SC puts safeguards in GST, Customs arrests

NEW DELHI: The Supreme Court on Thursday upheld the power of officers to arrest individuals under the Goods and Services Tax (GST) and Customs Acts but introduced key judicial safeguards to prevent arbitrary detention and clarified the extent and limits of enforcement under these special statutes.

- Utkarsh Anand [e-mail]

A three-judge bench, led by Chief Justice of India (CJI) Sanjiv Khanna, emphasised the necessity of procedural compliance to uphold constitutional rights, while issuing directives to ensure that arrests are not made on "mere suspicion" or "for the sake of investigation".

Delivering the verdict on a bundle of 281 petitions that assailed the arresting powers under the central and state GST laws and the Customs Act, the bench, also comprising justices MM Sundresh and Bela M Trivedi, made several key determinations the right of a person to seek a pre-arrest bail even in absence of a first information report (FIR), the supply of grounds for arrest in writing, the right of legal counsel, and the applicability of the Criminal Procedure Code (now replaced with Bharatiya Nyaya Suraksha Sanhita) -- to guide lawful and valid arrests.

The bench also addressed concerns that taxpayers were being forced to make voluntary payments under threat of arrest, noting that payments under Section 74(5) of the GST Act must be truly voluntary and not extracted under coercion. It called for strict compliance with legal safeguards to prevent undue pressure on individuals, saying it would be "desirable" that the Central Board of Indirect Taxes and Customs promptly formulate clear guidelines to ensure that no taxpayer is threatened with the power of arrest for recovery of tax in the garb of selfpayment.

With this ruling, the Supreme Court has struck a balance between empowering tax authorities to curb evasion and ensuring that individuals are protected against arbitrary detention. The judgment asserts the constitutional rights of the accused while requiring strict adherence to procedural safeguards. Going forward, all arrests under the GST and Customs Acts are likely to be subjected to heightened judicial scrutiny to prevent misuse of power.