The bench, comprising Justices Sanjiv Khanna, MM Sundresh, and Bela M Trivedi, made these observations that arrests should be justified by reasonable belief in the commission of a serious offense, rather than mere suspicion. It stated that the grounds for arrest should follow adjudication, and the court intends to examine the “reason to believe” and “grounds of arrest” as outlined in the Customs Act and the GST Act.
NEW DELHI: On May 15th, the Supreme Court of India stated that arrests under Goods and Services Tax (GST) cases should not be made indiscriminately. The court emphasized that arrests should only be executed when there is credible evidence and tangible material to establish culpability.
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The bench, comprising Justices Sanjiv Khanna, MM Sundresh, and Bela M Trivedi, made these observations while hearing a batch of pleas challenging the constitutional validity and interpretation of provisions related to the Customs Act and Goods and Services Tax Act.
During the hearing, the Supreme Court highlighted that the power of arrest should be exercised cautiously and distinguished from the necessity of arrest. It clarified that the legislation governing GST does not mandate arrests for the completion of investigations. Rather, arrests should be based on substantial evidence and credible material.
Additional Solicitor General SV Raju, representing the government, acknowledged that arrests are typically made during the investigation phase, and there can be no arrest after the probe is completed.
The legislation doesn’t mandate arrest as a prerequisite for completing an investigation. Arrest isn’t the primary aim of the legislation, nor is it required in every GST case. Instead, it should rely on credible evidence and tangible material,
as highlighted by the bench to Additional Solicitor General SV Raju.
The bench, which asked Raju numerous questions regarding arrest provisions within GST law, emphasized that the legislation prioritizes preserving individual liberties and should not be undermined.
Raju clarified that arrests typically occur during investigations, as there’s no provision for arrest once a case probe concludes.
He stressed that arrests aren’t founded solely on suspicion but on credible indications of serious offenses. He added that these indications shouldn’t be narrowly interpreted as the strict commission of an offense.
The legislation doesn’t mandate arrest as a requirement to conclude an investigation. The primary objective of the legislation doesn’t center around arrest. It’s not obligatory to make arrests in every GST case. Rather, the decision should be grounded in credible evidence and tangible material, as conveyed by the bench to Additional Solicitor General SV Raju.
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The bench further emphasized that arrests should be justified by reasons to believe the commission of a serious offense rather than mere suspicion. It stated that the grounds for arrest should be preceded by adjudication, and the court intends to scrutinize the “reason to believe” and “grounds of arrest” as stipulated in the Customs Act and the GST Act.
The petitioners challenging various sections of the Customs Act and the GST Act allege significant misuse of arrest provisions in both laws. They claim they are being pressured and coerced into paying liabilities without proper adherence to due procedure.
Under the GST Act, Section 69 addresses arrest powers, while Section 104 of the Customs Act of 1962 permits officers to arrest individuals if they have reasonable grounds to suspect an offense.
On May 9, the Supreme Court instructed the government that arrests under the GST Act shouldn’t be based solely on suspicion but should require substantial evidence and adherence to proper protocols. The court emphasized that the evidence leading to an arrest should be verifiable by a magistrate.
Earlier, the court directed the government to refrain from using threats or coercion during search and seizure operations related to GST recovery and instead encouraged voluntary payment of dues.
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On May 2, the court requested the government provide details on notices issued and arrests made under the GST Act. It expressed concern over the ambiguity in Section 69 of the GST Act and indicated its intention to interpret the law to reinforce the principle of liberty.
The Supreme Court recognized both the overreach of GST authorities and wrongdoing by taxpayers. They promised to factor these issues into their final decision. Petitioners challenging the Customs Act and GST Act claim arrest provisions are misused, with threats and coercion to settle liabilities without following proper procedures.
