GST Inquiry Summons Under Section 70 CGST Act: Whether Compliance Amounts to Unlawful Custody - Bombay HC Analysis

Introduction

The Bombay High Court recently examined whether responding to summons issued under Section 70 of the Central Goods and Services Tax Act, 2017 [CGST Act] for investigation purposes constitutes unlawful custody. The judicial bench dismissed the writ petition filed by the individual who claimed illegal detention while cooperating with GST authorities during an investigation.

Case Background and Petitioner's Claims

Initial Proceedings

In this matter, Kanhaiya Nilambar Jha approached the Bombay High Court through a writ petition. The petitioner identified himself as an employee working in the capacity of Office Boy at M/s Kabsan Services Private Limited. He sought multiple reliefs including:

  • Declaration that his custody by respondent No.4 in Case No.1/2025 was illegal and void
  • Setting aside the order passed on 21.06.2025 by the Judicial Magistrate (First Class), Nanded sanctioning magisterial custody
  • Monetary compensation amounting to Rs. 10,00,000/- for alleged wrongful detention

Sequence of Events as Presented by Petitioner

The petitioner's version of incidents unfolded as follows:

On 17.06.2025 at approximately 1.00 p.m., GST Department officials visited the professional office of Chartered Accountant Bhavik Bhanushali (Mehta) located in Mumbai. Subsequently, the petitioner received a telephonic call directing him to that location. According to his assertion, GST personnel took him into custody on that very day without presenting any summons document or arrest memorandum.

The petitioner claimed he was transported from Mumbai to Chhatrapati Sambhajinagar without any communication being made to his family members. On 18.06.2025, he was allegedly brought to the CGST and Central Excise Office at GST Bhavan, Chhatrapati Sambhajinagar, where he remained in custody without formal arrest documentation and without being produced before any judicial authority until 20.06.2025.

On 20.06.2025, the petitioner's spouse engaged legal counsel who visited the CGST Office premises and met with the petitioner. The department's position was that the petitioner had been called since 17.06.2025 for witness statement recording purposes. The petitioner's legal representative sent multiple electronic communications to senior GST officials requesting information about the legal basis for custody and anticipated release timeline. However, respondent No.4 allegedly responded with threatening correspondence refusing to provide requested information.

The advocate representing the petitioner sent another electronic communication highlighting the illegality of detention. Nevertheless, on 21.06.2025, respondent No.4 formally arrested the petitioner at Nanded under Section 69 of the CGST Act and initiated Case No. 1/2025 before the Judicial Magistrate (First Class), Nanded for alleged violations punishable under Sections 132(1)(b), 132(1)(c), and 132(1)(i) of the CGST Act.

Subsequent Judicial Proceedings

The concerned Magistrate remanded the petitioner to Magisterial Custody Remand till 03.07.2025. On the same date, the petitioner submitted a bail application before the said Magistrate citing illegal detention since 17.06.2025. After the department filed opposition to the bail application, the Magistrate rejected it on 23.06.2025.

On 26.06.2025, a fresh bail application was filed before the Sessions Judge, Nanded, followed by an interim bail application on 03.07.2025. Although the Sessions Judge granted interim bail on 04.07.2025, the department immediately filed an application for cancellation on 05.07.2025, resulting in a stay on the interim bail order. Subsequently, following the High Court's direction, the Sessions Judge ultimately granted bail to the petitioner.

Department's Counter-Arguments

Revenue's Position

The learned counsel representing respondent Nos.1 to 3 filed a comprehensive affidavit-in-reply strongly refuting the petitioner's allegations. The chronology of events presented by the department differed substantially from the petitioner's version.

According to the revenue authorities, the petitioner was actually managing the operations of M/s Kabsan Services Pvt. Ltd and had fraudulently obtained input tax credit running into crores of rupees through fabricated accounts and documentation.

Procedural Compliance Claimed

The department maintained that the petitioner was summoned as a witness to record statements under proper legal authority granted by Section 70 of the CGST Act, which contains no mandatory requirement for providing 7 days advance notice. From 17.06.2025 to 20.06.2025, the petitioner remained with department officials voluntarily under validly issued summons for statement recording purposes. Only on 21.06.2025, after establishing prima facie charges against him, was he formally arrested at Nanded and immediately produced before the Magistrate.

The revenue authorities emphasized that no restriction was placed on the petitioner's liberty until 20.06.2025, and formal arrest occurred only on 21.06.2025 after proper disclosure of grounds. The department contended that appropriate procedural safeguards were followed while issuing summons to the petitioner as well as CA Bhavik Mehta. They reiterated that no statutory requirement mandates 7 days notice as claimed by the petitioner.

Petitioner's Contentions

The petitioner's legal representative vigorously argued multiple grounds:

Jurisdictional Challenge: Respondent No.4 Mr. Nade lacked territorial jurisdiction to issue summons to the petitioner in Mumbai. The summons dated 17.06.2025 was therefore jurisdictionally defective and constituted a fabricated document prepared after the fact.

Procedural Violations: CA Bhavik was allegedly called at 9.00 p.m. on 17.06.2025 to the office of Ankit Dharod without any summons, and a concocted narrative was created to facilitate illegal detention. The documented record of summons was fabricated after custody commenced, particularly after receiving communication from the petitioner's advocate.

Notice Requirement: Learned counsel argued that 7 days advance notice is mandatory for issuing summons as per Order XVI of the Code of Civil Procedure, since Section 70 of the CGST Act does not specify any particular duration. This position was based on the provision that summons must follow civil court procedures.