HC grants bail to Malad bizman illegally detained by CGST

“Arrest is a serious matter and cannot be made in a routine manner on a mere allegation of commission of an offence, in as much as, an arrest can cause incalculable harm to the reputation and self-esteem of a person,” said the division bench of justices Revati Mohite Dere and Manjusha Deshpande while ordering Mahesh Gala’s release on an unconditional bail bond of ₹25,000

MUMBAI: The Bombay high court last week granted bail to a Malad-based businessman after noticing that he was detained by a Central goods and services tax (GST) inspector beyond 24 hours without being produced before a metropolitan magistrate court.

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“Arrest is a serious matter and cannot be made in a routine manner on a mere allegation of commission of an offence, in as much as, an arrest can cause incalculable harm to the reputation and self-esteem of a person,” said the division bench of justices Revati Mohite Dere and Manjusha Deshpande while ordering Mahesh Gala’s release on an unconditional bail bond of ₹25,000.

Gala had approached the high court seeking a declaration that his arrest by the CGST was illegal and by an interim order sought to be released on bail. According to his petition, CGST had in October 2021 investigated Om Sai Nityanand Management Pvt Ltd and Gala had appeared before the authorities on the company’s behalf.

His counsel informed the court that subsequently, CGST carried out a special audit of the company and found violations quantified at approximately ₹4.48 crore, out of which ₹2.93 crore was frozen, ₹23.61 lakh was paid in cash and input tax credit of ₹1.32 crore was reversed.

Though the required tax had been paid, Gala was detained when he went to the CGST office around 1.30pm on March 13, 2024. He was kept there overnight, purportedly for recording his statement, and was formally placed under arrest at around 4.30pm the next day. He was produced before the metropolitan magistrate the following day, March 15, at 3.30pm, around 50 hours after he was detained at the CGST office.

The department, on the other hand, claimed that the businessman was produced before the magistrate within 24 hours of his arrest and there was no illegality in the arrest.

The bench, however, refused to accept the argument, after noticing that the authorities claimed that they spent over 12 hours for generating the relevant GST returns, their verification, and generation of the arrest memo along with document identification number.

The judges said there was no need to detain the businessman overnight if the authorities did not have the requisite documents with them, especially when the petitioner had co-operated with them and could have been called the next day or some other day.

“Prima facie, we do not find, in the facts, that there was any reason for the respondent no 2 (CGST) to keep the petitioner overnight, when he came on March 13, 2023, more particularly, if the respondent no 2 did not have documents to question the petitioner,” said the bench.

Concluding that the businessman was apparently detained beyond 24 hours without being produced before a magistrate, which was impermissible under the law, the court ordered Gala to be released on bail.