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Issues: (i) Whether the power to arrest under section 69 read with section 132 of the Central Goods and Services Tax Act, 2017 can be exercised only after completion of adjudication and assessment; (ii) whether the Commissioner must record reasons to believe for arrest and furnish those reasons to the proposed arrestee; (iii) whether the Code of Criminal Procedure, 1973 applies in full to arrests made under section 69 of the Central Goods and Services Tax Act, 2017 and whether GST officers are to be treated as police officers for that purpose; (iv) whether the safeguards governing arrest, including those flowing from constitutional rights and the arrest memo requirement, apply to GST arrests.
Issue (i): Whether the power to arrest under section 69 read with section 132 of the Central Goods and Services Tax Act, 2017 can be exercised only after completion of adjudication and assessment.
Analysis: Section 69 was held to operate in a different field from the assessment provisions. The power to arrest is triggered when the Commissioner has reason to believe, on credible material, that a person has committed the specified offences under section 132. The Court held that the reference to section 132 in section 69 identifies the nature of offences and the quantum-based classification of punishment, but does not make prior adjudication or final determination of tax liability a condition precedent. Adjudication and criminal action were treated as distinct and capable of proceeding independently.
Conclusion: The power to arrest under section 69 is not dependent on prior completion of adjudication or assessment and can be invoked on the Commissioner's reason to believe.
Issue (ii): Whether the Commissioner must record reasons to believe for arrest and furnish those reasons to the proposed arrestee.
Analysis: The Court held that the Commissioner must record reasons to believe in the file and such belief must be founded on relevant, credible and non-vague material. The belief is subjective in form but not immune from judicial scrutiny as to existence of material and rational nexus. However, the statute does not require disclosure of the recorded reasons to the person sought to be arrested in every case; the obligation expressly stated is to inform the person of the grounds of arrest in the appropriate category of cases.
Conclusion: Reasons to believe must be recorded, but their full disclosure to the arrestee is not mandatory under section 69.
Issue (iii): Whether the Code of Criminal Procedure, 1973 applies in full to arrests made under section 69 of the Central Goods and Services Tax Act, 2017 and whether GST officers are to be treated as police officers for that purpose.
Analysis: The Court held that GST officers are not police officers and are not required to follow the entire police-code procedure applicable to regular criminal investigation. The reference in section 69(3) to the powers of an officer-in-charge of a police station was confined to the limited context of granting bail or otherwise dealing with an arrested person in non-cognizable and bailable offences. Provisions such as the FIR-based procedure under sections 154 to 157 of the Code were held inapplicable to the arrest power under the GST law.
Conclusion: The Code of Criminal Procedure does not apply in full to GST arrests and GST officers are not police officers for that purpose.
Issue (iv): Whether the safeguards governing arrest, including those flowing from constitutional rights and the arrest memo requirement, apply to GST arrests.
Analysis: The Court held that the power of arrest under the GST law is drastic and must be exercised sparingly, on weighty grounds, with due regard to personal liberty. The constitutional protections under Articles 21 and 22 remain relevant, and the arresting authority must comply with the foundational safeguards of lawful arrest, including communication of grounds and preparation of a proper arrest memo. The Court emphasised transparency and accountability in the exercise of the power.
Conclusion: Constitutional safeguards apply to GST arrests, including the requirement of a proper arrest memo and communication of grounds of arrest.
Final Conclusion: The petitions failed because the impugned power of arrest under the GST law was upheld as available before adjudication, subject to recorded reasons, constitutional safeguards and the limits built into the statute.
Ratio Decidendi: Section 69 of the Central Goods and Services Tax Act, 2017 authorises arrest on the Commissioner's reason to believe based on credible material that the specified offence has been committed, and that power is independent of prior adjudication or assessment, though it remains subject to constitutional safeguards and procedural limits inherent in the statute.
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