The Allahabad High Court has declared the arrest and detention of the accused by the Directorate General of GST Intelligence (DGGI), Meerut Zonal Unit, as illegal on the grounds that there was  absence of transit remand and arrest memo defects and directed his immediate release from custody. 

The bench of Justice Siddharth and Justice Vinai Kumar Dwivedi has observed that the arrest suffered from serious procedural infirmities, including the absence of a transit remand and non-compliance with mandatory arrest safeguards. 

The petitioner was arrested on March 25, 2026, by the DGGI, Meerut Zonal Unit, on allegations of involvement in offences under Sections 132(1)(b), 132(1)(c), 132(1)(f), 132(1)(l) and 132(1)(i) of the CGST Act, 2017 relating to an alleged fake Input Tax Credit (ITC) fraud. He subsequently challenged the legality of his arrest through a habeas corpus petition before the High Court, seeking quashing of the remand order and his immediate release from judicial custody. 

The petitioner argued that he had appeared before the DGGI authorities pursuant to summons and had cooperated with the investigation. According to him, there was no material establishing his involvement in the alleged fraud and the arrest had been carried out mechanically without any valid “reason to believe” as required under Section 69 of the CGST Act. 

The petitioner contended that the DGGI had already seized all relevant records and evidence, leaving no possibility of tampering with evidence. It was further argued that the arrest violated the GST Investigation Wing’s arrest guidelines and the safeguards governing arrests for offences punishable with imprisonment below seven years. 

A key argument advanced before the Court was that after completion of investigations, the DGGI itself had filed a complaint against three other accused persons—Abhishek Jain, Samyak Jain and Ankur Jain—in relation to the alleged fake ITC fraud involving wrongful ITC of over ₹422.28 crore and fraudulent refunds of ₹18.22 crore. The petitioner was not named as an accused in that complaint, despite the authorities having already scrutinized the entire material collected during investigation. 

The petitioner also claimed that the alleged amount attributed to him was approximately ₹4.8 crore, which was below the threshold of ₹5 crore prescribed under Section 132(1)(i) of the CGST Act for cognizable and non-bailable offences. Therefore, according to him, the offence, if any, was bailable and his detention was unlawful. 

The Union of India and DGGI opposed the petition, contending that the petitioner had been implicated based on information gathered during investigation which disclosed his involvement with the other accused persons. The respondents maintained that the statutory procedure for arrest had been followed and that the detention was legally justified. They placed on record the arrest memo, grounds of arrest, reasons to believe and other related documents to support the arrest. 

After examining the records, the High Court found multiple procedural lapses in the arrest process.

The Court noted that the petitioner had been arrested in Dehradun and subsequently produced before a Magistrate in Meerut. However, the respondents failed to produce any transit remand order authorising the transfer of the petitioner from Dehradun to Meerut.

The Bench observed that it is a settled principle of law that a person arrested in one State cannot be taken and produced before a Magistrate in another State without obtaining a valid transit remand from the jurisdictional Magistrate where the arrest took place. 

The Court further found that the arrest memo did not disclose the place of arrest, despite the petitioner having been arrested in Dehradun. This omission, according to the Court, was contrary to the safeguards laid down by the Supreme Court in D.K. Basu v. State of West Bengal. 

The Bench also observed that while the arrest memo recorded that the petitioner had received the grounds of arrest and reasons to believe, the memo itself did not mention any annexure containing such grounds. Moreover, the “Jama Talashi” record did not indicate any recovery from the petitioner and several columns were left blank. 

Referring to the Supreme Court’s decision in Radhika Agarwal v. Union of India and the CBIC Circular dated January 13, 2025, the High Court emphasized that grounds of arrest must not only be explained to the arrested person but must also be furnished in writing as an annexure to the arrest memo.

The Court found that the arrest memo did not mention any such annexure and therefore the authorities had failed to comply with their own circular governing arrests under GST laws. The Bench held that this non-compliance rendered the remand order illegal. 

In view of the procedural defects and statutory violations, the High Court concluded that the arrest and detention of the petitioner could not be sustained.

The Court held the arrest and detention of petitioner is held to be illegal and he is directed to be released forthwith. 

Accordingly, the habeas corpus petition was allowed and directions were issued for immediate release of the petitioner. At the same time, the Court clarified that the authorities would remain free to initiate fresh proceedings against the petitioner in accordance with law if the facts so warranted. 

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