CGST Tax Evasion Case: SC Declines to Quash Chinese National’s Arrest, Directs Bail Plea to Trial Court

The petitioner, who has been in judicial custody since her arrest on August 26, 2025, alleged that her detention violated Article 21 of the Constitution, claiming it was arbitrary and unlawful.

The petitioner, who is a mother of a three-year-old child, contended that although she is a foreign national, she is entitled to constitutional protection under Article 21 as she was arrested on Indian soil. She maintained that the grounds cited in the arrest memo issued under Section 69 of the CGST Act, 2017, were inadequate and amounted to a mere formality.

Her counsel argued that the arrest contravened the principles established by the Supreme Court in Arnesh Kumar vs. State of Bihar & Anr. (2014) 8 SCC 273, which cautions against arrest without sufficient justification in cases involving non-violent offences.

The Court, however, observed that it could not conclusively hold the arrest to be illegal at this stage.

The Court noted that the petitioner had yet to apply for bail before the competent court, and that the investigation was still at an early stage. It acknowledged the submissions of the Additional Solicitor General (ASG) Aishwarya Bhati, who represented the Union of India and highlighted that the arrest was based on prima facie material collected during the ongoing investigation.

The investigation pertains to alleged tax evasion by M/s. Tantech LED Display Pvt. Limited, a company under scrutiny by the Anti-Evasion Wing of the CGST, Gautam Buddha Nagar. A search was conducted at the company’s undeclared premises on May 22, 2025, during which the petitioner’s role allegedly surfaced. The arrest memo and subsequent orders by the CGST Commissioner identified her as a person of interest in connection with the alleged tax violations.

While the Court refrained from commenting on the merits of the investigation or the allegations of tax evasion, it emphasised that the petitioner must file her bail application before the appropriate court.

The Bench directed that once such an application is filed, the concerned court shall consider it expeditiously, strictly on its merits, and in accordance with settled legal principles, without being influenced by the Supreme Court’s refusal to entertain the Article 32 petition.

“Once any bail application is filed, the court concerned shall look into it expeditiously on its own merits in accordance with law, without being influenced in any way by the fact that this Court declined to entertain the Article 32 petition. It is needless to clarify that the bail application of the petitioner shall be decided strictly applying the very settled principles of grant of bail. If any such application is filed, the Court concerned shall look into it at the earliest and pass an appropriate order on its own merits in accordance with law,” the Court noted in its order.

With these directions, the Court disposed of the writ petition as well as all pending applications related to the matter.