HC can't grant relief if anticipatory bail plea premature: Supreme Court overturns relief to Sunil Biyani

The Supreme Court on Wednesday set aside a Bombay High Court ruling protecting Future Group’s non-executive director Sunil Biyani from arrest in a ₹1,200-crore Goods and Services Tax (GST) scam [Union of India v. Sunil Biyani].

Notably, the High Court had granted this protection even though it held that Biyani's anticipatory bail application in the matter was premature, since the GST authorities had not passed any order under Section 69 (power to arrest) of the Central Goods and Services Tax Act.

In its February ruling, the High Court had directed that if any such order for Biyani's arrest is issued by the GST authorities, he should not be arrested for a week from the date of intimation of such order.

The Central government challenged this ruling before the Supreme Court.

It questioned whether High Courts possess inherent jurisdiction to grant interim protection from arrest to a litigant after holding that their anticipatory bail petition is premature and unmaintainable.

A Bench of Justices Dipankar Datta and Sheel Nagu today ruled that the manner in which protection from arrest was given by the High Court was impermissible.

"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 maybe passed), saying that it is not permissible in law," said the Bench.

However, the Court cautioned that the GST authorities must communicate arrest orders clearly, so that anyone facing apprehensions of arrest in GST cases can ascertain which legal remedies they would want to avail.

"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 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 top court said.

A detailed copy of the judgment is awaited.

The matter arose from a summons issued by the Directorate General of GST Intelligence (DGGI) to Future Group’s non-executive director Sunil Biyani.

The underlying probe pertained to a large-scale fake invoicing and circular input tax credit racket with a total GST implication of over ₹200 crores.

The DGCI claimed that although invoices and input tax credit existed on paper, they were not tied to any real business activity.

The DGCI added that the case also involves ₹1208.77 crore in foreign remittances, on which about ₹217.57 crores GST appears payable as well as about ₹50 crore of ineligible input tax credit. 

About ₹664.70 crore of these remittances allegedly moved through Alphaneon Studioz and Pindflix Entertainment where the Biyani was a director. 

According to DGCI, Alphaneon alone is said to have availed ineligible input tax credit of about ₹20 crores on the strength of invoices of the suppliers who were later found to be non-existent or not operating from their registered premises. 

They argued that the magnitude of the alleged evasion, layered transactions and electronic evidence makes the custodial interrogation indispensable. 

Biyani’s plea before the Bombay High Court for pre-arrest bail stressed that he had tendered his resignation from the relevant company in July 2023 via email.

As per his plea, he was falsely implicated through fraudulent company filings by Alphaneon.

He denied any role in the alleged fraud claiming that he had been dragged into the investigation despite offering to co-operate and respond in writing to the summons.