The Punjab and Haryana High Court on Friday directed the Chief Judicial Magistrate of Ludhiana to immediately release a trader arrested by Central GST authorities on Thursday in connection with an investigation into a tax matter [Kuldeep Goyal v Union of India and Others]

A Bench of Chief Justice Ashwani Kumar Mishra and Justice Rohit Kapoor noted that the GST authorities had manipulated records and ignored ongoing court proceedings related to the matter when arresting Kuldeep Goyal, who runs a firm namely Ansh Steel Alloys.

"We find the action of the respondents-department to be a brazen act of highhandedness where the constitutional safeguards available to a citizen have not been adhered to," the Court observed.

The Court said it intends to recommend disciplinary proceedings against Sugrive Meena, Principal Commissioner of CGST, Commissionerate, Ludhiana and Mohmad Saleem, SIO of CGST, Commissionerate, Ludhiana.

Accordingly, it issued notices to both the officers, asking them to explain their conduct and to clarify why appropriate action be not recommended against them.

The order was passed on a petition moved by Goyal to quash the arrest memo and authorization for arrest against him.

The case is connected to an earlier petition moved by Goyal's firm, which has accused of fraudulently availing Input Tax Credit (ITC) to the tune of ₹35 crores by generating fake invoices and by onwarding of credit to various recipients.

Ansh Steel Alloys had filed a petition before the Court in May challenging the attachment of its bank account without issuance of a show cause notice. In response, the GST authorities said Goyal was not cooperating with the investigation.

However, Goyal's counsel told the Court that all documents demanded by the authorities were furnished to them and he has appeared before them on several occasions.

On September 22, the counsel representing him told the Court that he would again appear before the Adjudicating Authority at 11 am on September 23.

The Court then listed Ansh Steel Alloys's matter for consideration on September 29 with a direction asking the revenue department to inform it about the status of the matter.

The case took a turn on September 23 when the GST authorities issued summons to Goyal and arrested him for giving evasive responses. This led to the filing of a separate petition to challenge his arrest.

On September 25, counsel representing Goyal submitted that he was illegally detained by authorities since 11 am on September 23 and shown to be arrested at 4:45 am on September 24. The actions were taken without any reference to the pending court proceedings, it was submitted.

During the hearing of the petition on Friday morning, the Court noted that Goyal was issued summons at 12:05 am under Section 70 of the Central Goods and Service Tax Act - requiring to him remain present on the same day - despite the fact that in accordance with the court order he was already there since 11 am.

The counsel representing the GST authorities said there was no stay on Goyal's arrest and his anticipatory bail was already rejected. He was arrested to prevent him any from committing any further offence, and to preserve evidence.

However, the Court was not impressed with the submission, considering that it was seized of the matter.

"The least that was expected on the part of the authorities was to have apprised the Court of any development and to proceed against the petitioner with the leave of the Court particularly when the matter was pending consideration and was specifically listed for 29.09.2026 for the authorities to report the status of the investigation. The undue hot haste which has been shown in detaining the petitioner at 11:00 am on 23.09.2026 and arrested him on the next date at 4:45 in the morning, prima-facie, indicates brazen violation of Article 21 of the Constitution of India," the Court said.

The Bench added that the approach of the authorities prima facie amounted to overreaching the pending proceedings before the Court. It then summoned the officer who authorized the arrest as well as the officer who made the arrest.

In the afternoon session when the officers were present, the Court observed that they had shown scant record for the judicial proceedings. It also found that there was a manipulation of records related to the summons.

"Prima-facie we find manipulation in the summons issued where the DIN is generated at 12:07 pm while the summons containing reference of such DIN mention the time of appearance as 12:05 pm. If the time for appearance was 12:05 pm, then the DIN ought to have been issued sometime prior to 12:05 pm," the Bench said.

The Court added that the reasons for authorizing the petitioner's arrest were wholly misplaced as Goyal was already present before the authorities with all the records and was willing to cooperate with the investigation.

It found that the authorization for arrest did not refer to the orders passed by the court nor the fact that he had already appeared before the authorities to facilitate the investigation.

"The routine manner in which the authorization to arrest the petitioner is issued by the department leaves much to be desired. We, otherwise, find the action of the respondents to be an attempt to overreaching the proceedings of the Court," the Court said.

Considering the facts, the Court ordered Goyal's release. However, it also said that the release was only an interim measure. The matter will be heard next on September 29.

Senior Advocate NS Boparai with Advocates JS Bedi, Aakriti and Umang Goyal represented the petitioner.

Senior Standing Counsel Naman Jain represented the revenue.

Senior Standing Counsel Sourabh Goel with Advocate Himanshi Gautam represented other respondents.

[Read Order]