The Punjab and Haryana High Court ordered release of a Chartered Accountant accused of running 28 shell firms, as the Commissioner never recorded reasons to believe and arrest documents lacked a DIN.
The Punjab and Haryana High Court has held that an arrest under Section 69(1) of the CGST Act, 2017 is illegal where the reasons to believe are recorded by the investigating Inspector and not by the Commissioner. Justice Shalini Singh Nagpal allowed the petition and ordered the petitioner’s release [Sahil Chandna v. State of Haryana & Anr., 2026-juristway.com-3257-HC(Punjab & Haryana)-GST].
The petitioner, a Chartered Accountant, was arrested on 25 Jul 2026 by an Inspector of the CGST Gurugram Commissionerate in a case under Section 132. The Department alleged that he created and operated 28 shell firms using KYC documents of relatives and acquaintances, through which fake ITC exceeding ₹110 crore was availed and passed on. He was remanded by the Judicial Magistrate, and his bail application was dismissed by the Trial Court.
The Department argued that the Commissioner had authorised the arrest under his digital signature, that his satisfaction was recorded on the departmental file, and that the petitioner had acknowledged receiving the grounds of arrest and reasons to believe signed by the Inspector. It added that disputed facts could not be examined in writ proceedings.
Relying on Radhika Agarwal v. Union of India (2025) and CBIC’s circular of 17 Aug 2022, the Court held that Section 69 leaves it to the Commissioner alone to form an opinion on credible material. The reasons to believe here, though detailed, were admittedly recorded by the Inspector, and “a solitary line in the authorisation for arrest that the Commissioner has ‘reasons to believe’ … without anything more” did not satisfy the statute. Following Union of India Versus Sunil Biyani (2026 INSC 849), it added that the Commissioner’s reasons must also be conveyed to the accused.
The Court also found that the grounds of arrest and the reasons to believe carried no Document Identification Number, as required by Circular No. 122/41/2019-GST dated 5 Nov 2019. The Department neither explained any exigency nor showed that the documents had been regularised within 15 working days.
The arrest, remand and continued custody were held illegal, and the petitioner was ordered to be released forthwith. The prosecution remains free to seek remand or custody after supplying the reasons to believe and grounds of arrest in writing, in accordance with law.
2026-juristway.com-3257-HC(Punjab & Haryana)-GST
