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Informist, Thursday, Feb. 27, 2025

 

NEW DELHI – The Supreme Court on Thursday held that the provisions of criminal law relating to rights of accused were applicable to arrest made under Customs Act, 1962, and the Central Goods and Services Tax Act, 2017. Further, the top court upheld Section 69 and 70 of the Central Goods and Services Tax Act relating to power of arrest and power to summon persons to give evidence, respectively.

 

The apex court said that in appropriate cases relating to Customs Act and Central Goods and Services Tax Act, application for anticipatory bail can be allowed, which may also be conditional. It is not essential that the application for anticipatory bail should be moved only after a first information report is filed, as long as facts are clear and there is a reasonable basis for apprehending arrest, the court added.

 

The apex court said there was a statutory duty on customs officers to inform the arrestee about their grounds of arrest. Customs officers must also maintain records of their statutory functions including details like the name of the informant, name of the person who has violated the law, nature of information received by the officers, time of arrest, seizure details, and statements recorded during the course of detection of the offence, said the top court.

 

The top court referred to Section 41-B of the Code of Criminal Procedure which outlined the procedures of arrest and the duties of the officer making the arrest.  "We respectfully agree with the view expressed that the customs officers are not police officers," said the court. Though this section refers to the police officer, it equally imposes a duty on the customs officers, it added. Custom 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, said the court.

 

The court said that Section 41-D of the Code of Criminal Procedure was also applicable for offences under the Customs Act. Section 41-D of the Code of Criminal Procedure states that an arrested person can meet a lawyer of their choice during questioning by the police. However, the lawyer can't be present throughout the interrogation. 

 

Further, the court said that an arrested person under Customs Act should be informed about its right which is given in Section 50A of the Code of Criminal Procedure, which states that every police officer or other person making an arrest shall give information regarding such arrest and place where the arrested person is being held to any of his friends and relatives. 

 

In its 76 page-judgement, the top court underlined the pre-conditions for arrest of a person under the Prevention of Money Laundering Act, 2002. These pre-conditions before arresting a person include that the officer must have material in his possession and the basis of it, the officer should form and record in writing, "reasons to believe" that the person to be arrested is guilty of the offence. Another pre-condition is that the person arrested, as soon as may be, must be informed of the grounds of arrest.

 

The top court said that in its earlier judgements it was held that the power to arrest a person without a warrant and without instituting a criminal case is a drastic and extreme power. The court said that, while hearing a Delhi liquor policy case involving Arvind Kejriwal, it had held that the "reasons to believe" are to be furnished to the arrestee such that they can challenge the legality of their arrest. The top court said that it did not find any inconsistency between Section 19(1) of the Prevention of Money Laundering Act, 2002 and Section 104(1) of the Customs Act. The principles and ratio developed in the case of Arvind Kejriwal were equally applicable to the power of arrest under Section 104 of the Customs Act, said the court.

 

The bench led by Chief Justice of India Sanjiv Khanna said that the court's reasoning and the ratio on the applicability of the Code of Criminal Procedure to the Customs Act would equally apply to the CGST Act. "We would, therefore, agree with the contention that the GST Acts are not a complete code when it comes to the provisions of search and seizure, and arrest, for the provisions of the Code(Criminal Procedure) would equally apply when they are not expressly or impliedly excluded by provisions of the GST Acts," said the court.

 

The apex court held that arrest under CGST Act must proceed on the belief supported by reasons relying on material that the conditions specified in sub-section (5) of Section 132 of Central Goods and Services Tax Act are satisfied, and not on suspicion alone. An arrest cannot be made to merely investigate whether the conditions are being met, the court added. The power of arrest under CGST Act should be used with great circumspection and not casually, said the court. Further, as in the case of service tax, the power of arrest is not to be used on mere suspicion or doubt, or for even investigation, when the conditions of subsection (5) to Section 132 of the CGST Act are not satisfied, the court added.

 

Further, the top court said that the tax authorities must exercise due care and caution as coercion and threat to arrest would amount to a violation of fundamental rights and the law of the land. It is 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 self-payment, said the court. "We would observe that in case there is a breach of law, and the assessees are put under threat, force or coercion, the assessees would be entitled to move the courts and seek a refund of tax deposited by them. The department would also take appropriate action against the officers in such cases," said the court.

 

In its separate opinion, Justice Bela M. Trivedi said the power of judicial review in cases of arrest under special Acts should be exercised very cautiously and in rare circumstances to balance individual liberty with the interest of justice and of the society at large.

 

The top court was hearing a batch of petitions challenging the penal provisions in the Customs Act, the CGST Act as being non-compatible with the Code of Criminal Procedure and the Indian Constitution. While Chief Justice Khanna wrote the judgement for himself and Justice M.M. Sundresh, Justice Trivedi wrote her different verdict with concurring views.  End

 

Reported by Surya Tripathi

Edited by Deepshikha Bhardwaj

 

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