Facts of the Case

The petitioner, Kshitij Ghildiyal, Director of a company engaged in e-waste management, was subjected to a search operation under Section 67 of the Central Goods and Services Tax Act, 2017. Allegations were made regarding fraudulent availment of Input Tax Credit (ITC) amounting to approximately ₹10.76 crore through fake invoices without actual supply of goods.

The petitioner was taken to the office of the Directorate General of GST Intelligence (DGGI) on 28 November 2024 and allegedly detained. Subsequently, he was formally arrested on the intervening night of 29–30 November 2024 and remanded to judicial custody.

The petition challenged the legality of arrest, remand, and detention on grounds of violation of constitutional and statutory safeguards.

Issues Involved

  1. Whether non-supply of written grounds of arrest violates Article 22(1) of the Constitution of India.
  2. Whether arrest under Section 69 of the CGST Act is invalid without furnishing written grounds.
  3. Whether alleged detention prior to formal arrest violates the 24-hour rule.
  4. Whether procedural lapses in summons and arrest memo vitiate the arrest.

Petitioner’s Arguments

  • The petitioner was illegally detained prior to formal arrest without due process.
  • Summons were backdated and generated later, indicating procedural irregularities.
  • Grounds of arrest were not supplied in writing, violating Article 22(1).
  • Oral communication of grounds is insufficient and unconstitutional.
  • Remand application did not contain clear “grounds of arrest.”
  • Arrest was unnecessary as evidence was documentary and no risk of tampering existed.
  • Reliance was placed on:
    • Pankaj Bansal v. Union of India (2024)
    • Prabir Purkayastha v. State (2024)
    • D.K. Basu v. State of West Bengal

Respondent’s Arguments

  • All actions were in compliance with CGST Act provisions.
  • Grounds of arrest were communicated orally and reflected in the remand application.
  • Arrest memo bore acknowledgment of the petitioner.
  • GST officers are not police officers; hence strict CrPC provisions may not apply identically.
  • “Reasons to believe” were properly recorded before arrest.
  • Procedural lapses, if any, were minor and curable.
  • Reliance placed on:
    • Commissioner of Customs v. Ganpati Overseas (2023)
    • Vijay Madanlal Choudhary v. Union of India
    • P.V. Ramana Reddy v. Union of India

Court Findings / Order

  • The Court held that written grounds of arrest were neither prepared nor furnished to the petitioner at any stage.
  • Oral communication is not sufficient compliance with Article 22(1).
  • The remand application cannot substitute written grounds of arrest.
  • Supreme Court precedents mandate mandatory written communication of grounds of arrest.
  • Procedural lapses, including discrepancies in summons and documentation, further weakened the respondent’s case.
  • Arrest and remand were declared illegal and unconstitutional.

Final Order

  • Arrest dated 30 November 2024 declared illegal
  • Remand order set aside
  • Petitioner directed to be released forthwith

Important Clarification

  • The Court emphasized that judicial review was limited to legality of arrest, not merits of the GST investigation.
  • It clarified that non-compliance with constitutional safeguards alone is sufficient to vitiate arrest, irrespective of allegations.
  • Written grounds of arrest are now treated as a mandatory constitutional requirement across statutes, including GST law.

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/59716122024CRLW37702024_164735.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.