GST UPDATE

Hon’ble Court: Rajasthan High Court, Jaipur Bench
Case Title: Pramod Chandra Navik So Shri Phool Chand vs Union of India
Citation: CRLMB / 24126U / 2026

Hon’ble Judge(s)	HON'BLE MR. JUSTICE BIPIN GUPTA
Date of Order	24.08.2026
Outcome	Pending

Brief Facts of the Case

The case arose out of an investigation concerning an alleged Input Tax Credit (ITC) fraud. The petitioner, Pramod Chandra Navik, had earlier been a Director of the concerned company. The petitioner submitted that he had resigned as a director on 12.07.2024, and the resignation was uploaded on the ROC and GST portal on the same day. He had also transferred all his shares and had no relationship with the company after 17.07.2024. The alleged bogus firms and transactions, according to the petitioner, pertained only to the period from October 2025 onwards and therefore had no factual or chronological nexus with him. The petitioner was summoned under Section 70 of the CGST Act in connection with the investigation and appeared through his authorised counsel on 19.06.2026, seeking two weeks’ time and communicating the same by email along with his vakalatnama. He was neither arrayed as an accused nor made a noticee in any show-cause notice. Aggrieved by the proceedings and the apprehension of arrest in connection with Criminal Case, he approached the Rajasthan High Court, Bench at Jaipur, by filing S.B. Criminal Miscellaneous Bail Application seeking protection from arrest.

Relevant Section

Section 69,132,122(1A), 137 of the CGST Act, 2017

Question before Hon’ble Court

Whether a former director could be subjected to arrest and custodial interrogation in connection with alleged bogus firms and fraudulent GST/ITC transactions that occurred substantially after he had resigned from the company?

Brief Arguments by Petitioner

Petitioner Not Arrayed as Accused or Noticee

The learned counsel for the petitioner submits that the petitioner has neither been arrayed as an accused nor made a noticee in any show-cause notice and was summoned only under Section 70 of the CGST Act. The case is based entirely on documentary and digital evidence, including invoices, e-way bills, banking records and GST portal data, all of which are already in the possession of the investigating agency. Hence, custodial interrogation is neither necessary nor warranted.

Resignation Prior to the Alleged Transactions

The petitioner had resigned as Director of the company much before the allegations of bogus transactions therefore no liability can be fastened upon him under Section 137 of the CGST Act, which requires the person concerned to have been in charge of and responsible for the conduct of the company’s business at the relevant time. Reliance is placed on Harshendra Kumar D. v. Rebatilata Koley, (2011) 3 SCC 351, wherein the Hon’ble Supreme Court recognised that a director who had resigned prior to the alleged acts of the company cannot be held liable for subsequent acts.

Provisions Invoked Are Sections 122(1A) and 137, Not Section 132

It was submitted that the provisions invoked are Sections 122(1A) and 137 of the CGST Act, and not Section 132 of the CGST Act. Section 122(1A) of the CGST Act concerns penalty, while Section 137 of the CGST Act is an attributive liability provision and does not itself create an offence.

Arrest Under Section 69 Cannot Be Mechanically Exercised

It is therefore submitted that the power of arrest under Section 69 of the CGST Act cannot be mechanically exercised in the absence of an offence falling within Section 132 of the CGST Act.

Cooperation With Investigation and No Requirement of Custodial Interrogation

It was submitted that the petitioner shall cooperate with the investigation, and not tamper with evidence or influence any witness. In view of the documentary nature of the evidence, the petitioner’s arrest and custodial interrogation would serve no useful purpose.

Main Accused Already Granted Regular Bail

The learned counsel for the petitioner further submits that the main accused, has already been enlarged on regular bail by the learned Trial Court.

Brief Arguments by Respondent

Learned Council for Respondent seeks time to file a reply to the queries raised and reply to bail application.

Cases Relied Upon

Case Law	Citation
Harshendra Kumar D. v. Rebatilata Koley	(2011) 3 SCC 351

Findings and Judgement

The High Court adopted a balanced approach. It permitted the petitioner to appear before the Investigating Officer and directed that the Investigating Officer could interrogate him in accordance with the notice issued to him. However, the Court specifically directed that the petitioner shall not be arrested in connection with Criminal Case. Thus, the protection granted was essentially interim protection from arrest coupled with an obligation to cooperate with investigation.
Accordingly, the matter was consequently adjourned for one week.

CA Pradeep Jain_

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GST update /2026-27/0082

GST UPDATE

Brief Facts of the Case

Relevant Section

Question before Hon’ble Court

Brief Arguments by Petitioner

Brief Arguments by Respondent

Cases Relied Upon

Findings and Judgement

CA Pradeep Jain_

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