GST Arrest in ₹17.88 Cr Fake ITC Without BNSS Safeguards Illegal: Bombay HC Rules in Favour of Copper Manufacturer [Read Order]

The Bombay High Court has ruled that an arrest under Section 69 of the Goods and ServicesTax Act (GST), 2017, without safeguards as provided under Bharatiya Nagarik Suraksha Sanhita (BNSS), 2023, is illegal. The ruling was made in favour of the petitioner, who was detained illegally.

Hemang Bipin Varaiya, proprietor of Mahavir Metal Industries, the petitioner, was engaged in the manufacturing of copper and brass utensils and trading non-ferrous metals. He was subjected to a search and seizure in September 2025. Authorities alleged that he had availed ineligible Input Tax Credit (ITC) worth ₹17.88 crore from non-genuine taxpayers between 2019-20 and 2024-25

Summons were issued under section 70 of the MGST Act. This was followed by a notice under section 35 of BNSS, which required his appearance before the Assistant Commissioner of State Tax. The notice also warns against tampering with evidence and influencing witnesses.

The petitioner replied to the same via an email on 11 September 205, citing his health issues due to which he couldn't appear before the authorities. He assured his cooperation within a few days and requested the same. The authorities, despite receiving this, arrested him on 17 September 2025 under Section 69 of the GST Act.

The petitioner argued that once a notice under section 35 of BNSS was issued, arrest could only follow after recording of reasons for the same in writing as it is mandated by law. He relied on the Supreme Court cases of Arnesh Kumar v. State of Bihar (2014) and Satender Kumar Antil v. CBI (2022), which require strict compliance with safeguards before arrest in offences punishable with imprisonment up to seven years.

He contended that his arrest was effected without recording reasons, despite his communication seeking extension, and therefore violated both BNSS provisions and Apex Court directives.

The Division Bench of Justice Bharati Dangre and Justice Shyam C. Chandak examined section 35 of BNSS. This section promotes arrest without warrant only if the officer has reason to believe an offence has been committed and records justification in writing.

The Court noted that Varaiya had responded to the notice, sought extension, and assured cooperation. No fresh date was fixed by the authority, yet he was arrested. The Assistant Commissioner failed to record reasons for arrest, a mandatory safeguard.

The bench observed that arrest is a “draconian step” and must be exercised with extreme caution. They reiterated that Apex Court rulings in Arnesh Kumar and Satender Kumar Antil bind all authorities, requiring written justification for arrest in offences punishable up to seven years. Failure to comply renders the arrest illegal, and the officer can even be liable for disciplinary proceedings.

The High Court declared the petitioner’s arrest on 17 September 2025 and subsequent remand orders illegal. While noting that he had already been released on bail, the Court restricted itself to granting declaratory relief. It clarified that the petitioner may pursue further remedies based on this declaration.

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