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BNSS/CrPC Provisions On Rights Of Arrested Persons Applicable To GST & Customs Acts : Supreme Court
Debby Jain
27 Feb 2025 10:48 AM IST
The Court also held that anticipatory bail provisions are applicable to GST and Customs Acts.
The Supreme Court on Thursday(February 27) delivered a significant ruling on the powers of arrest under the Goods and Services Tax Act and the Customs Act.The Court held that the provisions of the Code of Criminal Procedure (now Bharatiya Nagarik Suraksha Sanhita) on the rights of accused persons are equally applicable to the arrests made both under the Customs Act and the GST Act.The dictum...
The Supreme Court on Thursday(February 27) delivered a significant ruling on the powers of arrest under the Goods and Services Tax Act and the Customs Act.
The Court held that the provisions of the Code of Criminal Procedure (now Bharatiya Nagarik Suraksha Sanhita) on the rights of accused persons are equally applicable to the arrests made both under the Customs Act and the GST Act.
The dictum in the Arvind Kejriwal case that the arrest under the Prevention of Money Laundering Act must be made only if there are "reasons to believe" has been applied in the context of GST and Customs arrests as well. Section 19(1) of the PMLA and Section 104 of the Customs Act are virtually the same, the Court noted. Both provisions deal with the power of arrest. The Court held the same for the arrest provision under the GST Act as well.
The Court also held that the circulars issued by the GST department regarding arrest must be strictly adhered to. The Court also rejected the argument that customs officers are police officers.
Anticipatory bail applicable to GST and Customs Acts.
The Court further held that the provisions relating to anticipatory bail are applicable to the GST Act and the Customs Act, and the parties can approach the Court for relief if there is an apprehension of arrest, without the FIR being registered.
The Court also observed that there was some merit in the allegations of coercion and harassment by the tax officials.
"We have commented on the basis of data with regard to allegations that there was force and coercion in the payment of taxes. We have some said that there may be some merit in it. Wherever a person is disposed to pay, he can go to the writ court and get an order. And the officers will have to be dealt with departmentally also. We have said that this cannot be permitted. This is contrary to the law. We have referred to Nandini Satpathy case in that regard," Chief Justice of India Sanjiv Khanna stated while pronouncing the verdict.
On application of CrPC provisions to the Customs Act and the GST Act
The judgment stated :
"In 2009, the Parliament amended the Code of Criminal Procedure to incorporate Section 41-B which outlines the procedures of arrest and the duties of the officer making the arrest. Although this section refers 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. These provisions are in furtherance of the dictum of this Court in D.K. Basu (supra). The Central Board of Excise and Customs, in a Circular dated 20.02.1998 (File No. 591/01/98-CUS(AS)), referenced the decision in D.K. Basu (supra). They have reproduced the relevant portions of the judgment with the intent that these would be complied with by the customs officers. We trust that customs officers shall duly comply with this mandate."
The Court further held that Section 41D CrPC is also applicable to Customs Act.
"We also hold that Section 41-D of the Code is applicable for offences under the Customs Act. Accordingly, a person arrested by a customs officer has the right to meet an advocate of his choice during interrogation, but not throughout interrogation."
Reference was made to Section 50A CrPC which states that every police officer or other person making an arrest under the Code shall forthwith give information regarding such arrest and place where the arrested person is being held to any of his friends, relatives, or other person as may be disclosed or nominated by the arrested person for the purpose of giving such information. The Court held that this has to be followed by Customs officials as well.
Section 55A, inserted in 2009, states that it shall be the duty of the person having custody of the accused to take reasonable care of their health and safety. This provision shall be equally applicable to arrests under the Customs Act.
The Court further observed that "To a large extent, our reasoning and the ratio on the applicability of the Code to the Customs Act would equally apply to the GST Acts in view of Sections 4 and 5 of the Code."
"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 would equally apply when they are not expressly or impliedly excluded by provisions of the GST Acts."
Arvind Kejriwal judgment applies to Customs Act arrests
Since the provisions of the PMLA and the Customs Act dealing with the arrests are similar in nature, the Court held that its judgment in the Arvind Kejriwal case, which held that the arresst under PMLA must be carried out only if there are "reasons to believe" that the accused was guilty and that such reasons must be furnished to the arrestee, are applicable to the Customs Act as well.
"For the aforesaid reasons, we do not find any inconsistency between Section 19(1) of the PML Act and Section 104(1) of the Customs Act. We are of the opinion that principles and ratio developed in the case of Arvind Kejriwal (supra), and the principles specifically discussed and delineated in paragraphs 30 to 45 of this judgment, are equally applicable to the power of arrest under Section 104 of the Customs Act. The respondent authorities are, therefore, directed to comply with the mandate of this judgment and that of Arvind Kejriwal (supra)."
Justice Bela Trivedi's judgment
Justice Bela Trivedi delivered a separate but concurring judgment. While stating that she was "completely agreeing with the well-considered opinion expressed by the Hon'ble Chief Justice, on when and how the power of arrest should be exercised by the authorized officers", Justice Trivedi added certain comments regarding the scope of judicial review.
Justice Trivedi observed that "judicial intervention is warranted only in exceptional circumstances when the arrest is prima facie found to be malafide; or is prompted by extraneous circumstances, or is made in contravention of or in breach of provisions of the concerned statute; or when the authority acting under the concerned statute does not have the requisite authority etc."
"Sufficiency or adequacy of material on the basis of which the belief is formed by the officer, or the correctness of the facts on the basis of which such belief is formed to arrest the person, could not be a matter of judicial review," Justice Trivedi added.
Also, the criteria or parameters of judicial review over the subjective satisfaction applicable in Service related cases, cannot be made applicable to the cases of arrest made under the Special Acts.
"The scrutiny on the subjective opinion or satisfaction of the authorized officer to arrest the person could not be a matter of judicial review, in as much as when the arrest is made by the authorized officer on he having been satisfied about the alleged commission of the offences under the special Act, the matter would be at a very nascent stage of the investigation or inquiry. The very use of the phrase “reasons to believe” implies that the officer should have formed a prima facie opinion or belief on the basis of the material in his possession that the person is guilty or has committed the offence under the relevant special Act. Sufficiency or adequacy of the material on the basis of which such belief is formed by the authorized officer, would not be a matter of scrutiny by the Courts at such a nascent stage of inquiry or investigation."
"The power of judicial review in cases of arrest under such 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. Any liberal approach in construing the stringent provisions of the Special Acts may frustrate the very purpose and objective of the Acts."
Background
A bench of Chief Justice of India Sanjiv Khanna and Justices MM Sundresh, Bela M Trivedi made the observations while delivering verdict in a batch of 279 petitions challenging the penal provisions in the Customs Act, CGST/SGST Act, etc. as non-compatible with the CrPC and the Constitution. The orders in the case were reserved on May 16, 2024.
There are two judgments- one by CJI Khanna and a concnurring judgment by Justice Trivedi. Justice Trivedi's judgment deals with the powers of judicial review.
Notably, while the matter was being heard, the bench orally made the following key observations: (i) there can be no private complaint under the GST Act (ii) arrest should not be made on mere suspicion, (iii) GST/Customs Officer must have certifiable material prior to arresting, which can be verified by a Magistrate, (iii) by recent amendments, Parliament whittled down the ratio of Om Prakash v. Union of India (2011), but did not completely do away with it, and (iv) citizens should not be harassed merely because there is ambiguity in arrest provisions.
It also expressed concerns about the ambiguity in Section 69 of the GST Act (dealing with power with arrest) and conveyed that it would interpret the law to "strengthen" liberty, if need be, but not allow citizens to be harassed.
During one hearing, CJI Khanna also observed that the legislation(s) in question conferred restricted powers of arrest: "sometimes we tend to believe that investigation cannot be completed until arrest. That is not the object of the legislation. It restricts the power of arrest". It was further highlighted that an officer's "power to arrest" is different from "necessity of arrest".
Other reports about the judgment can be read here.
Case Title: Radhika Agarwal v. Union of India and Ors., W.P.(Crl.) No. 336/2018 (and connected matters)
Citation : 2025 LiveLaw (SC) 255