Gauhati High Court Grants Bail to Dealer in Rs 15 Crore GST Evasion Case
The Gauhati High Court has recently granted bail to a businessman in a GST evasion case, as the arrest did not follow the legal procedure under the BNSS, 2023 and also violated Supreme Court guidelines on arrest for offences punishable up to 7 years.
The GST authority had conducted a search at the premises of M/s Balaji Steel Rolling Mills and M/s Balaji on May 19, 2023, where the applicant, Mukesh Agarwal, was a partner. The accountant admitted the clandestine supply of goods worth Rs 11.46 Crores by M/s Balaji Concast and goods worth Rs 23.66 Crores by M/s Balaji Steel Rolling Mill during April 2022 to May 2023. It was revealed that the applicant had illegally supplied goods, resulting in a GST evasion of Rs 15.25 Crores.
The applicant also agreed with these statements confessed by the accountant and also admitted a tax liability of Rs 1.74 crores of M/s Balaji Concast and Rs 3.64 Crores of M/s Balaji Steel Rolling Mills. The DGGI, Gauhati, summoned him many times under Section 70 of the CGST Act, 2017, but the applicant did not appear in person. He replied to the summons by issuing communications. Therefore, the DGGI issued an Authorisation of Arrest (Reason to Believe), and he was later arrested on 15 October 2025 for alleged GST evasion of about Rs 15.25 crores over four years (From FY 2019-20 to 2022-23).
However, the court noted that the GST authority had not issued the mandatory separate notices under Section 35(3) of the BNSS, 2023, to the applicant. The court cited the Supreme Court judgement in the case of Arnesh Kumar (Supra), which laid down some guidelines that need to be followed before arresting a person, which involves imprisonment of up to 7 years or less than 7 years for the offence.
In the current case, the court noted that there was non-compliance with Section 35(3) BNSS, which is mandatory as per the guidelines of the Supreme Court. Therefore, the court granted bail to the applicant and directed the applicant to:
- Furnish a bond of Rs 1,00,000 with two sureties
- Appear before DGGI by 3 November 2025 to record his statement.
- Appear before the Investigating Officer whenever required.
- Not to threaten or make an inducement or promise to any person to stop them from disclosing the facts.
- Provide contact details and do not leave the jurisdiction without permission.
- Not to commit any offence while he is on bail.
Case Citation: Shri Mukesh Agarwal vs The Union of India and 2 Ors. (Gauhati HC); Bail Appln./3440/2025; 24/10/2025
