Case Law Details
Umang Garg S/o Surinder Kumar Garg Vs Union of India (Rajasthan High Court)
In this case, two bail applications were filed under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), by accused persons facing prosecution initiated by the Directorate General of GST Intelligence (DGGI), Jaipur Zonal Unit, for alleged offences under various provisions of Section 132 of the Central Goods and Services Tax Act, 2017 (CGST Act).
The prosecution alleged that one accused was involved in wrongful availment and utilization of Input Tax Credit (ITC) amounting to approximately ₹32.30 crore through firms allegedly issuing fake and goods-less invoices. It was contended that invoices were issued in the names of multiple companies and that fraudulent ITC had been availed between February 2024 and April 2025. The other accused was alleged to have acted as an intermediary arranging fake invoices and was accused of operating several fake firms that generated fake ITC exceeding ₹66.52 crore. The DGGI relied upon statements recorded under Section 70 of the CGST Act, WhatsApp chats, electronic devices, forensic analysis, and documentary evidence to establish involvement in issuance of goods-less invoices and passing of fraudulent ITC.
The petitioners argued that the allegations were vague and unsupported by sufficient material. One petitioner contended that he was not a director of two of the companies during the relevant period and had only briefly served as an additional director in another company. The other petitioner argued that no material demonstrated that he generated invoices himself and that no invoicing software, GST utility, server logs, portal access history, forensic metadata, or other electronic infrastructure had been recovered from him. According to the petitioners, the WhatsApp chats merely showed circulation of invoices and not authorship or generation of the documents.
A major challenge raised by the petitioners related to the legality of their arrests. They contended that mandatory safeguards under Section 35 of the BNSS and Section 69 of the CGST Act had not been followed. According to them, the authorities failed to provide written reasons justifying arrest and did not furnish proper written grounds of arrest. They argued that the arrest memos were mechanical and lacked essential particulars regarding transactions, firms involved, financial periods, and the specific role attributed to each accused. The petitioners also relied on CBIC instructions distinguishing “reasons for arrest” from “grounds of arrest” and argued that proper grounds of arrest had not been supplied. They further submitted that the case was based entirely on documentary and electronic evidence already in the Department’s possession, making custodial interrogation unnecessary. Since the offences were compoundable, triable by a Magistrate, and the trial was likely to take considerable time, they sought bail.
The DGGI opposed the bail applications, asserting that the petitioners were involved in a large-scale economic offence causing significant loss to the public exchequer. It argued that the allegations were supported by statements of co-accused persons, forensic examination of electronic devices, WhatsApp communications, and other documentary evidence. The Department maintained that written grounds of arrest had been supplied to both petitioners at the time of arrest and that acknowledgments bearing their signatures had been obtained. It further alleged that one petitioner had failed to cooperate with the investigation and had attempted to abscond during search proceedings. Considering the gravity of the offence, ongoing investigation, and pending criminal cases, the Department argued that bail should be denied.
The Court examined the material on record and noted that the investigation had yielded statements under Section 70 of the CGST Act, seized electronic devices, WhatsApp chats, forensic reports, and documentary evidence that prima facie connected the petitioners with operation of fake firms and issuance of invoices without actual supply of goods.
Addressing the challenge regarding arrest procedures, the Court referred to Supreme Court decisions, including Pankaj Bansal, Prabir Purkayastha, Vihaan Kumar, and Mihir Rajesh Shah, which establish that written grounds of arrest must be supplied to the arrested person. The Court reiterated the distinction between “reasons for arrest,” which are general and formal, and “grounds of arrest,” which must convey the factual basis necessitating arrest and enable the accused to seek bail and defend against custodial remand. Failure to provide written grounds of arrest would render the arrest illegal.
However, after examining the record, the Court found that both petitioners had been furnished written grounds of arrest at the time of their arrests. The arrest documents bore their acknowledgment signatures, and copies of the grounds of arrest had been annexed by the petitioners themselves with the bail applications. The Court also noted the Department’s explanation that the DIN-based computerized system generated the relevant documents on the same date and that the arrest proceedings had been videographed. Since the petitioners failed to produce material showing that the grounds of arrest were antedated or prepared subsequently, the Court rejected their contention that written grounds of arrest had not been supplied.
The Court further rejected the argument that the grounds of arrest were inadequate because they did not set out every transaction or detail of the alleged fraud. It observed that economic offences often involve voluminous electronic and documentary evidence, making it impracticable to reproduce the entire evidentiary record in the grounds of arrest. The legal requirement is only that the arrested person be informed of the substance of the allegations and the basis for the arrest. The Court found that the petitioners had participated in search proceedings, their statements had been recorded, and incriminating material had allegedly been recovered, demonstrating their awareness of the allegations. The written grounds of arrest also identified the statutory provisions invoked, the allegations concerning fake invoices, and the wrongful availment of ITC.
Considering the magnitude of the alleged economic offence, the prima facie material linking the petitioners to the alleged fraudulent activities, and allegations of non-cooperation during the investigation, the Court declined to grant bail. Accordingly, both bail applications were dismissed. The Court clarified that its observations were confined to the determination of the bail applications and would not affect the merits of the criminal case.
FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT
1. These bail applications under Section 483 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (for short, ‘BNSS’) have been filed on behalf of the accused-petitioners arising out of Criminal Case No. DGGI/INT/INTL/1053/2025-GrA instituted by the Directorate General of GST Intelligence, Jaipur Zonal Unit (for short, ‘DGGI’) for offences under Sections 132(1),(c),(f),(h),(i) of the Central Goods and Services Tax Act, 2017 (for short, ‘CGST Act’) against accused petitioner- Umang Garg and under Sections 132(1)(b),(c),(i) of the CGST Act against accused petitioner-Ashish Jain.
2. Since both these bail applications arise out of the similar set of facts and involve common questions of law and fact, they were heard together and are being decided by this common order.
3. Learned counsel for the petitioners submitted that the present prosecution arises out of allegations pertaining to wrongful availment and passing of Input Tax Credit (‘ITC’) through alleged fake and goods-less invoices under the provisions of the CGST Act, wherein the offences alleged are triable by magistrate and carry a maximum punishment of five years. It was submitted that accused petitioner Umang Garg was arrested on 20.03.2026 and accused petitioner Ashish Jain was arrested on 06.02.2026 pursuant to proceedings initiated by the respondent-DGGI in relation to alleged operation of fake firms and issuance of goods-less invoices.
4. Learned counsel further submits that the allegations against the accused petitioner- Umang Garg pertain to alleged wrongful utilization of ITC amounting to approximately Rs.32,30,98,779/-from February, 2024 to April, 2025 through invoices allegedly issued in the name of M/s Umang Impex India Pvt. Ltd., M/s New Growth Petrochem India Pvt. Ltd. and M/s U G India Pvt. Ltd. It was contended that the accused petitioner was not the Director in two of the said companies during the relevant period and remained merely an Additional Director in M/s Umang Impex India Pvt. Ltd., for only eleven days i.e., from 01.08.2024 to 12.08.2024. It was contended that there is no material to establish that the petitioner was ‘in charge of’ or ‘responsible for conduct of business’ of the said companies so as to attract the provision of Section 137 of the CGST Act and the allegation against him are vague and omnibus in nature.
5. It was further submitted that insofar as petitioner- Ashish Jain is concerned, his role is merely that of an intermediary agent allegedly arranging invoices between various entities on commission basis and not that of beneficiary proprietor of false ITC. Learned counsel submitted that no material has been recovered to show that invoices were generated by the petitioner himself and no invoicing software, billing application, GST utility, backend server logs, GST portal access history, IP mapping, digital trail, forensic metadata or electronic infrastructure allegedly used for creation of invoices were recovered from his premises and the WhatsApp chats relied upon by the department merely show circulation of invoice copies and do not establish authorship, preparation or generation of invoices by the petitioner.
6. Learned counsel further submits that the arrests of the petitioners are ex-facie illegal on account of non-compliance of mandatory safeguards contained under Section 35 of BNSS and Section 69 of the CGST Act, 2017. It was contended that though Section 35(3) of the BNSS mandates recording of reasons justifying necessity of arrest, no such satisfaction or reasons were supplied to the petitioners in writing. This Court vide its order dated 29.04.2026, raised a specific query as to whether written grounds of arrest in terms of Section 35 BNSS and Section 69 of the CGST Act had been supplied to the petitioners or not; however, till date no material has been placed on record by the respondent-department demonstrating compliance thereof.
7. It was further argued that Section 69 of the CGST Act contains two mandatory requirements, namely, recording and furnishing of ‘reasons to believe’ by the respondents and communication of proper ‘grounds of arrest’ to the accused in writing. It is submitted that no written ‘reasons to believe’ recorded by the respondents were ever supplied to the petitioners and the arrest memos supplied to the petitioners are purely mechanical and stereotyped proforma documents lacking foundational factual particulars such as relevant financial period, specific firms involved, nature of transactions, exact role attributed to the petitioners and necessity of arrest. Furthermore, the CBIC Instruction No. 01/2025-GST dated 13.01.2025 and Instruction No. 02/2022-23 (GST Investigation), issued by the respondent department itself recognize a distinction between ‘reasons for arrest’ and ‘grounds of arrest’ and mandate that grounds of arrest be separately furnished to the arrested person in writing.
8. It is further contended that the prosecution case is entirely documentary and electronic in nature and all relevant devices and documents are already in possession of the Department, custodial interrogation is no longer required and there is no possibility of tampering with evidence, offences alleged are compoundable and triable by the learned Magistrate, the accused petitioners are in custody since long and the trial is likely to take considerable time, therefore, considering the long incarceration of the accused petitioners, the present bail applications may be allowed. In support of the aforesaid submissions, learned counsel placed reliance upon the followings judgments:
A. Radhika Agarwal v. Union of India, (2025) 6 SCC 545;
B. Prabir Purkayastha v. State (NCT of Delhi), (2024) 8 SCC 254;
C. Arvind Kejriwal v. Directorate of Enforcement, (2025) 2 SCC 248;
D. Satender Kumar Antil v. CBI, 2026 SCC OnLine SC 162;
E. Chanda Deepak Kochhar v. CBI, 2023 SCC OnLine Bom 72;
F. Mahesh Sharma v. Union of India, S.B. Criminal Misc. Bail Application No.3459/2025 decided on 09.06.2025;
G. Rajesh Agarwal v. State of Rajasthan, S.B. Criminal Misc. Bail Application No.5728/2025 decided on 13.06.2025;
H. Vikas Sain v. State of Rajasthan, S.B. Criminal Misc. Bail Application No.6773/2025 decided on 26.06.2025.
9. Per contra, learned counsel appearing for the respondent-DGGI submitted that the petitioners are actively involved in a large-scale economic offence pertaining to operation of fake firms and issuance of goods-less invoices resulting in wrongful availment and passing of fake ITC causing huge loss to the public exchequer. It is also submitted that the case against the accused petitioners are not only supported by the statements of co-accused persons, but are duly corroborated by electronic evidence, forensic analysis of mobile devices, WhatsApp chats, documentary material and statements recorded during investigation under Section 70 of the CGST Act.
10. Learned counsel further submits that during investigation against M/s Erawaan India Pvt. Ltd., and other related entities, statements of various persons including Ganesh Prasad Gupta, Basant Shrivastav and other employees associated with petitioner-Umang Garg were recorded under Section 70 of the CGST Act and it was revealed that accused petitioner- Ashish Jain was engaged in issuance of goods-less invoices to beneficiary firms operated by petitioner- Umang Garg. It was submitted that examination of data recovered from the seized mobile phone of Ganesh Prasad Gupta revealed that Ashish Jain had issued goods-less invoices to firms namely M/s Umang Impex India Pvt. Ltd., M/s New Growth Petrochem India Pvt. Ltd., and M/s U G India Pvt. Ltd., allegedly operated by petitioner-Umang Garg.
11. It was further submitted that accused petitioner- Ashish Jain, in his own statements recorded under Section 70 of the CGST Act admitted the issuance of fake goods invoices to firms operated by petitioner- Umang Garg and other beneficiary entities and during the search proceedings conducted on 05.02.2026 and 06.02.2026 at premises of petitioner- Ashish Jain, various documents and electronic devices including mobile phones were seized. It was argued that a large number of incriminating WhatsApp chats recovered from the seized mobile phones clearly establish involvement of petitioner- Ashish Jain in operation of fake firms and issuance of goods-less invoices in lieu of commission.
12. Learned counsel further submitted that petitioner- Ashish Jain was operator of as many as 29 fake firms and generated fake ITC of Rs. 66,52,73,095/- and used to receive details from beneficiary firms for issuance of goods-less invoices through contract staff and thereafter forwarded such invoices to beneficiary entities. It was argued that the offences alleged against the petitioners clearly fall within Sections 132(1)(b),(c),(l) of the CGST Act. It was further submitted that investigation revealed that several fake firms were created on the basis of forged documents including forged electricity bills and were found non-existent during physical verification.
13. Learned counsel further submits that the grounds of arrest were duly communicated and supplied to the petitioners both orally and in writing at the time of arrest and acknowledgment bearing signatures of the petitioners was also obtained by the department. It was submitted that petitioner- Umang Garg was served summons under Section 70 of the CGST Act dated 19.03.2026 and was formally arrested on 20.03.2026, whereas written grounds of arrest under Section 35 of the BNSS were also furnished on the same date.
14. Learned counsel additionally submitted that petitioner-Umang Garg has suppressed material facts regarding his criminal antecedents and proceedings pending before other forums which stands in violation of the dictum laid down by the Hon’ble Apex Court in the case of Zeba Khan v. State of UP & Ors., 2026 INSC 144. The accused petitioner has also failed to cooperate with the investigation despite repeated summons issued by the department and during search proceedings conducted on 20.03.2026, petitioner- Umang Garg attempted to abscond from the premises, which clearly reflects likelihood of evasion and noncooperation. Therefore, considering the fact that investigation is still pending, there exists criminal cases pending against the accused petitioner and also taking into account the gravity and magnitude of the economic offence, the present bail applications may be dismissed.
15. Heard learned counsel of the parties and perused the material available on record.
16. A perusal of the record reflects that petitioner- Umang Garg is alleged to have operated beneficiary firms namely M/s Umang Impex India Pvt. Ltd., M/s New Growth Petrochem India Pvt. Ltd. and M/s U G India Pvt. Ltd., through which fraudulent ITC amounting to approximately Rs.32,30,98,779/- was allegedly availed and utilized, material collected during investigation and similarly against the accused petitioner-Ashish Jain, the material available on record prima facie indicates that he was operating multiple fake firms and was engaged in issuance of goods-less invoices for passing of fraudulent ITC to beneficiary entities and the statements recorded under Section 70 of the CGST Act, electronic devices seized during search proceedings, WhatsApp chats, forensic analysis and other documentary material, which prima facie connect the accused petitioners with operation of fake firms and issuance of invoices without actual supply of goods.
17. As far as the contention with regard to furnishing of grounds of arrest is concerned, the law on this point is no more res integra in view of the judgments rendered by the Hon’ble Apex Court in the matters of: Pankaj Bansal v. Union of India & Ors., (2024) 7 SCC 576; Prabir Purkayastha v. State (NCT of Delhi), (2024) 8 SCC 254; Vihaan Kumar v. State of Haryana & Anr., (2025) 5 SCC 799 and Mihir Rajesh Shah v. State Of Maharashtra And Anr., 2025 INSC 1288, that it is mandatory to supply the grounds of arrest in writing in all cases without exception.
18. The Hon’ble Apex Court in the case of Prabir Purkayastha (supra) has drawn a distinction between ‘reasons for arrest’ and ‘grounds of arrest.’ The relevant extract is reproduced hereunder:-
“49. It may be reiterated at the cost of repetition that there is a significant difference in the phrase ‘reasons for arrest’ and ‘grounds of arrest’. The ‘reasons for arrest’ as indicated in the arrest memo are purely formal parameters, viz., to prevent the accused person from committing any further offence; for proper investigation of the offence; to prevent the accused person from causing the evidence of the offence to disappear or tempering with such evidence in any manner; to prevent the arrested person for making inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the Court or to the Investigating Officer. These reasons would commonly apply to any person arrested on charge of a crime whereas the ‘grounds of arrest’ would be required to contain all such details in hand of the Investigating Officer which necessitated the arrest of the accused. Simultaneously, the grounds of arrest informed in writing must convey to the arrested accused all basic facts on which he was being arrested so as to provide him an opportunity of defending himself against custodial remand and to seek bail. Thus, the ‘grounds of arrest’ would invariably be personal to the accused and cannot be equated with the ‘reasons of arrest’ which are general in nature.”
19. Furthermore, the Hon’ble Apex Court in the case of Mihir Rajesh Shah (Supra) has observed as under:-
“51. Supplanting the above situation, there may be a case wherein the Investigating Officer has sent a notice for appearance of the accused to join the investigation under Section 41A of CrPC 1973 (now Section 35(3) to 35(6) of BNSS 2023) pursuant to which the accused has joined the investigation. The Investigating Officer, after perusal of material available before him and/or on interrogating the accused, makes up his mind that the arrest of the accused person is required for further investigation or has other reason(s) for arrest, in such cases, since the accused is under the supervision of the Investigating Agency and there exists no apprehension of him absconding, it becomes incumbent upon the Police Officer to supply the grounds of arrest in writing on arresting the accused person. This can also be followed, for instance, in cases involving offences which are primarily based on documentary evidence/records, economic offences such as under PMLA where the grounds of arrest in writing be furnished to the arrested person on arrest simultaneously.”
20. Therefore, the core principles emerging from the aforesaid judgments are as follows:-
(i) That, shortly after the arrest of the accused, the authorities are required to furnish written grounds of arrest to the arrested person;
(ii) That, ‘reasons for arrest’ are generally formal and broad in nature, and mere non-elaboration thereof would not ipso facto render the arrest illegal and;
(iii) That, failure to communicate the grounds of arrest in writing would vitiate the arrest and render the same illegal.
21. In the instant case, the record reflects that prior to their arrest, the petitioners were summoned under Section 70 of the CGST Act and their statements were recorded during the course of investigation. The accused petitioner- Umang Garg was formally arrested on 20.03.2026 vide arrest warrant memo bearing DIN No.202603DNN20000020475 and, along with the same, written grounds of arrest were also furnished to him, which bear his acknowledgment signatures and similarly, grounds of arrest were also furnished to accused petitioner- Ashish Jain at the time of his arrest and copies thereof have been annexed by the petitioners themselves along with their respective bail applications.
22. It has been specifically contended on behalf of the respondent-DGGI that once a DIN number is generated, the computerized system automatically generates the corresponding documents on the same date and the DIN number mentioned in the grounds of arrest correspond with those reflected in the respective arrest memos. It is further submitted that the proceedings pertaining to recording of statements under Section 70 of the CGST Act as well as the subsequent arrest proceedings were videographed and the petitioners have not been able to place any cogent material before this Court to prima facie establish that the written grounds of arrest supplied to them were antedated or subsequently prepared; therefore, in such circumstances, this Court is unable to accept the contention raised on behalf of the petitioners that the grounds of arrest were not furnished to them in writing at the time of arrest.
23. Learned counsel for the petitioners has additionally questioned the adequacy and objectivity of the grounds of arrest furnished by the respondent-DGGI on the premise that the same do not specifically disclose the exact manner in which the petitioners allegedly generated fake invoices or the precise transactions and firms through which wrongful ITC was claimed and in absence of such detailed particulars, they were deprived of an effective opportunity to defend themselves. This Court is unable to accept the aforesaid contention at this stage, as in cases involving economic offences of the present nature, the investigation ordinarily pertains to voluminous electronic and documentary material and it may not be practicable for the investigating agency to reproduce the entire evidence present against the accused petitioners in the grounds of arrest. The requirement of law is that the arrested person must be informed of the substance of allegations and the grounds on which the arrest has been effected.
24. In the instant matter, prior to the arrest of the accused petitioner, search proceedings were conducted in their presence and electronic devices and documentary material were seized and the accused petitioners were examined under Section 70 of the CGST Act. The prosecution has specifically alleged recovery of incriminating material including invoices, WhatsApp chats and electronic data from the seized mobile phones and laptops, thereby, prima facie establishing that the petitioners were aware of the nature of allegations and the material collected during investigation even prior to their arrest. Moreover, the written grounds of arrest furnished to the petitioners specifically discloses the statutory provisions invoked against them, the allegation regarding issuance of fake invoices without actual supply of goods and the alleged wrongful availment of ITC. At the stage of consideration of bail, the scope of judicial scrutiny is confined to a prima facie examination regarding compliance of procedural safeguards and it is not expected from this Court to undertake a detailed adjudication on the sufficiency or evidentiary value of each ground forming the basis of arrest.
25. Therefore, considering the aforesaid facts and more particularly the magnitude of the alleged economic offence, prima facie involvement attributed to the accused-petitioners and alleged non-cooperation during investigation, this Court is not inclined to enlarge the accused petitioners on bail.
26. Accordingly, the present bail applications filed by accused petitioners are hereby dismissed.
27. However, it is made clear that the observations made hereinabove are only for the purpose of deciding the present bail applications and shall have no bearing on the merits of the case.
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