Allahabad HC Frees GST Arrestee: Grounds of Arrest Must Tag Along with Memo, But 'Reasons to Believe' Stay Internal

In a sharp rebuke to procedural lapses by GST investigators, the Allahabad High Court has ordered the immediate release of Jai Kumar Aggarwal from custody. A division bench of Justice Siddharth and Justice Jai Krishna Upadhyay ruled that while "reasons to believe" under Section 69 of the CGST Act, 2017, need not be handed over to the arrestee, the "grounds of arrest" must be supplied as an annexure to the arrest memo—a safeguard the Directorate General of GST Intelligence (DGGI) ignored here. The court set aside the Chief Judicial Magistrate, Meerut's remand order dated January 17, 2026, in this habeas corpus petition filed under Article 226.

Searches Turn to Sudden Arrest: The Trigger

It all began on December 29, 2025, when DGGI officers detained Aggarwal at 8:00 a.m. and launched search proceedings at his Meerut residence under Section 67 of the CGST Act. Nearly three weeks later, on January 16, 2026, at around 6:40 p.m., he was arrested under Section 69 for alleged offences under Section 132(1)(c), punishable with up to five years' imprisonment—linked to tax evasion or wrongful input tax credit.

Aggarwal claimed the arrest memo handed over that evening lacked any annexures, and neither grounds nor reasons to believe were provided, flouting Supreme Court mandates and departmental circulars. He was produced before the magistrate the next day, but documents like the medical report and grounds surfaced only post-remand, fueling his habeas plea on February 13, 2026.

Petitioner's Plea: Arrest a Procedural Sham?

Senior Counsel Imran Ullah, leading a team of advocates, hammered home multiple violations:

  • No "grounds of arrest" or "reasons to believe" at arrest time, breaching Radhika Agrawal v. Union of India (2025) 5 SCC 545 and a CBIC circular dated January 13, 2025, mandating written grounds as annexure.
  • Arrest unwarranted for offences under seven years, invoking Satendra Kumar Antil v. CBI (2022) guidelines that treat arrest as an exception, not routine.
  • Remand order flawed: Grounds allegedly supplied post-facto, magistrate failed to verify compliance or scrutinize sealed "reasons to believe."

They leaned on a August 17, 2022, CBIC Instruction No. 02/2022-23, listing pre-arrest checks like risk of evidence tampering or absconding—none justified here.

Revenue's Defence: All in Order, No Disclosure Needed

DGGI counsel, including Senior Standing Counsel Dhananjay Awasthi, countered fiercely:

  • "Reasons to believe" are internal for the Commissioner's satisfaction under Section 69(1); no duty to share, as upheld in Radhika Agrawal .
  • Grounds, arrest memo, and intimation to Aggarwal's wife were signed on January 16; service timing doesn't vitiate remand.
  • Satendra Antil inapplicable to CGST's "complete code"; vires of Sections 69-70 validated by Supreme Court.
  • Oral communication of grounds sufficed, with signatures obtained pre-production.

They insisted the petition was premature, as arrest followed due process.

Decoding the Verdict: Annexure Missing, Remand Crumbles

The bench dissected Radhika Agrawal meticulously. While para 34 mandates furnishing grounds and reasons under PMLA-like scrutiny, paras 58-64.2 clarify for CGST: Commissioners record "reasons to believe" internally with material evidence, but grounds must be explained orally, noted in memo, and furnished in writing as annexure per the January 13, 2025, circular.

Crucially: "In this case we find that in the arrest memo, there is no mention of any annexure. Therefore it appears that opposite party nos. 1 & 2 have not...complied their own circular dated 13.1.2025."

The remand order recited oral communication and signatures but skipped verification of timely annexure supply or Antil compliance. Echoing V. Senthil Balaji (2024) 2 SCC 51 and Mihir Rajesh Shah (2025), the court held illegal remand vitiates detention, warranting habeas relief. It affirmed Satendra Antil 's applicability to CGST, rejecting exclusion for special acts.

Key Observations

"It is amply clear... that it is for the Commissioner to ascertain and record the 'reasons to believe' explicitly... It is not provided anywhere that the 'reasons to believe' should be supplied to the accused." (Para 21)

"The argument... that the petitioner ought not to have been arrested since he has been implicated for committing an offence, which is punishable below 7 years appears to be correct since Apex Court in the case of Satendra Kumar Antil (supra) has not excluded the application of ratio... to the offences covered under the Special Act." (Para 23)

"In this case we find that in the arrest memo, there is no mention of any annexure. Therefore it appears that opposite party nos. 1 & 2 have not complied their own circular dated 13.1.2025 by furnishing to the petitioner the 'grounds of arrest' alongwith the arrest memo as its annexure. On this account also we find that the remand order of petitioner is illegal." (Para 26)

Release Ordered, Fresh Probe Greenlit

The writ stood allowed: "The remand order suffers from legal infirmity and cannot be sustained. It is hereby set aside." Aggarwal's release was directed forthwith upon producing the order. Respondents may reinvestigate lawfully.

This ruling fortifies safeguards in GST probes, mandating strict circular adherence and curbing knee-jerk arrests in sub-seven-year cases. As news reports note, it underscores DGGI's repeated procedural slips, potentially reshaping tax enforcement nationwide.