This Supreme Court ruling strengthens legal protections for individuals facing arrest under the GST and Customs Acts. By extending CrPC safeguards to these laws, the Court ensures that tax enforcement authorities follow due process and refrain from arbitrary arrests.
The Supreme Court of India delivered a landmark judgment on February 27, addressing the applicability of the Code of Criminal Procedure (CrPC), now known as the Bharatiya Nagarik Suraksha Sanhita (BNSS), to arrests made under the Goods and Services Tax (GST) Act and the Customs Act. The ruling reinforces the legal safeguards for accused individuals and mandates strict adherence to procedural guidelines.
Key Highlights of the Judgment
- Applicability of CrPC Provisions to GST and Customs Arrests
- The Supreme Court ruled that the rights of accused persons under the CrPC apply equally to arrests made under the GST Act and the Customs Act.
- The Court emphasized that officers must adhere to procedural requirements outlined in Section 41-B of CrPC, which mandates that arresting officers display their names for easy identification.
- Section 41-D of CrPC, which grants arrested individuals the right to consult an advocate during interrogation, applies to Customs Act violations as well.
- Section 50A CrPC, requiring officials to inform a nominated person of the arrestee’s whereabouts, must be followed by Customs officers.
- Section 55A CrPC, ensuring the safety and health of arrested persons, is applicable to GST and Customs-related arrests.
- Arvind Kejriwal Judgment Extended to GST and Customs Arrests
- The ruling references the Supreme Court’s judgment in the Arvind Kejriwal case, which mandates that arrests under the Prevention of Money Laundering Act (PMLA) must be based on “reasons to believe.”
- The Court found that Section 19(1) of the PMLA and Section 104 of the Customs Act have similar provisions regarding arrest powers, thereby extending the principles of the Arvind Kejriwal case to GST and Customs arrests.
- Anticipatory Bail Applicable to GST and Customs Acts
- The Supreme Court clarified that anticipatory bail provisions are applicable to both the GST Act and the Customs Act.
- Individuals fearing arrest under these acts can seek relief from the courts even in the absence of a First Information Report (FIR).
- GST Department Circulars on Arrest Must Be Followed
- The Court ruled that circulars issued by the GST department concerning arrests must be strictly adhered to.
- The Court rejected the contention that Customs officers should be considered police officers, thereby limiting their authority in criminal procedures.
- Concerns Over Coercion and Harassment by Tax Officials
- The Court acknowledged allegations of coercion and harassment by tax authorities during tax recovery procedures.
- Chief Justice of India (CJI) Sanjiv Khanna emphasized that individuals coerced into tax payments can seek redress through writ petitions.
- The Court referenced the Nandini Satpathy case, reinforcing legal protections against coercive practices.
Also Read: Guidelines for Arrest and Bail under the CGST Act 2017
Judicial Observations on Arrest Powers
Judgment by Chief Justice of India Sanjiv Khanna
- The GST Acts are not a “complete code” regarding search, seizure, and arrest, necessitating the application of CrPC provisions where the GST Acts remain silent.
- The Court highlighted ambiguity in Section 69 of the GST Act and affirmed that laws should be interpreted to uphold individual liberties while preventing harassment.
- The distinction between the “power to arrest” and the “necessity of arrest” was underscored, emphasizing that an arrest should not be the default approach in investigations.
Also Read: Supreme Court Upholds Constitutionality Of GST Act Provisions On Arrest & Summons
Concurring Judgment by Justice Bela Trivedi
- Judicial intervention in arrests under special acts should be exercised in rare and exceptional cases.
- Courts should intervene only when arrests are prima facie malicious, prompted by extraneous factors, or made without statutory authority.
- The sufficiency or adequacy of material justifying an arrest should not be subjected to judicial review at the preliminary investigation stage.
- A liberal interpretation of stringent provisions could compromise the objectives of the GST and Customs Acts.
Background of the Case
- The judgment was delivered by a bench comprising CJI Sanjiv Khanna, Justice MM Sundresh, and Justice Bela M Trivedi in a batch of 279 petitions challenging the penal provisions of the GST Act, Customs Act, and related laws.
- The Supreme Court reserved its verdict on May 16, 2024, before delivering this significant ruling.
- The case, titled Radhika Agarwal v. Union of India and Ors., W.P.(Crl.) No. 336/2018, examined the compatibility of these penal provisions with CrPC and constitutional principles.
Conclusion
This Supreme Court ruling strengthens legal protections for individuals facing arrest under the GST and Customs Acts. By extending CrPC safeguards to these laws, the Court ensures that tax enforcement authorities follow due process and refrain from arbitrary arrests. Additionally, the supreme court’s recognition of anticipatory bail under GST and Customs Acts marks a significant development in balancing tax enforcement with individual liberties. The ruling sets a precedent that reinforces accountability in tax-related investigations while upholding constitutional rights.
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