Gujarat High Court Says GST Arrest Valid Though Verbatim Signed 'Reasons To Believe' Copy Was Not Supplied

The Gujarat High Court has upheld the arrest of a person accused in a fake Input Tax Credit (ITC) racket, holding that while an arrestee must be furnished the “reasons to believe” forming the basis of arrest to enable a legal challenge, failure to provide a verbatim signed copy of the Commissioner's internal note does not vitiate the arrest.

"Therefore, this Court, is of the opinion that the 'reasons to believe' recorded by the Commissioner has been furnished to the petitioner, facilitating him to challenge his arrest on the grounds as permissible and available to him in law.", the court observed.

A division bench of Justice Sangeeta K. Vishen and Justice D. M. Vyas dismissed a habeas corpus petition filed through the accused's wife challenging the legality of his arrest by the Directorate General of GST Intelligence (DGGI) and the subsequent remand proceedings.

The challenge was narrowly focused on the arrest procedure. The petitioner argued that the arrest was illegal because the Commissioner, who alone is empowered to form the opinion that a person has committed a serious GST offence warranting arrest, had not supplied the exact signed copy of the “reasons to believe” recorded before authorising the arrest. It was argued that without that exact document, the accused was deprived of an effective opportunity to challenge the legality of his arrest.

The DGGI opposed the plea, saying the substance of the “reasons to believe” had in fact been supplied to the petitioner at the time of arrest, and that the law does not require furnishing the exact signed internal note.

The case arose from an investigation into an alleged fake invoicing and fraudulent ITC racket involving firms including Naksh Enterprises, AAI Metalics and Shakti International. According to the DGGI, the petitioner was allegedly involved in availing fake ITC worth Rs 14.01 crore and passing on fraudulent credit worth Rs 10.39 crore without any actual supply of goods.

After examining the e-office noting sheets, the High Court found that the Additional Director General had independently recorded detailed reasons before authorising the arrest.

The bench noted that the petitioner had also acknowledged receiving both the grounds of arrest and the “reasons to believe,” with an endorsement stating the contents had been explained to him in Hindi.

Rejecting the petitioner's insistence on a verbatim signed copy, the court held that what matters is whether the accused is given sufficient material to challenge the arrest, not whether the exact internal noting sheet is physically handed over. The bench observed:

“the 'reasons to believe' recorded by the Commissioner has been furnished to the petitioner, facilitating him to challenge his arrest on the grounds as permissible and available to him in law.”

The court also clarified that habeas corpus can be invoked where detention is alleged to violate mandatory legal safeguards, but found no such violation in this case.

It therefore declined to interfere with the arrest or remand proceedings

For Petitioner: Advocates Maulik Vakhariya and Virat G. Popat

For Respondents: Utkarsh Sharma, APP and Advocate Tirth Nayak,