The Supreme Court has upheld the constitutional validity of GST Arrest Provisions and held that BNSS/CrPC Protections for Arrested Persons Apply to GST & Customs Acts.
The bench, comprising Chief Justice of India Sanjiv Khanna and Justices MM Sundresh and Bela M Trivedi, underscored that GST officials must strictly adhere to departmental circulars regarding arrests. The Court also dismissed the argument that customs officers function as police officers.
The bench clarified that the powers of arrest under the Goods and Services Tax (GST) Act and the Customs Act. The Court ruled that the rights of accused persons, as outlined in the Code of Criminal Procedure (now Bharatiya Nagarik Suraksha Sanhita), are equally applicable to arrests made under both the Customs Act and the GST Act.
Drawing parallels to the Prevention of Money Laundering Act (PMLA), the Court emphasized that arrests under these tax laws must be based on “reasons to believe,” not mere suspicion. This principle aligns with the Court’s earlier stance in the Arvind Kejriwal case concerning the PMLA.
The Court noted the similarity between Section 19(1) of the PMLA and Section 104 of the Customs Act, both pertaining to arrest powers, and extended this reasoning to the GST Act.
Significantly, the Court affirmed that anticipatory bail provisions are applicable under both the GST and Customs Acts. Individuals apprehending arrest can seek relief from the courts even before an FIR is registered.
Addressing concerns of coercion and harassment by tax officials, Chief Justice Khanna stated, “We have commented on the basis of data with regard to allegations that there was force and coercion in the payment of taxes. We have said that there may be some merit in it. Wherever a person is disposed to pay, he can go to the writ court and get an order. And the officers will have to be dealt with departmentally also. This is contrary to the law.”
The judgment responded to a series of 279 petitions challenging the penal provisions in the Customs Act and CGST/SGST Acts, arguing their incompatibility with the CrPC and the Constitution. Justice Trivedi, in a concurring opinion, elaborated on the scope of judicial review concerning these matters.
During the hearings, the bench made several key observations:
- No Private Complaints: Under the GST Act, private complaints are not permissible.
- Arrests Require Verifiable Material: Arrests should not be based on mere suspicion; GST and Customs officers must possess certifiable material prior to making an arrest, which can be verified by a Magistrate.
- Legislative Amendments: Recent amendments have partially modified the precedent set in Om Prakash v. Union of India (2011) but have not entirely overruled it.
- Protection Against Harassment: Citizens should not face harassment due to ambiguities in arrest provisions.
The Court expressed concerns about the ambiguity in Section 69 of the GST Act, which deals with arrest powers, and indicated its intent to interpret the law in a manner that upholds individual liberty and prevents undue harassment.
This ruling aims to balance the enforcement powers of tax authorities with the protection of individual rights, ensuring that arrests under the GST and Customs laws are conducted lawfully and justly.
Case Title: Radhika Agarwal v. Union of India and Ors., W.P.(Crl.) No. 336/2018 (and connected matters)
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