The Allahabad High Court has allowed a habeas corpus petition, holding that the arrest, remand and detention of a petitioner under the Health Security Se National Security Cess Act, 2025 were not in accordance with law and directing his immediate release.

The Court noted that the object of the Act is "to augment the resources for meeting expenditure on national security and for public health and to levy a cess for the said purposes on the machines installed or other processes undertaken by which specified goods are manufactured or produced and for matters connected therewith or incidental thereto."

A Division Bench of Justice Siddharth and Justice Vinai Kumar Dwivedi observed, "the provision regarding the arrest under the B.N.S.S shall apply to the present case provided under Section 35 to Section 62 of B.N.S.S. Section 35 of B.N.S.S provides that police can arrest individuals without order of Magistrate for cognizable offences carrying punishment about 7 years. For offences carrying under 7 years of imprisonment, the police is required to record reasons justified why the arrest is absolutely necessary to prevent tampering with the evidence or for ensuring appearance in court."

The Court held, "The remand order has been passed by the Remand Magistrate without application of mind. The condition stipulated under Section 41-A of Cr.P.C./35(3) of B.N.S.S were violated in this case. Hence, the arrest of petitioner is absolutely illegal. He may be directed to be set free."

Advocate Ayank Mishra appeared for the Petitioner and GA Dhananjay Awasthi appeared for the Respondents.

The Bench observed that the cess under the Act is "in addition to any other duties or taxes chargeable on the specified goods." It further remarked that "apart from the taxes being leveled against the businessmen / business concerns, this is an additional cess imposed for meeting the expenditure on National Security and Public Health."

The Court recorded that the Act creates a comprehensive framework for levy and collection of monthly cess, registration of taxable persons, filing of returns, audit, assessment, inspection, search and seizure, confiscation, penalties and prosecution. The Court noted that the Act requires taxable persons to pay cess every month by the 7th day, provides for audit and assessment before determination of dues, and also prescribes criminal liability under Chapter VI and civil liability under Chapter V.

Referring to the penal provisions, the Bench observed that offences involving evasion of cess beyond the prescribed thresholds are punishable with imprisonment of up to five years, while the Act also contains provisions for compounding of offences under Section 23.

In the case before it, the respondents alleged evasion of government revenue of Rs. 17.88 crore through clandestine manufacture of tobacco and pan masala products in undeclared packing machines.

However, the High Court found procedural deficiencies in the arrest process under Section 26 of the Act. According to the judgment, while the respondents furnished the arrest memo along with the grounds of arrest, "copy of the arrest memo appears to have been furnished only to the corpus and not to any of his family members or to any person nominated by him."

The Court further observed that the arrest memo did not disclose the name of the person informed about the arrest and that all witnesses mentioned in the memo appeared to be strangers to the petitioner.

Significantly, the Bench noted that although the petitioner was arrested during the night of May 22, 2026, "the letter authorising the arrest... was issued by the Commissioner... only on 23.05.2026." The Court observed that the authorisation for arrest was issued subsequent to the arrest of the petitioner on 22.05.2026.

The Court noted that the arrest memo did not contain any recital indicating that the petitioner had been informed of his right to avail legal assistance from an advocate of his choice.

Examining the scheme of the National Security Cess law, the Bench observed that "the maximum punishment to be awarded to an accused is 5 years only or fine or both. Further there is also option of compounding of the offences under Section 23 of the Act."

The Court also noted that the alleged evasion of Rs. 17.88 crore was "not based on any audit and assessment under Chapter V of the Act."

Holding that the statutory safeguards governing arrest had not been complied with, the Bench concluded that the arrest, remand and detention of petitioner do not seem to be in accordance with law and are hereby set aside.

Cause Title: Sanchit Seth v. Commissioner Of Cgst And Central Excise & Ors., [2026:AHC:146504-DB]

Appearance:

Petitioner: Advocates Ayank Mishra, Rajesh Chhibber and Amit Singh

Respondents: ASG Shashi Prakash Singh, Advocates Dhananjay Awasthi and Gopi Krishna Sood

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