A Special Court in Thane has granted bail to two senior Central Goods and Services Tax (CGST) officials, IRS officer Vinay Kumar Kantheti, Additional Commissioner of CGST, Raigad; CGST Superintendent Rakesh Kumar Sinha and a private individual, Narinder Rajput arrested by the Central Bureau of Investigation (CBI) in an alleged ₹40-lakh bribery case, after holding that the arrests were illegal due to non-compliance with the mandatory requirement of communicating the grounds and reasons for arrest.

The case concerns allegations that CGST officials demanded ₹1.5 crore from representatives of a stone-quarrying business for settling issues relating to GST and royalty. According to the CBI, the alleged demand was subsequently negotiated down to ₹40 lakh, following which the agency laid a trap and apprehended a private individual while allegedly receiving the money.

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When the three accused were produced before the Special Court at Thane on Friday, the CBI sought five days of custodial interrogation, contending that the alleged transaction reflected a systematic act of corruption requiring further investigation.

The court, however, declined the agency’s request and ordered the release of the accused on bail.

A crucial issue raised before the court concerned the legality of the arrests themselves. The defence argued that the CBI had failed to comply with the mandatory legal requirement of communicating the grounds and reasons for arrest to the accused.

Accepting the objection concerning the arrest procedure, the Special Court held that the arrests were illegal.

The ruling assumes significance because it separates the legality of an arrest from the merits of the allegations being investigated. Even where an investigating agency claims to possess substantial material concerning an alleged offence, statutory and constitutional safeguards governing arrest are required to be followed.

Apart from its finding regarding the legality of the arrests, the court was also reportedly unconvinced about the necessity of sending the accused to CBI custody.

The court took into consideration that the alleged bribe amount had already been seized and that mobile phones belonging to the accused had also been recovered by the investigating agency.

In these circumstances, the court found no satisfactory justification for further custodial interrogation and consequently rejected the CBI’s remand application.

The accused were represented by advocates Rahul Agrawal, Jasmin Purani and Harsh Shah, who questioned the legality of the arrest procedure and opposed the agency’s demand for police custody.

According to the CBI’s case, the controversy originated from a GST-related matter involving a stone-quarrying firm.

The agency alleged that CGST Superintendent Rakesh Kumar Sinha initially demanded approximately ₹1.5 crore for settling the firm’s GST and royalty-related issues.

Following negotiations, the alleged demand was reduced substantially to ₹40 lakh.

A representative of the business subsequently approached the CBI with a complaint. The agency conducted a verification exercise before registering the case and claimed that the verification corroborated the allegations concerning the demand for illegal gratification.

The CBI further alleged that its verification indicated the involvement of Additional Commissioner Vinay Kumar Kantheti along with the superintendent.

The investigating agency alleged that the public servants did not intend to receive the money directly and instead arranged for its collection through private individual Narinder Rajput.

According to the CBI, the complainant was instructed to hand over the negotiated amount to the private person.

Acting on this information, CBI officials laid a trap and allegedly caught Rajput red-handed while accepting ₹40 lakh from the complainant.

In its statement concerning the operation, the CBI said that the accused public servants had allegedly arranged to collect the bribe through the private individual and directed the complainant accordingly.

The agency further claimed that after the ₹40-lakh payment was accepted by the private individual, its receipt was subsequently acknowledged by the CGST superintendent as well as the additional commissioner.

The CBI thereafter arrested the two CGST officials from their respective offices.

According to agency sources, the CBI initially caught Rajput during the trap operation. Information allegedly obtained from him, coupled with an examination of communications and other material, was thereafter used to establish the suspected role of the CGST officers.

The agency claimed that its examination of Rajput’s communications with Kantheti provided further material concerning the latter’s alleged involvement, following which the additional commissioner was also arrested.

The CBI maintained before the court that it possessed substantial evidence indicating the involvement of all three accused in the alleged demand and acceptance of illegal gratification.

Following the arrests, the CBI conducted searches at premises connected with the accused.

According to the agency, the searches resulted in the recovery of an additional ₹43 lakh in cash and jewellery valued at approximately ₹90 lakh.

A substantial portion of the alleged recoveries was reportedly made from the premises connected with Superintendent Rakesh Kumar Sinha.

The recoveries are expected to form part of the continuing investigation, including scrutiny of the source of the cash and other assets and whether they have any connection with the alleged bribery transaction.

Despite the Special Court’s adverse finding regarding the arrests, the CBI has maintained that it has strong evidence against the accused concerning the alleged demand and acceptance of the bribe.

Agency officials indicated that the CBI intends to challenge the order granting bail.

The dispute may therefore move before a higher court, where the agency could contest both the finding concerning the legality of the arrests and the rejection of its request for custodial interrogation.

The case consequently raises two distinct questions: the evidentiary allegations surrounding the alleged ₹40-lakh bribe and whether the investigating agency complied with the mandatory procedural safeguards governing arrest.

While the CBI maintains that its trap operation, communications and subsequent acknowledgement of the payment provide evidence of the alleged corruption, the immediate judicial outcome has turned on arrest procedure. The Special Court’s refusal to authorise custody and its finding that the arrests were illegal resulted in all three accused securing bail despite the seriousness of the allegations.

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