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Synopsis

The Supreme Court recently upheld the power of arrest by officers under the Customs and GST Acts and enjoined them with the duty to follow the rigours of Article 22(1) of the Constitution of India and the Criminal Procedure Code.

A bench comprising Chief Justice of India Sanjiv Khanna and Justices M M Sundresh and Bela M Trivedi affirmed the constitutional validity of Sections 69 and 70 of the Central Goods and Services Tax Act, 2017, which lay down the power to summon and arrest—powers necessary for the effective levy and collection of GST.

"The Parliament has the power to make laws regarding GST and, as a necessary corollary, enact provisions against tax evasion. Article 246-A of the Constitution is a comprehensive provision and the doctrine of pith and substance applies," the bench said.

To ensure safeguards, the court also clarified that it is not essential for an application for anticipatory bail to be moved only after an FIR is filed. As long as the facts are clear and there is a reasonable basis for apprehending arrest, such pleas can be made by accused persons under the GST and Customs Acts.

"The power to grant anticipatory bail arises when there is apprehension of arrest. This power, vested in the courts under the Code, affirms the right to life and liberty under Article 21 of the Constitution to protect persons from being arrested," the bench said.

The court also held that the Central as well as the State GST Acts (GST Acts), in pith and substance, pertain to Article 246-A of the Constitution and that the powers to summon, arrest, and prosecute are ancillary and incidental to the power to levy and collect goods and services tax.

Interpreting the provisions on anticipatory bail, the bench stated that decisions in the context of the GST Acts that contradict this ratio should not be treated as binding.

In a separate judgment concurring with the main judgment authored by CJI Khanna, Justice Trivedi emphasized that when the legality of an arrest under Special Acts like the PMLA, UAPA, Foreign Exchange Management Act, Customs Act, and GST Acts is challenged, courts should exercise extreme restraint in judicial review.

"In such cases, the exercise of the power should be confined only to see whether the statutory and constitutional safeguards are properly complied with or not, namely to ascertain whether the officer was an authorized officer under the Act, whether the reason to believe that the person was guilty of the offence under the Act, was based on the “material” in possession of the authorised officer or not, and whether the arrestee was informed about the grounds of arrest as soon as may be after the arrest was made," she said.

On a clutch of petitions filed by Radhika Agarwal, the court conducted a detailed analysis of the pre-conditions for arrest, as well as when and how the power of arrest is to be exercised.

Addressing the provisions of the Customs Act, the bench reaffirmed previous rulings that customs officers are not police officers.

The court underscored the obligation of customs officers to provide grounds of arrest, stating that this duty flows from the rigours imposed by Article 22(1) of the Constitution of India and Section 50 of the Code.

Customs officers must also maintain records of their statutory functions, including details such as the name of the informant, the name of the person who has violated the law, the nature of information received, the time of arrest, seizure details, and statements recorded during the course of detecting offences, the bench said.

With regard to arrest procedures and the duties of the officer making the arrest, the bench observed, "Although this section (41 B of the CrPC) refers to the police officer, we believe, it equally imposes a duty on the customs officers. Officers making an arrest are required to bear an accurate, legible, and clear indication of their names to facilitate ease of identification by the arrestee".

The bench held that Section 41D of the CrPC applies to offences under the Customs Act. Accordingly, a person arrested by a customs officer has the right to meet an advocate of his choice during interrogation, but not throughout interrogation.

It also pointed out that Section 55A of the CrPC mandates that the person having custody of the accused must take reasonable care of their health and safety. This provision is equally applicable to arrests under the Customs Act. Similarly, the stipulations under Section 50A will apply in cases of arrests made by customs officers, the bench said.

The court further noted that Section 104(1) of the Customs Act requires that a person arrested must be informed of the grounds of arrest as soon as may be. The grounds of arrest must be provided in writing to the arrestee before they are produced before the magistrate under Section 104(2).

"This is necessary as it enables the accused to contest and challenge his arrest and seek bail from the court. To deny and not give the grounds in writing would be to deprive the accused of his right in terms of Section 104(1) and also to seek right of bail under the provisions of the Code," the bench said.

This interpretation aligns with Article 22(1) of the Constitution, which states that no person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds of such arrest, nor shall such a person be denied the right to consult and be defended by a legal practitioner of their choice, the bench opined.

Regarding the GST Acts, the bench held that the reasoning and ratio on the applicability of the Code to the Customs Act would equally apply.

"To pass an order of arrest in case of cognizable and non-cognizable offences, the Commissioner must satisfactorily show, vide the.reasons to believe recorded by him, that the person to be arrested has committed a non-bailable offence and that the pre-conditions of sub-section (5) to Section 132 of the Act are satisfied. Failure to do so would result in an illegal arrest," the bench said.

The arrest must be made based on the Commissioner’s formulated opinion, which must be duly recorded in the reasons to believe. These reasons must be supported by evidence establishing—to the satisfaction of the Commissioner—that the requirements of sub-section (5) to Section 132 of the GST Act are met, the bench said.

"A person summoned under Section 70 of the GST Acts is not per se an accused protected under Article 20(3) of the Constitution- Prohibitive sweep of Article 20(3) of the Constitution does not go back to the stage of interrogation," the bench said.

Case Title: Radhika Agarwal Vs Union of India And Others