Bombay High Court Invalidates GST Arrest Due to Non-Compliance with BNSS Mandatory Safeguards
Introduction
In a significant ruling reinforcing procedural safeguards in custodial matters, the Bombay High Court has set aside an arrest executed by GST authorities for violating the mandatory requirements prescribed under the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023. The judgment in Hemang Bipin Varaiya Vs State of Maharashtra And Ors underscores that the power to arrest, though available to investigating officers, must be exercised with utmost caution and only after recording cogent reasons in writing as mandated by law.
The decision reiterates that arrest is an extreme measure, especially in cases where the alleged offence carries imprisonment of seven years or less. Mechanical exercise of arrest powers without adherence to statutory procedures renders such custodial action unlawful and liable to be quashed.
Background Facts of the Case
The petitioner operated M/s. Mahavir Metal Industries, a proprietary concern holding valid GST registration engaged in manufacturing copper and brass utensils and trading in non-ferrous metals. During early September 2025, state tax authorities initiated a search and seizure operation at both the business establishment and residential premises of the petitioner.
Search and Seizure Operations
On 1st September 2025, Respondent No.4, the Assistant Commissioner of State Tax, Kalyan, commenced search operations pursuant to a warrant issued by the Deputy Commissioner of State Tax. The investigation extended to 3rd September 2025, covering the factory premises and the petitioner's residence where books of accounts were maintained. The petitioner maintained that he extended complete cooperation throughout the investigation process.
Issuance of Statutory Notices
Following the search operations, authorities issued summons under Section 70 of the Maharashtra Goods and Services Tax Act, 2017, requiring the petitioner's attendance regarding an inquiry into suspected non-genuine business activities of M/s. Mahavir Metal Industries.
Subsequently, on 8th September 2025, a crucial notice was issued under Section 35(3) of the Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023. This notice alleged that the petitioner had wrongfully availed ineligible input tax credit totaling Rs. 17,88,58,156/- from declared non-genuine taxpayers and cancelled GSTINs spanning financial years 2019-20 through 2024-25.
The notice directed the petitioner to appear before the Assistant Commissioner of State Tax, Kalyan on 11th September 2025 at 11:00 AM. It also imposed specific conditions requiring:
- Non-commission of any further offence
- Non-tampering with investigation evidence
- Refraining from threatening, inducing, or promising any person connected with the case facts
- Court appearance as required and cooperation with investigation
Communication Timeline Leading to Arrest
Rescheduling Request
On 11th September 2025 at 7:25 PM, the petitioner received email communication from the Assistant Commissioner rescheduling his appearance to 12th September 2025 at 11:30 AM.
Petitioner's Response Seeking Extension
The petitioner responded the same evening at 10:04 PM, conveying his inability to attend on the scheduled date. His communication specifically mentioned:
- Health concerns including high blood pressure and hypertension
- Urgent family difficulties requiring attention
- Request for short extension of 15-20 days
- Assurance of full cooperation in investigation proceedings
- Commitment to attend personally on any alternate date granted
Absence of Further Communication
Critically, after this communication seeking postponement, no further correspondence was received from the Assistant Commissioner fixing a fresh date for appearance. Despite this communication gap, the petitioner was arrested on 17th September 2025.
Legal Grounds Challenging the Arrest
The petitioner challenged the custodial action on fundamental grounds that once a notice under Section 35(3) of the BNSS, 2023 had been issued for an offence attracting imprisonment below seven years, the prescribed statutory procedure must be strictly observed.
Binding Nature of BNSS Provisions
The petitioner contended that while the Assistant Commissioner exercised arrest powers under Section 69 of the GST Act, he remained bound by the procedural safeguards embedded in the BNSS and the constitutional principles established by the Supreme Court regarding arrests in such matters.
Absence of Recorded Reasons
A fatal defect in the arrest was the complete absence of recorded reasons in writing justifying the necessity of custodial action, as explicitly required by statute.