The Allahabad High Court has held that the absence of a formal arrest order under Section 69 of the Central Goods and Services Tax Act, 2017, does not automatically bar an anticipatory bail application where the applicant demonstrates a real and reasonable apprehension of arrest.
However, the Lucknow Bench rejected the anticipatory bail plea in an investigation into alleged clandestine manufacture and clearance of pan masala and tobacco products involving revenue evasion exceeding ₹186.62 crore, besides further alleged GST liability.
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The bench of Justice Rajeev Bharti distinguished between the circumstances permitting a person to approach the court for anticipatory bail and the grounds necessary to obtain that protection. The judgment, delivered on October 1, 2026, held that a reasonable apprehension of arrest enables the court to consider the application but does not, by itself, justify granting relief.
The proceedings arose from an investigation by the Directorate General of GST Intelligence, Lucknow Zonal Unit, into an alleged clandestine manufacturing network linked to M/s Kamadgiri Products.
According to the prosecution, Manish Kumar, the concern’s proprietor, was operating manufacturing units producing pan masala, zarda scented tobacco and desi dohra without payment of applicable GST, Health Security se National Security Cess and central excise duty.
Acting on specific intelligence, DGGI officials searched seven premises on August 18, 2026. The department alleged that it recovered 27 undeclared form-fill-seal pouch-packing machines from three unregistered manufacturing units, along with raw materials, packaging materials, invoices and finished products.
The prosecution also relied on statements allegedly connecting Manish Kumar and his brother David with the operation of the units, supply of raw materials and management of manufacturing activities. These allegations remained subject to investigation and were not adjudicated as established facts in the bail proceedings.
The applicant argued that the department’s own material identified Manish Kumar as the principal person allegedly responsible for the activities under investigation.
His counsel contended that no comparable or individualised role had been attributed to him and that there was no primary material showing that he had retained any proceeds or benefit from the alleged activities.
The applicant offered to cooperate with the investigation and undertook not to influence witnesses or tamper with documentary or electronic evidence. He also expressed willingness to comply with conditions concerning changes in his address or mobile number and travel outside India.
The Union of India opposed the application on the ground that the applicant had only received summons under Section 70 of the CGST Act. It submitted that the competent authority had not issued an arrest order or authorisation under Section 69.
According to the department, receiving a summons did not, by itself, establish a reasonable apprehension of arrest.
It further argued that the applicant’s interrogation could be necessary to ascertain his role in controlling machinery, procuring raw materials, operating packing premises, clearing finished goods and tracing the financial, documentary and electronic records connected with the alleged operation.
The department also alleged that he had failed to cooperate despite summons on August 18, August 24, August 31 and September 7, 2026.
Examining the relationship between Sections 69 and 70, the court explained that the former concerns arrest powers, while the latter authorises officers to summon persons to give evidence or produce documents during an inquiry.
The issuance of a summons does not necessarily mean that the person has been arrested or that an arrest order already exists. Nevertheless, the court held that the absence of an arrest order cannot operate as an absolute restriction on anticipatory bail jurisdiction.
An applicant must demonstrate an apprehension grounded in tangible circumstances rather than speculative fear.
In this case, searches had already taken place, machinery and other materials had been seized, substantial revenue evasion had been alleged and a connected co-accused had already been arrested. Taken together, these circumstances meant that the applicant’s apprehension could not be dismissed as imaginary. The court therefore declined to reject the application merely as premature.
The court nevertheless found that the applicant had not established grounds for protection against arrest.
It considered the alleged organised nature of the manufacturing operation, the magnitude of the revenue implications, the material collected and the investigation’s outstanding requirements. The allegation of non-cooperation despite repeated summons was also relevant, although the court clarified that it was not independently determinative.
The applicant’s promise to cooperate was a relevant consideration, but it could not automatically prevent the investigating agency from undertaking lawful interrogation where necessary.
Referring to Supreme Court precedent on custodial interrogation, the court recognised its potential investigative significance. It also stressed that custodial interrogation cannot be treated as an objective in itself: its necessity must arise from the particular facts and it must be conducted strictly according to law.
On the material before it, the court concluded that the requirement of further interrogation could not be completely ruled out.
Balancing personal liberty against the legitimate requirements of investigation, the court rejected the anticipatory bail application.
It expressly clarified that its observations were confined to the bail proceedings and would not constitute an opinion on the prosecution’s merits or the applicant’s ultimate guilt or innocence.
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