GST arrest and prosecution powers upheld in principle; interim protection refused as investigation was allowed to continue.

Sections 69 and 132 of the CGST Act were challenged as beyond legislative competence, but the Court applied the strong presumption of constitutionality and held that Article 246A is wide enough to include ancillary and incidental powers such as arrest and prosecution. On pith and substance, the criminal provisions were treated as incidental to GST levy and collection, and were also linked to criminal law under the Concurrent List. Interim interference was refused because the allegations involved fraudulent IGST refund and circular trading, and the Court declined to halt the investigation, while noting that innocent persons should not be arrested or harassed and statutory remedies remained available.

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Issues: (i) Whether sections 69 and 132 of the Central Goods and Services Tax Act, 2017 were beyond legislative competence and unconstitutional at the interim stage. (ii) Whether the petitioners were entitled to interim protection against coercive action and whether the jurisdictional challenge to the search action justified such relief.

Issue (i): Whether sections 69 and 132 of the Central Goods and Services Tax Act, 2017 were beyond legislative competence and unconstitutional at the interim stage.

Analysis: There is a strong presumption in favour of constitutionality, and the burden lies on the challenger to show a clear transgression. Applying the widest amplitude to Article 246A of the Constitution of India, the power to make laws "with respect to" goods and services tax was treated as wide enough to include ancillary and incidental powers such as arrest and prosecution. On the doctrine of pith and substance, the enactment was viewed as materially relating to GST, with criminal provisions being incidental to levy and collection. Even otherwise, the Court held that the impugned provisions could be traced to criminal law under Entry 1 of List III.

Conclusion: The challenge to the constitutional validity of sections 69 and 132 did not warrant interim interference and the provisions were treated as prima facie within legislative competence.

Issue (ii): Whether the petitioners were entitled to interim protection against coercive action and whether the jurisdictional challenge to the search action justified such relief.

Analysis: The Court placed weight on the seriousness of the allegations of fraudulent IGST refund and circular trading, and on the view that intelligence-based enforcement could be undertaken by Central tax officers in the circumstances presented. It also noted that reliance on earlier ad-interim "no coercive steps" orders did not assist the petitioners. The Court held that the writ court should not interfere with the investigation at the interim stage, while clarifying that innocent persons should not be arrested or harassed and that statutory remedies remained available.

Conclusion: Interim protection was declined and the existing interim order was vacated.

Final Conclusion: The applications for interim relief failed, the earlier interim protection stood withdrawn, and the investigation was permitted to proceed subject to statutory remedies.

Ratio Decidendi: A fiscal enactment is entitled to a strong presumption of constitutionality, and provisions incidentally authorising arrest and prosecution may validly sustain under the wide legislative power conferred by Article 246A or, alternatively, under the criminal law entry in the Concurrent List.

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