Shri Mukesh Agarwal Vs Union of India And 2 Ors. (Gauhati High Court)
GST Evasion Arrest Vitiated by Procedural Flaws: Gauhati High Court Grants Bail
The Gauhati High Court has granted bail to Shri Mukesh Agarwal, a partner in two firms accused of a ₹15.25 crore Goods and Services Tax (GST) evasion, ruling that his arrest was illegal due to the authorities’ failure to comply with mandatory procedural safeguards. The court, citing judicial precedents from the Supreme Court, held that for offences punishable by up to five years imprisonment, notice under the relevant provision of the newly enacted Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS) was compulsory before arrest, a requirement that was overlooked by the arresting officers.
The Case Background
Shri Mukesh Agarwal, a partner in M/s Balaji Steel Rolling Mills and M/s Balaji Concast, was arrested on October 16, 2025, by the Directorate General of Goods and Service Tax Intelligence (DGGI), Guwahati Zone. The arrest stemmed from allegations of clandestine supply of goods, leading to a total GST evasion determined by the department to be ₹15.25 crore.
The investigation began with a search on May 19, 2023, where “incriminating materials” were reportedly seized. Statements were recorded, including one from the firm’s accountant, Rakesh Sarkar, who allegedly admitted to clandestine supplies by both firms, leading to an initial determined GST liability of ₹5.36 crore. The petitioner, Shri Agarwal, had his statement recorded on February 26, 2024, where he reportedly agreed with the accountant’s admission and accepted the tax liability for the period of April 2022 to May 2023. Subsequently, he deposited a part payment of ₹2.15 crore.
