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Synopsis

The Supreme Court recently held that power to arrest a person by an empowered authority under the GST Act may be termed as statutory in character and ordinarily the high courts should not interfere with exercise of such power under writ jurisdiction. 

The bench clarified that such power of arrest can be exercised only in those cases where the Commissioner or his delegatee has reasons to believe that the person has committed any offence specified in Clause (a),(b), (c) or (d) of sub-Section (1) of Section 132 which is punishable under clause (i) or (ii) or sub-section (1) or sub- Section (2) of the said Section.

A bench comprising of Justices JB Pardiwala and Prashant Kumar Mishra was hearing a special leave petition filed by the state of Gujarat against a decision of the state High Court allowing the writ petitions of the respondents. 

In the present case, a summons was issued in 2018 calling upon the respondents to remain present in connection with an inquiry against one M/s. Iyer Enterprise Mundra Kutch.

The concerned authority intended to interrogate them in respect to the alleged evasion of Goods and Service Tax Liability/Contravention of the Provision of the Finance Act 1994 and CGST Act 2017.

Upon receipt of the summons, the respondents apprehended arrest and filed two writ petitions before the high court, which were disposed of after putting certain conditions on the authority with regard to interrogation in the matter.

Dissatisfied, the State of Gujarat moved the present appeal before the Supreme Court.

Advocate Kanu Agarwal,  representing the state government, apprised the top court that as many as 14 summons were issued to one of the respondents. However, only once, one of the respondents appeared for the purpose of interrogation and thereafter, none of the respondents  appeared before the authority. 

“We are not convinced with the manner in which the High Court has disposed of both the writ applications filed by the respondents. It was expected of the respondents to honour the summons and appear before the authority for the purpose of interrogation,” observed the Supreme Court. 

Earlier, in Union of India Vs. Padam Narain Aggarwal and Ors., the top court had ruled that ordinarily the Court should not impose any condition before effecting arrest. If any conditions are imposed before effecting arrest for instance giving prior intimation to the person concerned etc., the statutory provisions would be rendered ineffective, nugatory and meaningless, it had said. 

The Supreme Court observed that if any person is summoned under Section 69 of the CGST Act, 2017 for the purpose of recording of his statement, the provisions of Section 438 of Criminal Procedure Code, 1908 cannot be invoked.

Further, it said that though there is no bar for the High Court to entertain an application for pre-arrest protection under Article 226 of the Constitution of India, yet such power should be exercised sparingly.

The state government has argued that if the respondents are interrogated, only then the department will be able to ascertain whether there is any evasion or not and on the basis of which the future course of action like filing of complaint etc., would be decided

The court allowed the state government’s appeal while giving one more opportunity to the respondents to appear before the authorities for recording their statements. “If the respondents fail to appear, then it shall be open for the authority concerned to proceed further in accordance with law” it said. 

Cause Title- State of Gujarat Etc v. Choodamani Parmeshwaran Iyer and Another Etc.