Delhi High Court – Orders
Dhruv Krishan Maggu vs Union Of India & Ors on 11 August, 2025
Author: Prathiba M. Singh
Bench: Prathiba M. Singh
$~11 to 13
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 5454/2020
DHRUV KRISHAN MAGGU .....Petitioner
Through: Mr. Ayush Mittal, Adv.
versus
UNION OF INDIA & ORS. .....Respondents
Through: Mr. Harpreet Singh, SSC, CBIC.
12 WITH
+ W.P.(CRL) 2020/2020 & CRL.M.A. 16840/2020
SARTAJ ALI .....Petitioner
Through: Mr. Siddharth Bhardwaj, Adv.
versus
UNION OF INDIA & ANR. .....Respondents
Through: Mr. Harpreet Singh, SSC, CBIC.
13 AND
+ W.P.(CRL) 2064/2020 & CRL.M.A. 3401/2021
CHAWLA PLASTICS INDUSTRIES (INDIA) .....Petitioner
Through: Mr. Arjun Wadhwa, Adv.
versus
UNION OF INDIA & ORS. .....Respondents
Through: Ms. Arti Bansal, SPC with Ms. Shruti
Goel, Adv.
Mr. Harpreet Singh, SSC, CBIC.
CORAM:
JUSTICE PRATHIBA M. SINGH
JUSTICE SHAIL JAIN
ORDER
% 11.08.2025
1. This hearing has been done through hybrid mode.
2. All these three petitions raise a common issue in respect of the powers
of arrest exercised by officers of the GST Department under Sections 69 and
70 of the Central Goods and Services Tax Act, 2017 (hereinafter “CGST Act“).
W.P.(C) 5454/2020 & connected matters Page 1 of 13
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3. In these writ petitions, allegations of tax evasion were raised against the
Petitioners and investigations/searches were conducted by the CGST
Department. In the said process, the Petitioners were even arrested but were
granted bail by the concerned Courts.
4. The prayer in these writ petitions is for declaration, inter alia, that
Sections 69, 70 and 132 of the CGST Act are beyond the legislative competence
of the Parliament and the same are ultra vires the Constitution of India. In one
of the writ petitions compensation has also been sought. The prayers in these
petitions are as under:
“W.P.(C) 5454/2020
i) Declare that Section 69 and 132 of Central Goods and
Services Tax Act, 2017 being arbitrary, unreasonable
and beyond the legislative competence of the Parliament
are ultra vires the Constitution of India.
W.P.(CRL) 2020/2020
i. Issue an appropriate Writ, order(s) or direction(s)
declaring Sections 69 & 132 of the Central Goods
Service Tax Act, 2017, as unconstitutional and ultra
vires to Article 21 of the Constitution of India and
hence unconstitutional, illegal and unenforceable;
ii. Issue an appropriate Writ, order(s) or direction(s) to
the Respondent to comply with the mandatory procedure
under Chapter XII of the Code of Criminal Procedure,
1973 including Section 154, 157, 167, 172 etc for valid
commencement of investigation into any offence qua the
petitioner.
iii. Declare the entire investigations erroneously
commenced by the Respondents qua the Petitioner as
non est, illegal, void ab initio for not following the
mandatory procedure under Chapter XII of the of the
Code of Criminal Procedure 1973 and therefore
violative of the “procedure established by law”.
iv. Issue an appropriate Writ, order(s) or direction(s)
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declaring Section 70(1) of the Central Goods Service
Tax Act, 2017, as unconstitutional and ultra vires to
Article 20(3) of the Constitution of India and hence
unconstitutional, illegal and unenforceable;
v. Issue an appropriate Writ, order(s) or direction(s)
declaring Section 67 (1) and S. 69 of the CGST Act are
ultra vires and violative of the principles of nature
justice, as the said Section does not provide for
recording of reasons to believe in writing, unlike other
statutes such as Prevention of Money Laundering Act,
2002
vi. Issue an appropriate Writ, order(s) or direction(s)
declaring Notification No. 14/2017 dated 1st July, 2017
issued by the Government of India, Ministry of Finance
investing the powers of Commissioner to Additional
Director General, GST Intelligence as contrary to the
settled principle of law as held by the Hon’ble Supreme
Court in Ajaib Singh Vs. State of Punjab, AIR 1965 SC
1619.
vii. Issue an appropriate Writ, order(s) or direction(s)
declaring Provisions of Section 137 of the CGST Act
2017 contrary to the settled principles of law, which
provide that there can be no fastening of vicarious
liability for a criminal offence requiring mens rea,
without there being an active role being proved by the
prosecution.
viii. Issue an appropriate Writ, order(s) or direction(s)
declaring provisions of Section 135 of CGST Act, 2017,
unconstitutional as it requires Accused to disprove the
reverse burden of proof not by preponderance of
probability but beyond reasonable doubt.
ix. Issue an appropriate Writ, order(s) or direction(s)
declaring provisions of Section 136 of the CGST Act
2017 unconstitutional as it is contrary to section 32 &
33 of the Indian Evidence Act and is ultra vires as it is
against the basic principle of law that no person shall
be condemned on ex-parte evidence.
x. Any other relief as this Hon’ble Court may deem fit
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and proper in view of the facts and circumstances of the
present case.
W.P.(CRL) 2064/2020
A. Issue a writ, order or direction to set aside and
declare the entire investigation of the Respondent No 2
& 3 qua the Petitioner as non est, illegal, without
jurisdiction and void ab initio and further as not in
compliance with the mandatory requirements of
Chapter XII of the Code of Criminal Procedure, 1973
B. Issue a writ, order or direction to Respondent No.2 &
3 to accept the payment of Rs. 1,00,00,000 made by
Petitioner as under protest and to adjust the amount
paid towards any liability incurred by the Petitioner
after following due process of law
C. Issue a writ, order or direction that any alleged
undertaking signed by the Petitioner including to
deposit Rs. 8,28,00,000/- (Rupees Eight Crore Twenty-
Eight Lakhs Only) i.e. the input credit towards
purchases and sales made in financial year 2018-2019
in installments was under involuntary, made under
coercion, and therefore non est, illegal and
unenforceable
D. Issue a write, order or direction that the Respondent
No.2 and 3 conduct the investigation in accordance with
the procedure established by law and restrain from
insisting on compliance of the coerced undertaking
signed by the Petitioner
E. Issue an appropriate Writ, order(s) or direction(s) till
the show cause notice is issued a fair opportunity is
accorded to the Petitioner to present his side of version
i.e., “Audi Alteram Partem” which is a settled
proposition of law and following the law of natural
justice, no coercive action be taken against the
Petitioner;
F. Pass any such other order(s) or direction(s) as this
Hon’ble Court may deem fit in the facts and
circumstances of the present case.”
W.P.(C) 5454/2020 & connected matters Page 4 of 13
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5. The issue relating to the legislative competence and validity of Sections
69 and 70 of the GST Act, has now been squarely decided by the Supreme
Court in the case of Radhika Agarwal v. Union of India & Ors., 2025 INSC
272 wherein the powers of the CGST officials to summon as also to seize
documents, seek production of documents, and arrest persons who may be
suspected of evading tax, has been discussed in detail. The Supreme Court has
also stipulated the safeguards qua arrest under the CGST Act in reference to
Section 132 of the said Act. The relevant observations of the Supreme Court
are as under:
“56. It is clear from the aforesaid provisions that, to
pass an order of arrest in case of cognizable and non-
cognizable offences, the Commissioner must
satisfactorily show, vide the reasons to believe recorded
by him, that the person to be arrested has committed a
non-bailable offence and that the pre-conditions of sub-
section (5) to Section 132 of the Act are satisfied.
Failure to do so would result in an illegal arrest. With
regard to the submission made on behalf of the Revenue
that arrests are not made in case of bailable offences, in
our considered view, the Commissioner, while
recording the reasons to believe should state his
satisfaction and refer to the ‘material’ forming the basis
of his finding regarding the commission of a non-
bailable offence specified in clauses (a) to (d) of sub-
section (1) to Section 132. The computation of the tax
involved in terms of the monetary limits under clause (i)
of sub-section (1), which make the offence cognizable
and non-bailable, should be supported by referring to
relevant and sufficient material.
57. The aforesaid exercise should be undertaken in right
earnest and objectively, and not on mere ipse dixit
without foundational reasoning and material. The arrest
must proceed on the belief supported by reasons relyingW.P.(C) 5454/2020 & connected matters Page 5 of 13
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on material that the conditions specified in sub-section
(5) of Section 132 are satisfied, and not on suspicion
alone. An arrest cannot be made to merely investigate
whether the conditions are being met. The arrest is to be
made on the formulation of the opinion by the
Commissioner, which is to be duly recorded in the
reasons to believe. The reasons to believe must be based
on the evidence establishing – to the satisfaction of the
Commissioner – that the requirements of sub-section (5)
to Section 132 of the GST Act are met.
58. Our attention was drawn to the judgment of the
High Court of Delhi in Makemytrip (India) Private
Limited and Another v. Union of India and Others,50
which is a decision interpreting the power of arrest
under the Finance Act, 1994. These provisions are
related to service tax. Excise duty, service tax, and
other taxes are subsumed under the GST regime.
Accordingly, we are in agreement with the findings
recorded in this decision to the extent that the power of
arrest should be used with great circumspection and
not casually. Further, as in the case of service tax, the
power of arrest is not to be used on mere suspicion or
doubt, or for even investigation, when the conditions
of subsection (5) to Section 132 of the GST Acts are
not satisfied.
[…]
62. The circular also refers to the procedure of
arrest and that the Principal
Commissioner/Commissioner has to record on the file,
after considering the nature of the offence, the role of
the person involved, the evidence available and that he
has reason to believe that the person has committed an
offence as mentioned in Section 132 of the GST Act. The
provisions of the Code, read with Section 69(3) of the
GST Acts, relating to arrest and procedure thereof, must
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be adhered to. Compliance must also be made with the
directions in D.K. Basu (supra). The format of arrest, as
prescribed by the Central Board of Indirect Taxes and
Customs in Circular No. 128/47/2019-GST dated
23.12.2019, has also been referred to in this Instruction.
Therefore, the arrest memo should indicate the relevant
section(s) of the GST Act and other laws. In addition,
the grounds of arrest must be explained to the arrested
person and noted in the arrest memo. This instruction
regarding the grounds of arrest came to be amended by
the Central Board of Indirect Taxes and Customs
(GSTInvestigation Wing) vide Instruction No. 01/2025-
GST dated 13.01.2025 (GST/INV/Instructions/21-22).
The circular dated 13.01.2025 now mandates that the
grounds of arrest must be explained to the arrested
person and also be furnished to him in writing as an
Annexure to the arrest memo. The acknowledgement of
the same should be taken from the arrested person at the
time of service of the arrest memo. Instruction 02/2022-
23 GST (Investigation) dated 17.08.2022 further lays
down that a person nominated or authorised by the
arrested person should be informed immediately, and
this fact must be recorded in the arrest memo. The date
and time of the arrest should also be mentioned in the
arrest memo. Lastly, a copy of the arrest memo should
be given to the person arrested under proper
acknowledgement. The circular also makes other
directions concerning medical examination, the duty to
take reasonable care of the health and safety of the
arrested person, and the procedure of arresting a
woman, etc. It also lays down the post-arrest formalities
which have to be complied with. It further states that
efforts should be made to file a prosecution complaint
under Section 132 of the GST Acts at the earliest and
preferably within 60 days of arrest, where no bail is
granted. Even otherwise, the complaint should be filed
within a definite time frame. A report of arrests made
must be maintained and submitted as provided in
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paragraph 6.1 of the Instruction. The aforesaid
directions in the Circular/instruction should be read
along with the specific directions outlined in the earlier
judgments of this Court and the present judgment.
[…]
72. The last issue for our determination concerns the
constitutional validity of Sections 69 and 70 of the GST
Acts which provide for the power to arrest and the
power to summon. The petitioners assail the vires of
these provisions on the grounds of legislative
competence. It is submitted that Article 246-A of the
Constitution while conferring legislative powers on
Parliament and State Legislatures to levy and collect
GST, does not explicitly authorize the violations thereof
to be made criminal offences. Our attention was drawn
to Lists I and II of the Seventh Schedule to the
Constitution which demarcate the legislative fields for
the Union and the States to enact laws and make
violations of the enactments as offences. Referring to
Entry 93 of List I to the Seventh Schedule, it is submitted
that the Parliament can enact criminal provisions only
for the matters in List I. It is further submitted that the
power to summon, arrest and prosecute are not
ancillary and incidental to the power of levying GST and
therefore, are beyond the legislative competence of the
Parliament under Article 246-A of the Constitution.
73. This argument, in our opinion, must be rejected.
Article 246-A of the Constitution is a special provision
defining the source of power and the field of legislation
for the Parliament and the State Legislature with
respect to GST:
“246-A. Special provisions with respect to
goods and services tax.–(1) Notwithstanding
anything contained in Articles 246 and 254,
Parliament, and, subject to clause (2), theW.P.(C) 5454/2020 & connected matters Page 8 of 13
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legislature of every State, have power to make
laws with respect to goods and services tax
imposed by the Union or by such State. (2)
Parliament has exclusive power to make laws
with respect to goods and services tax where
the supply of goods, or of services, or both
takes place in the course of inter-State trade
or commerce.
Explanation.–The provisions of this article,
shall, in respect of goods and services tax
referred to in clause (5) of Article 279- A, take
effect from the date recommended by the
Goods and Services Tax Council.”
74. This Court in Union of India and Others v. VKC
Footsteps (India) Private Ltd., 57 took note of the
change brought about by Article 246-A of the
Constitution and observed:
“52.1. Firstly, Article 246-A defines the
source of power as well as the field of
legislation (with respect to goods and services
tax) obviating the need to travel to the Seventh
Schedule. 52.2. Secondly, the provisions of
Article 246-A are available both to
Parliament and the State Legislatures, save
and except for the exclusive power of
Parliament to enact GST legislation where
the supply of goods or services takes place in
the course of inter-State trade or commerce.
(…)”
75. The Parliament, under Article 246-A of the
Constitution, has the power to make laws regarding
GST and, as a necessary corollary, enact provisions
against tax evasion. Article 246-A of the Constitution is
a comprehensive provision and the doctrine of pith and
substance applies. The impugned provisions lay down
the power to summon and arrest, powers necessary for
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the effective levy and collection of GST. Time and again
this Court has held that while deciding the issue of
legislative competence, entries should not be read in a
narrow or pedantic sense but given their broadest
meaning and the widest amplitude because they are
intrinsic to a machinery of government. The ambit of an
entry or article laying down the legislative field extends
to all ancillary and subsidiary matters which fairly and
reasonably can be said to be comprehended in it. This
settled dictum regarding the interpretation of legislative
entries equally applies to the special provision of Article
246-A of the Constitution. In the context of the
legislative power to levy and collect tax, a Constitution
Bench of Seven Judges in R.S. Joshi, Sales Tax Officer,
Gujarat and Others v. Ajit Mills Limited and Another,
60 held:
“47. The principle in construing words
conferring legislative power is that the most
liberal construction should be put on the
words so that they may have effect in their
widest amplitude. None of the items in the
List is to be read in a narrow restricted
sense. Each general word should be held to
extend to all ancillary or subsidiary matters
which can fairly and reasonably be said to
be comprehended in it. All powers necessary
for the levy and collection of the tax
concerned and for seeing that the tax is not
evaded are comprised within the legislative
ambit of the Entry as ancillary or incidental.
It is also permissible to levy penalties for
attempted evasion of taxes or default in the
payment of taxes properly levied.”
Thus, a penalty or prosecution mechanism for the levy
and collection of GST, and for checking its evasion, is
a permissible exercise of legislative power. The GST
Acts, in pith and substance, pertain to Article 246-A of
the Constitution and the powers to summon, arrest and
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prosecute are ancillary and incidental to the power to
levy and collect goods and services tax. In view of the
aforesaid, the vires challenge to Sections 69 and 70 of
the GST Acts must fail and is accordingly rejected.
76. In some of the cases, Section 135 of the GST Acts
which relates to culpable mental intent has been
challenged. We are not examining the said aspect as
prosecution has not been initiated in any of these cases.
If any person is aggrieved and is advised to challenge
the said Section, he/she may do so before the High
Court.
77. In view of the aforesaid discussion the challenge to
the constitutional validity as also the right of the
authorised officers under the Customs Act and the
GST Acts to arrest are rejected and dismissed with
elucidation and clarification on the pre-conditions and
when and how the power of arrest is to be exercised.”
6. Thus, the Supreme Court speaking through Hon’ble Justice Sanjiv
Khanna and Hon’ble Justice M. Sundresh has clearly held that the Parliament
has the legislative competence to enact the provisions under Section 69 and 70
of the CGST Act.
7. It would also be relevant to note that in a concurring judgment by
Hon’ble Ms. Justice Bela M. Trivedi, it has also been observed as under:
“12. It is pertinent to note that the Special Acts are
enacted to achieve specific purposes and objectives. The
power of judicial review in cases of arrest under such
Special Acts should be exercised very cautiously and in
rare circumstances to balance individual liberty with
the interest of justice and of the society at large. Any
liberal approach in construing the stringent provisions
of the Special Acts may frustrate the very purpose and
objective of the Acts. It hardly needs to be stated that theW.P.(C) 5454/2020 & connected matters Page 11 of 13
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offences under the PMLA or the Customs Act or FERA
are the offences of very serious nature affecting the
financial systems and in turn the sovereignty and
integrity of the nation. The provisions contained in the
said Acts therefore must be construed in the manner
which would enhance the objectives of the Acts, and not
frustrate the same. Frequent or casual interference of
the courts in the functioning of the authorized officers
who have been specially conferred with the powers to
combat the serious crimes, may embolden the
unscrupulous elements to commit such crimes and may
not do justice to the victims, who in such cases would be
the society at large and the nation itself. With the
advancement in Technology, the very nature of crimes
has become more and more intricate and complicated.
Hence, minor procedural lapse on the part of authorized
officers may not be seen with magnifying glass by the
courts in exercise of the powers of judicial review, which
may ultimately end up granting undue advantage or
benefit to the person accused of very serious offences
under the special Acts. Such offences are against the
society and against the nation at large, and cannot be
compared with the ordinary offences committed against
an individual, nor the accused in such cases be
compared with the accused of ordinary crimes.
13. Though, the power of judicial review keeps a check
and balance on the functioning of the public authorities
and is exercised for better and more efficient and
informed exercise of their powers, such power has to be
exercised very cautiously keeping in mind that such
exercise of power of judicial review may not lead to
judicial overreach, undermining the powers of the
statutory authorities. To sum up, the powers of judicial
review may not be exercised unless there is manifest
arbitrariness or gross violation or non-compliance of
the statutory safeguards provided under the special
Acts, required to be followed by the authorized officersW.P.(C) 5454/2020 & connected matters Page 12 of 13
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when an arrest is made of a person prima facie guilty of
or having committed offence under the special Act.”
8. In view of the above judgment of the Supreme Court, the challenges
raised in present petitions no longer require adjudication. None of the other
reliefs sought in these writ petitions are pressed. Accordingly, these writ
petitions are disposed of in the above terms. All pending applications, if any,
are also disposed of.
PRATHIBA M. SINGH, J.
SHAIL JAIN, J.
AUGUST 11, 2025
Rahul/msh
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