Pre-arrest bail provisions to apply under GST Act, Customs Act: Supreme Court

New Delhi: The Supreme Court on Thursday said the provisions of pre arrest bail would apply under the GST Act and the Customs Act as anybody apprehending arrest can move anticipatory bail even before lodging of the FIR.

"We also wish to clarify that the power to grant anticipatory bail arises when there is apprehension of arrest. This power, vested in the courts under the Criminal Procedure Code, affirms the right to life and liberty under Article 21 of the Constitution to protect persons from being arrested," a bench of Chief Justice of India Sanjiv Khanna and Justices M M Sundresh and Bela M Trivedi said.

Under Section 438 of the Code of Criminal Procedure, the bench said it is not essential that the application for anticipatory bail should be moved only after an FIR is filed, as long as facts are clear and there is a reasonable basis for apprehending arrest.

The court pointed out this principle was confirmed recently by a five-judge Constitution bench in Sushila

Aggarwal and others Vs State (NCT of Delhi) and Another (2020).

Dealing with a batch of writ petitions filed by Radhika Agarwal and others, the court also clarified that a person summoned under Section 70 of the GST Acts is not per se an accused protected under Article 20(3) of the Constitution.

"This is because the prohibitive sweep of Article 20(3) of the Constitution does not go back to the stage of interrogation," the bench said.

In its judgment, the court upheld constitutional validity of Section 69 and 70 of the Central Goods and Services Tax Act, 2017.

"The Parliament has the power to make laws regarding GST and, as a necessary corollary, enact provisions against tax evasion. Article 246-A of the Constitution is a comprehensive provision and the doctrine of pith and substance applies" the bench said.

The provisions laid down the power to summon and arrest, which are necessary for the effective levy and collection of GST, it said.

"The GST Acts, in pith and substance, pertain to Article 246-A of the Constitution and the powers to summon, arrest and prosecute are ancillary and incidental to the power to levy and collect goods and services tax," the bench said.

The court also said the penalty or prosecution mechanism for the levy and collection of GST,

and for checking its evasion, is a permissible exercise of legislative power.

It rejected a challenge to the constitutional validity as also the right of the authorised officers under the Customs Act and the GST Acts to arrest, after pointing out in detail the pre conditions and when and how the powers are to be exercised.

The court said the 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,” the bench said.

The court also said 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 GST Acts are not satisfied.

In its judgment, the court declared the customs officers are not police officers. A person arrested by a customs officer has the right to meet his advocate but not throughout the interrogation, it said.

The court also said the obligation to provide grounds of arrest is incumbent upon them.

Referring to Section 41-B of the CrPC, the bench said the provision related to the procedures of arrest and the duties of the officer making the arrest referred to the police officer.

"We believe, it equally imposes a duty on the customs officers. 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," the bench said.

Referring to Section 104(1) of the Customs Act, the bench said, "A person arrested as soon as may be is required to be informed of the grounds of such arrest. The grounds of arrest must be given in writing to the arrestee before he is produced before the Magistrate".

This is necessary as it enables the accused to contest and challenge his arrest and seek bail from the court. To deny and not give the grounds in writing would be to deprive the accused of his right in terms of Section 104(1) and also to seek right of bail under the provisions of the Code, the bench added.