Supreme Court Declines to Interfere in Chinese National’s Arrest, Advises Bail Route Under GST Case.


22 September 2025 GST >> Tax Laws  

The Supreme Court on September 22, 2025 heard a petition moved by Xu Xunfu, a Chinese citizen, who objected to her arrest under the Goods and Services Tax (GST) regime. The case is important because it involves questions of arrest procedure, liberty of the person under Article 21 of the Constitution, and the applicability of bail principles in fiscal offenses.

Xu, who was taken into judicial custody since 26 August 2025, moved the top court under Article 32, and prayed to have her arrest invalidated. She contended, in her advocate, that the modus operandi of arrest was against the protections enumerated in previous judgments, specifically Arnesh Kumar v. State of Bihar (2014). It was argued that the reasons for arrest presented to her were insufficient, and keeping her detained without a complaint being registered was not fair.


 

 
 
 

On behalf of the Union of India, Additional Solicitor General Aishwarya Bhati argued that the arrest was valid and connected with an investigation by the Anti-Evasion Wing of the CGST ongoing against a firm called Tantech LED Display Pvt. Ltd. The department said searches had yielded prima facie evidence of tax evasion, in which the petitioner's involvement had emerged.

The bench of Justices J.B. Pardiwala and K.V. Viswanathan went through the facts with great caution and refused to hold that the arrest per se was illegal. Though keeping in view the petitioner's contention of personal liberty under Article 21, the Court remarked that the investigation was at its nascent stage and that there was some prima facie material against her.

Importantly, the Supreme Court clarified that its refusal to interfere did not prevent the petitioner from seeking bail before the trial court. In fact, the bench encouraged Xu to immediately move a bail application, directing that the concerned court must decide it expeditiously, strictly on merits, and uninfluenced by the apex court’s observations in this writ petition.
With this clarification, the writ petition was disposed of.

Practical Legal Takeaways:

  • Arrest under GST act: Arrest under CGST Act in case of serious evasion of tax is allowed under Section 69, but such a power needs to hold scrutiny in the light of Article 21.
  • Article 21 to apply for foreign nationals: Although Xu is a Chinese national, the Court reiterated that any foreign national, who is arrested in India, would be eligible for protection under Article 21.
  • Bail is the proper course: The Court indicated that though it would not invalidate the arrest under Article 32, the petitioner ought to seek bail. This enforces the general rule that ordinary criminal procedure remedies, such as bail and anticipatory bail, are still the right course of action once custody is initiated.
  • Speedy bail consideration: The Court instructed lower courts that bail had to be considered speedily and on established principles, especially where freedom is involved.