The Allahabad High Court has rejected the anticipatory bail application of Devid Babu Gupta, brother of arrested co-accused Manish Kumar, proprietor of M/s Kamadgiri Products, in a DGGI case involving alleged clandestine manufacture and clearance of Pan Masala, Zarda Scented Tobacco and Desi Dohra without payment of GST, HSN Cess and Central Excise duty. The Court held that the mere issuance of summons under Section 70 of the CGST Act does not, by itself, establish that the person summoned is under arrest or that an order of arrest has been passed.
The Court also held that the absence of a formal arrest order cannot be treated as an absolute bar to the maintainability of an anticipatory bail application where a real, genuine and reasonable apprehension of arrest is demonstrated. The Court placed reliance on the Supreme Court’s decision in Radhika Agarwal v. Union of India [(2025) 6 SCC 545], to observe that a person summoned under Section 70 of the CGST Act does not, merely by reason of such summons, acquire the status of an accused entitled to the protection under Article 20(3) of the Constitution.
The Court clarified that the existence of an apprehension of arrest is only a condition for invoking the jurisdiction and is not, by itself, a sufficient ground for granting anticipatory bail, and the Court is required to balance personal liberty against the legitimate requirement of investigation, particularly in complex economic offences involving substantial revenue evasion. Accordingly, the Court held that the applicant had failed to make out a case for anticipatory bail, having regard to the nature and gravity of the allegations, the magnitude of the alleged revenue evasion of more than Rs. 186.62 crores, the stage of investigation, the material already collected, the arrest of the co-accused, the alleged non-cooperation of the applicant despite repeated summons.
A Single Judge Bench of Justice Rajeev Bharti noted that Section 69 of the CGST Act deals with the power of arrest, while Section 70 confers upon the proper officer the power to summon any person whose attendance is considered necessary either to give evidence or to produce a document or any other thing in an inquiry. The mere issuance of summons under Section 70 of the CGST Act, by itself, does not establish that the person summoned is under arrest or that an order of arrest has already been passed against him. At the same time, the absence of an existing order of arrest cannot be treated as an absolute bar to the exercise of the jurisdiction for anticipatory bail where the applicant is able to demonstrate a real, genuine and reasonable apprehension of arrest founded upon the facts and circumstances of the particular case.
The Court further observed that the present case stands on a somewhat different footing because the investigation concerns an alleged clandestine manufacturing and clearance operation involving substantial revenue implications, searches have already been conducted at several premises, machinery and other material have already been seized, the alleged revenue evasion has been quantified at more than Rs. 186.62 crores, and the co-accused connected with the alleged activity has already been arrested.
The Court also noted that the existence of an apprehension of arrest is a condition for invoking the jurisdiction, but it is not, by itself, a sufficient ground for granting anticipatory bail, and the Court is required to consider the nature and gravity of the allegations, the material collected during investigation, the role attributed to the applicant, the stage and requirement of investigation, the possibility of the applicant influencing witnesses or tampering with evidence and, where relevant, the necessity of custodial interrogation.
The Court further observed that the applicant’s undertaking to cooperate with the investigation is undoubtedly a relevant circumstance, but such an undertaking cannot, by itself, foreclose the investigating agency’s statutory authority to undertake interrogation in accordance with law wherever such interrogation is found necessary for fair and effective investigation. The Court placed reliance on the decision of the Supreme Court in C.B.I. v. Anil Sharma [(1997) 7 SCC 187], which observed that custodial interrogation is qualitatively more elicitation-oriented than questioning a suspect who is well ensconced with a favourable order under Section 438 of the Code, and that effective interrogation of a suspected person is of tremendous advantage in disinterring much useful information and also materials which would have been concealed.
Briefly, the applicant, Devid Babu Gupta had sought anticipatory bail in connection with DGGI case arising under Sections 19/26 of the Health Security and National Security Cess Act, 2025, Sections 9, 9A and 13 of the Central Excise Act, and Section 70 and allied provisions of the Central Goods and Services Tax Act, 2017, District Lucknow. The prosecution case was that Manish Kumar, proprietor of M/s Kamadgiri Products, was allegedly running a clandestine manufacturing network for Pan Masala, Zarda Scented Tobacco and Desi Dohra without paying applicable GST, HSN Cess and Central Excise duty.
Acting on specific intelligence, the DGGI Lucknow Zonal Unit carried out searches at seven premises on 18.08.2026 and allegedly recovered and seized 27 undeclared FFS pouch-packing machines from three unregistered manufacturing units, along with raw materials, packaging material, invoices and finished products. The alleged revenue evasion was quantified at more than Rs. 186.62 crores, apart from further GST liability.
In his statement under Section 70 of the CGST Act, Manish Kumar allegedly admitted to clandestine manufacture and clearance using the said machines, and his involvement was allegedly corroborated by statements of machine operator Ram Lakhan, contractor Arvind Kumar and employee Rakesh Kumar, who attributed the operation, supply of raw materials and management of the units to Manish Kumar and his brother David (the applicant). The applicant was summoned on several occasions, but according to the Department, he did not cooperate with the investigation despite repeated summons.
