Arrest in GST Evasion Cases: Anticipatory and Regular Bail
Two Supreme Court decisions now govern the arrest of a person alleged to have evaded GST. Read together, they produce a sequence that determines which remedy is available at which stage — and getting the stage wrong is now the commonest reason an application fails on maintainability rather than on merits.
Supreme Court — 27 Feb 2025
Radhika Agarwal v. Union of India
What the department must satisfy before it may arrest
Supreme Court — 12 Aug 2026
Union of India v. Sunil Biyani
When the person may approach a court — and what he must be told first
I. When Can There Be an Arrest at All
Not every GST offence carries the possibility of arrest, and fewer still are non-bailable.
Section 132(4) of the CGST Act provides that all offences under the Act are non-cognizable and bailable except those referred to in sub-section (5). Section 132(5) makes cognizable and non-bailable only those offences falling in clauses (a) to (d) of Section 132(1) which are punishable under clause (i) — that is, where the tax evaded, input tax credit wrongly availed or utilised, or refund wrongly taken exceeds ₹500 lakh.
The practical consequence is underused
Where the alleged amount does not cross the clause (i) threshold, bail is not a matter of discretion to be argued before a court — it is to be granted by the officer, on the same footing as a station house officer dealing with a bailable offence.
II. Radhika Agarwal: What the Department Must Satisfy
Khanna CJI (with Sundresh J.) — 27 February 2025
Vires challenge failed
Sections 69 and 70 were upheld. Article 246-A is a comprehensive source of power, and the powers to summon, arrest and prosecute are ancillary and incidental to the power to levy and collect GST.
GST Acts are not a complete code on arrest
Because of Sections 4 and 5 of the Code, and Section 67(10) of the GST Acts, the provisions of the Code apply to search, seizure and arrest wherever they are not expressly or impliedly excluded.
Arvind Kejriwal safeguards apply
The officer must have material in his possession; form and record in writing "reasons to believe"; the reasons must refer to the material and evince application of mind; the reasons must be furnished to the arrestee; the material must be admissible before a court; the officer must consider the whole material and cannot ignore what exonerates.
Threshold is higher than Section 41 of the Code
Section 41 permits arrest on "reasonable suspicion". Section 69 requires "reasons to believe" — a more stringent standard. "Committed an offence" and "guilty of an offence" were held to be self-same.
Reasons must show the arithmetic
Because the statute grades offences by monetary threshold, the reasons to believe must include a computation or explanation, based on factors such as the goods seized, from which the conclusion is drawn.
Arrest cannot precede satisfaction
An arrest cannot be made in order to investigate whether the conditions are met. The power is to be used with great circumspection and not casually, and not on mere suspicion or doubt.
Procedural safeguards under the Code apply
Case diaries, Section 41-B (identification and arrest memo), Section 41-D (right to meet an advocate during interrogation), Section 50A (information to a nominated person) and Section 55A (health and safety) all apply. CBIC Instruction No. 01/2025-GST dated 13 January 2025 requires grounds to be furnished in writing as an annexure to the arrest memo.
Coerced payment during search
Section 74(5) confers an option on the assessee and no right on the authorities to extract tax by threatening arrest. Where payment is made under threat, force or coercion, the assessee may move the court and seek refund.
Anticipatory bail
The power to grant anticipatory bail arises on apprehension of arrest. Following Gurbaksh Singh Sibbia and Sushila Aggarwal, it is not essential that the application be moved only after an FIR is filed, provided the facts are clear and there is a reasonable basis for apprehending arrest. GST decisions contrary to that ratio — Choodamani Parmeshwaran Iyer and Bharat Bhushan — should not be treated as binding.
III. The Concurrence: How Far Judicial Review Goes
Trivedi J. agreed on when and how the power of arrest is to be exercised, but wrote separately to mark the limits of Articles 32 and 226 when an arrest under a special Act is challenged. The Court, she held, should be extremely loath to interfere.
The exercise is confined to whether:
- The officer was an authorised officer
- The reason to believe rested on material in his possession
- The grounds of arrest were communicated as soon as may be
For drafting: A petition that argues the department got the merits wrong will not survive the concurrence. A petition that identifies a specific safeguard and shows its absence — no recorded reasons, no material referred to, no computation, no written grounds, no authorisation — is pleading the case the concurrence leaves open.
IV. Sunil Biyani: The Two New Holdings
Supreme Court — 12 August 2026 · DGGI Mumbai Zonal Unit investigation
Interim protection cannot survive a dismissal on maintainability
Applying the principle from Madan Gopal Rungta and Hema Mishra, the Court held that a High Court or Sessions Court dismissing a pre-arrest bail application as not maintainable — whatever the ground — cannot thereafter extend or grant protection from arrest. The protection granted by the High Court was set aside.
The Section 69 order is a sine qua non, and must be communicated
Until the Commissioner passes an order under Section 69 recording the reasons to believe, no apprehension of arrest arises and the person cannot maintain an anticipatory bail application.
Communication was accordingly held to be mandatory. Since Rule 8 of the CGST Rules requires a registrant to furnish an email address and mobile number, the order may be communicated electronically. The Court's closing formulation: "without such communication, the question of arrest would not arise."
V. Reading the Two Judgments Together
There is a tension worth naming. Radhika Agarwal said anticipatory bail does not require an FIR, only clear facts and a reasonable basis for apprehending arrest, and disapproved GST decisions to the contrary. Sunil Biyani proceeds on the footing that the Section 69 order is a sine qua non — which, in the GST context, reintroduces a formal trigger.
The safer reading
Sunil Biyani does not hold that an apprehension of arrest can never arise before a Section 69 order. It holds that where a court has found no such apprehension and dismissed the application on that basis, it cannot then grant protection anyway — and that the department cannot exploit the resulting gap by keeping the authorisation secret. Whether a case can be made out for apprehension on facts short of a Section 69 order, consistently with Radhika Agarwal, remains arguable.
VI. The Sequence in Practice
Stage 1 — Summons under Section 70
The person is not an accused; Article 20(3) is not attracted at interrogation. Appearance should be secured rather than avoided — the record in Sunil Biyani shows adjournments preceding an unsuccessful application. This is the stage at which to establish cooperation, which CBIC Instruction No. 02/2022-23 identifies as a relevant factor against arrest.
Stage 2 — Search, Seizure and the Deposit Question
Any payment made during search or investigation must be genuinely voluntary and routed through DRC-03. Where it is not, Radhika Agarwal recognises a remedy in refund and action against the officers. Contemporaneous recording — of who said what, and when the payment was made relative to the questioning — is what makes that remedy available later.
Stage 3 — The Section 69 Order
It must be preceded by reasons to believe, referring to material, evincing application of mind, and computing the threshold. It must now be communicated, electronically or otherwise. On communication, apprehension of arrest crystallises and an application under Section 482 BNSS becomes maintainable.
Stage 4 — Arrest
Grounds of arrest in writing, annexed to the arrest memo with acknowledgement; nominated person informed; arrest memo attested and countersigned; production before the Magistrate within twenty-four hours; and, for an offence within Section 132(4), release on bail by the officer.
Stage 5 — Regular Bail and Default Bail
Section 132 carries a maximum of five years. The CGST Act contains no twin-condition bail bar of the kind in Section 45 of the PML Act or Section 37 of the NDPS Act, so ordinary bail principles apply. CBIC Instruction No. 02/2022-23 states that a prosecution complaint should be filed at the earliest and preferably within sixty days of arrest where bail has not been granted; the corresponding statutory default period should be worked out and pressed where the complaint is not filed in time.
VII. Drafting Points
Anticipatory bail application
- Plead the communicated Section 69 order and annex it
- Attack the reasons to believe on the four Radhika Agarwal markers: material, application of mind, computation of the threshold, consideration of exonerating material
- If the alleged amount does not cross the clause (i) threshold, take the Section 132(4) point first — it converts the argument from discretion to entitlement
- Plead cooperation with summonses against the Instruction 02/2022-23 factors
Writ challenging the arrest
- Plead to the concurrence, not around it
- Identify the safeguard, show its breach, and frame it as manifest arbitrariness or gross non-compliance
- Do not argue a difference of view on sufficiency of material — the concurrence closes that door
Where no Section 69 order is shown
- Sunil Biyani supplies a distinct relief: a direction that any order under Section 69 be communicated
- This is not interim protection dressed up — it is what the Supreme Court itself directed
- This remedy does not depend on anticipatory bail at all
VIII. What Remains Open
- The challenge to Section 135 of the GST Acts (presumption of culpable mental state) was expressly left open in Radhika Agarwal — to be raised before the High Court when prosecution is initiated.
- The interaction between Radhika Agarwal on pre-FIR anticipatory bail and the sine qua non premise in Sunil Biyani is not conclusively resolved.
- The extent to which reasons to believe may be redacted in GST cases, as against the PMLA framework in which the Kejriwal principle was developed, has not been separately worked out.
Facing a GST Investigation or Arrest?
Our advocates at Bombay High Court have deep experience in GST defence, anticipatory bail, and writ proceedings. Contact us for a confidential consultation.
Get Legal Help Now