Supreme Court Overturns Bombay High Court’s Premature Bail Protection
The Supreme Court of India recently annulled a decision by the Bombay High Court which had temporarily shielded Sunil Biyani, a non-executive director at Future Group, from arrest. The case revolves around a ₹1,200-crore Goods and Services Tax (GST) evasion scheme [Union of India v. Sunil Biyani]. The High Court had earlier deemed Biyani’s plea for anticipatory bail as premature, as no arrest order had been issued under Section 69 of the Central Goods and Services Tax Act by the GST authorities.
High Court’s Premature Protection Overturned
In February, the Bombay High Court ruled that if an arrest order were to be issued, Biyani should not be detained for a week following the intimation of such an order. This provision was challenged by the Central Government, raising questions about the High Court’s authority to grant interim protection when a bail plea is deemed premature and unmaintainable.
A Supreme Court bench comprising Justices Dipankar Datta and Sheel Nagu concluded that the High Court’s method of offering arrest protection was legally impermissible. The bench stated, “We have set aside the direction contained in para 6 (giving interim protection for a week from the date on which any future arrest order may be passed), saying that it is not permissible in law.”
Guidance on Communication of Arrest Orders
While overturning the High Court’s directive, the Supreme Court emphasized the importance of clear communication of arrest orders by GST authorities. This would allow individuals apprehensive about arrest in GST cases to determine their legal options effectively. “But to ensure that anyone facing apprehension of arrest is not placed in a position of irreparable damage, section 69 order has to be communicated. And in terms of the rules framed under the CGST act, every dealer has to provide his email address. So therefore the notice can be communicated to their email address. Appeal stands disposed of on the aforesaid terms,” the Court observed.
Background of the GST Investigation
The case originated from a summons issued by the Directorate General of GST Intelligence (DGGI) to Biyani concerning a significant fake invoicing and circular input tax credit fraud. This scheme purportedly involves a GST liability exceeding ₹200 crores, with allegations of non-existent business activities behind the claimed invoices and input tax credits.
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The DGGI’s investigation further highlighted foreign remittances amounting to ₹1208.77 crore, with approximately ₹217.57 crores in GST obligations, along with around ₹50 crores of ineligible input tax credit. Companies like Alphaneon Studioz and Pindflix Entertainment, where Biyani was a director, were allegedly involved in these transactions, with Alphaneon alone accused of availing ₹20 crores of ineligible input tax credit based on fictitious supplier invoices.
Biyani, in his defense before the Bombay High Court, argued for pre-arrest bail by asserting his resignation from the implicated companies in July 2023 via email. He maintained his innocence, claiming that fraudulent company filings by Alphaneon led to his unwarranted involvement in the investigation, despite his willingness to cooperate and provide written responses to the DGGI’s summons.
