The Supreme Court has on 27 February pronounced a detailed judgement on the powers of arrest under the Customs Act, 1962 and under the GST laws. Certain important points as stated by the Apex Court, including certain pre-conditions and safeguards to protect the life and liberty of the arrestees, are highlighted below.
Customs:
- Customs officers are not police officers.
- Amendments made to the Customs Act in 2012, 2013 and 2019, designating specified offences as cognizable and non-bailable, while also imposing certain pre-conditions and stipulations for making arrest, are substantive and introduced to effectively modify the application of Supreme Court decision in Om Prakash.
- Paginated diary to be maintained by the officer during investigation [Section 172 of the Code of Criminal Procedure, 1973 (‘Code’)].
- Customs officers to inform the arrestee about his grounds of arrest [Section 50 of Code]. The grounds of arrest must be given in writing to the arrestee before he is produced before the Magistrate.
- Customs officers must maintain records of their statutory functions including details like the name of the informant, name of the person who 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.
- Customs officers making an arrest to bear an accurate, legible, and clear indication of their names to facilitate ease of identification. Section 41-B of the Code, which outlines procedures of arrest and duties of the officer making the arrest, is binding on customs officers.
- The person arrested by a customs officer has the right to meet an advocate of his choice during interrogation, but not throughout interrogation. Section 41-D of the Code is applicable for offences under the Customs Act.
- The Customs officer is under obligation to inform friend/relative, etc. of the person arrested, about the arrest, etc. Magistrate to satisfy himself that the requirements have been complied with. Section 50A of the Code is applicable.
- Reasonable care of the health and safety of the arrested person needs to be taken. Section 55A of the Code is applicable.
- Supreme Court’s decision in the case of Arvind Kejriwal Directorate of Enforcement, though on Prevention of Money Laundering Act, is applicable. Court compares Section 19(1) of PMLA to Section 104(1) of the Customs Act.
- Threshold for arrest under Section 104(1) of the Customs Act is higher than that under Section 41 of the Code. ‘Reason to believe’ being more stringent than ‘suspicion’.
- Reasoning must weigh in why an arrest is being made in a specific case.
- Reasoning must state how specified monetary thresholds are met.
- Reasons to believe must include a computation and/or an explanation, based on factors such as the goods seized, from which a conclusion of guilt can be drawn.
Goods and Services Tax (GST)
- Reasoning and the ratio on the applicability of the Code to the Customs Act would equally apply to the GST Acts.
- GST Acts are not a complete code for search, seizure and arrest. The provisions of the Code would equally apply when they are not expressly or impliedly excluded.
- 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 Section 132(5) of the CGST Act are satisfied.
- Arrest cannot be made to merely investigate whether the conditions of Section 132(5) are being met. Power of arrest should be used with great circumspection and not casually.
- Computation of the tax involved in terms of the monetary limits should be supported by referring to relevant and sufficient material.
- Power under Section 132(5) can be exercised even before the assessment procedure under Section 73 is completed.
- CBIC Instruction No. 02/2022-23, dated 17 August 2022 and Instruction No. 01/2025-GST dated 13 January 2025 to be read along with directions outlined in present case.
- Coercion and threat to arrest amounts to violation of fundamental rights and the law of the land. CBIC was asked to 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.
- However, there should not be any attempt to dictate the investigator and at the same time, there should not be any misuse of power and authority.
- It is not essential that the application for anticipatory bail should be moved only after an FIR is filed.
- It is possible for the Department to justify resorting to coercive provisions. Notes on the file must offer convincing justification for resorting to such an extreme measure.
- Sections 69 and 70 of the GST Acts are constitutionally valid. Submission that power to summon, arrest and prosecute are not ancillary and incidental to the power of levying GST and therefore, are beyond the legislative competence of the Parliament under Article 246-A of the Constitution, was rejected.
[Radhika Agarwal v. Union of India – Judgement dated 27 February 2025 in Writ Petition (Criminal) No. 336 of 2018 and Others, Supreme Court]