest under Section 69 of the CGST Act and subsequent judicial custody were illegal on account of alleged non-compliance with the statutory requirements and safeguards governing arrest, including communication of the grounds of arrest and existence of adequate reasons justifying custody.
The petitioner contended, among other things, that the grounds of arrest and arrest memo had not been properly supplied, that the arrest was mechanically effected, and that the Remand Magistrate failed to examine the procedural irregularities.
Department’s Allegations
According to the material placed before the Court, the investigation concerned online money gaming transactions allegedly routed through the “SabPaisa” payment gateway and several allegedly fictitious or dummy entities.
The investigation alleged that approximately ₹1,644.96 crore had been routed through the gateway into accounts of 47 entities. The Department alleged a GST liability of approximately ₹460.59 crore, while substantially lower GST had actually been discharged by the entities concerned.
The grounds of arrest further alleged manipulation of merchant verification, onboarding of non-existent entities, diversion of funds from escrow to non-escrow accounts, layering of transactions and movement of certain funds through connected entities before reaching accounts linked with the petitioner. These allegations formed part of the Department’s recorded justification for invoking Sections 69 and 132 of the CGST Act.
High Court’s Observations
The High Court examined Circular No. 02 of 2022-2023 dated 17 August 2022, dealing with arrest under the CGST Act. The Court noted the circular’s recognition that arrest affects personal liberty and therefore cannot be undertaken routinely or mechanically.
The competent authority is required to consider whether credible material exists concerning the alleged non-bailable offence and whether arrest is necessary for proper investigation, prevention of evidence tampering, protection of witnesses or other legitimate investigative purposes.
On examining the petitioner’s grounds of arrest, the High Court found that detailed grounds had been served upon him. The grounds recorded the alleged transaction structure, nature of the petitioner’s involvement, financial trail, apprehension of tampering with evidence and the Department’s assertion that custodial interrogation was required at the crucial stage of investigation.
The Court therefore concluded that the grounds of arrest were in conformity with the Department’s arrest circular and that the arrest could not be characterised as illegal merely on the grounds raised by the petitioner.
Arrest for Offences Punishable Up to Five Years
The petitioner also relied upon Satender Kumar Antil v. Central Bureau of Investigation to contend that, since the alleged offences carried punishment of up to five years, his arrest was unjustified.
The High Court rejected this argument. It observed that offences under the CGST Act fall within the category of offences governed by special enactments. It further referred to the Supreme Court’s observations that even for cognizable offences punishable below seven years, arrest may follow where the competent authority has reason to believe or suspect commission of the offence and the necessity for arrest is established for purposes such as proper investigation or preventing tampering with evidence.
Importantly, the reasons for arrest must be recorded in writing. In the present case, the High Court found that the grounds of arrest contained adequate recorded reasons supporting the necessity for arrest.
Verdict
The Allahabad High Court held that the petitioner’s arrest was supported by detailed grounds and recorded reasons and was consistent with the requirements reflected in the CGST Department’s arrest circular.
Accordingly, the Court declined to declare the arrest or subsequent custody illegal and dismissed the habeas corpus writ petition.
Key Legal Takeaway
The judgment reinforces that the power of arrest under Section 69 of the CGST Act cannot be exercised mechanically, but an arrest may withstand judicial scrutiny where the competent authority possesses credible material and records specific reasons demonstrating the necessity of custody.
The mere fact that an offence carries a maximum punishment of up to five years does not, by itself, invalidate an arrest. What remains crucial is the existence of the statutory “reason to believe”, communication of the grounds of arrest and recorded justification showing why arrest is necessary in the circumstances of the investigation.
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