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of <h1>Petitions dismissed challenging Sections 69 and 70 of CGST after SC affirmed seizure, summons and arrest powers; Section 132 safeguards</h1> <h3>Dhruv Krishan Maggu, Sartaj Ali, Chawla Plastics Industries (India) Versus Union Of India & Ors.</h3> Dhruv Krishan Maggu, Sartaj Ali, Chawla Plastics Industries (India) Versus Union Of India & Ors. - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether Sections 69 and 70 of the Central Goods and Services Tax Act, 2017 (powers to arrest and summon/produce persons and documents) are within the legislative competence of Parliament under Article 246-A of the Constitution and constitutionally valid. 2. Whether the powers of arrest under Section 132 (read with Sections 69 and 70) of the CGST Act satisfy constitutional safeguards and the requirements of 'reasons to believe' / procedural safeguards, including compliance with D.K. Basu directions and departmental instructions. 3. Whether challenges to other provisions raised (Sections 135, 136, 137, reverse onus in Section 135, and delegated powers by notification) require adjudication in the present petitions. ISSUE-WISE DETAILED ANALYSIS - Issue 1: Legislative competence and vires of Sections 69 and 70 Legal framework: Article 246-A (special provision with respect to goods and services tax) defines source of power and field of legislation for Parliament and State Legislatures with respect to GST; doctrine of pith and substance and established principles that ancillary/incidental matters necessary for levy and collection of tax fall within legislative competence. Precedent Treatment: The Supreme Court in Radhika Agarwal (2025) squarely addressed the validity of the powers to summon, seize, produce documents and arrest under the GST enactment; earlier authorities such as R.S. Joshi (Seven-Judge ruling on construction of entries) and Union of India v. VKC Footsteps (interpretation of Article 246-A) were applied to ascertain scope. Makemytrip decision (service tax regime) was noted for circumspection in exercising arrest powers. Interpretation and reasoning: Article 246-A is a comprehensive provision; entries should be given liberal construction so that ancillary and subsidiary matters fairly and reasonably comprehended in the GST field are included. Powers to summon, arrest and prosecute are necessary for effective levy and collection of GST and for checking evasion; therefore these powers are ancillary/incidental to Article 246-A. The pith and substance of the GST Acts concerns Article 246-A and thus the enactment of criminal/penal mechanisms to check evasion is permissible. Ratio vs. Obiter: Ratio-Parliament has competence under Article 246-A to enact Sections 69 and 70 as ancillary to the power to levy and collect GST; challenges to vires of Sections 69 and 70 on legislative-competence grounds are unsustainable. Observations referencing broad construction of entries and the doctrine of ancillary/incidental powers form part of the binding reasoning. Reference to Makemytrip and R.S. Joshi supply doctrinal support and are treated as precedentially followed. Conclusions: The challenge to constitutional validity of Sections 69 and 70 on grounds of legislative competence under Article 246-A is rejected; Sections 69 and 70 are intra vires Parliament and constitutionally valid. ISSUE-WISE DETAILED ANALYSIS - Issue 2: Validity and safeguards in exercise of power of arrest under Section 132 (and interaction with Sections 69/70) Legal framework: Section 132 prescribes conditions for arrest for specified offences (cognizable/non-cognizable, bailable/non-bailable) and sub-section (5) sets pre-conditions for arrest; Section 69(3) interacts with procedural requirements; D.K. Basu principles and departmental circulars/instructions lay down procedural safeguards (arrest memo, recording reasons, explanation of grounds, informing nominated person, medical care, post-arrest formalities, timelines for prosecution complaint). Precedent Treatment: The Supreme Court in Radhika Agarwal clarified the standards for recording 'reasons to believe' by the Commissioner and stressed reliance on material and objective reasoning; Makemytrip (Delhi HC) principle that arrest powers be used with great circumspection was adopted to the extent relevant; departmental Circular No. 128/47/2019 and subsequent Instruction No. 01/2025 and Instruction 02/2022-23 were recognized as prescribing minimum procedural steps to be followed. Interpretation and reasoning: An order of arrest must be founded on recorded reasons to believe by the Commissioner that a non-bailable offence under Section 132 has been committed, and such reasons must refer to the material forming the basis of such belief, including computation of tax where monetary thresholds determine cognizability. Arrest cannot be made on mere suspicion or to investigate whether conditions are satisfied; the Commissioner must form an opinion supported by material. The procedural safeguards in departmental instructions (explaining and furnishing grounds in writing, acknowledgement, informing nominee, recording date/time, provision of copy of arrest memo, compliance with D.K. Basu) must be complied with; minor procedural lapses should be viewed in context but manifest arbitrariness or gross non-compliance will attract judicial intervention. Ratio vs. Obiter: Ratio-Arrest under GST law requires objective reasons to believe recorded by the Commissioner supported by material satisfying sub-section (5) of Section 132; compliance with statutory and constitutional procedural safeguards (including D.K. Basu) is mandatory. Observations cautioning against judicial overreach and recommending restraint in review absent manifest arbitrariness are part of the binding approach to judicial review in special Acts. Conclusions: Arrests under the GST Act must comply with the statutory pre-conditions and procedural safeguards; arrests made without proper reasons recorded and material to support the formulation of opinion under Section 132 are illegal. Compliance with departmental instructions and D.K. Basu is required; the Court rejects blanket invalidation of arrest powers but requires their exercise to be objective, material-based and procedurally compliant. ISSUE-WISE DETAILED ANALYSIS - Issue 3: Challenges to other provisions and procedural irregularities (Sections 135, 136, 137, delegated power by notification, adherence to CrPC procedures) Legal framework: Petitioners raised multiple objections - reverse burden (Section 135), provisions on evidence and ex-parte evidence (Section 136), vicarious liability (Section 137), and vires of notifications delegating powers; additional reliefs challenged compliance with CrPC Chapter XII and invocation of procedural safeguards in initiating investigations. Precedent Treatment: The Supreme Court in Radhika Agarwal did not adjudicate some of these specific substantive challenges where prosecution or adjudication had not been initiated; concurring observations emphasized caution in judicial interference in special Acts absent manifest arbitrariness. Earlier authorities on burden of proof and evidence were noted as appropriate fora for separate challenges. Interpretation and reasoning: The present petitions did not press or pursue several of these contentions for adjudication; the Court refrains from deciding on Sections 135, 136, 137, or the validity of the notification delegating powers, where factual/commercial prosecution context is absent or prosecution has not been initiated. Procedural challenges alleging non-compliance with CrPC Chapter XII and that investigations are void ab initio were not pressed or require adjudication in view of the Supreme Court ruling clarifying arrest and investigation safeguards. Ratio vs. Obiter: Observational-The Court declines to examine and adjudicate on the vires of Sections 135, 136, 137 and delegated notification in the present petitions; such issues remain open for appropriate challenge where prosecution or factual matrix requires determination. This constitutes obiter insofar as it leaves substantive questions undecided. Conclusions: Challenges to Sections 135, 136, 137 and to the notification delegating powers are not adjudicated in these petitions; aggrieved persons may challenge those provisions before appropriate forums. Allegations of procedural non-compliance in investigation not pressed are not entertained here. ADDITIONAL OBSERVATIONS 1. The concurring view in the controlling Supreme Court decision underlines that special enactments (PMLA, Customs, etc.) address serious offences and that judicial review of arrests under such Acts should be exercised cautiously and sparingly; minor procedural lapses should not result in undue advantage to accused persons unless there is manifest arbitrariness or gross non-compliance. 2. In light of the Supreme Court elucidation, pending challenges to the legislative competence and the right of authorised officers to arrest under the Customs and GST Acts are dismissed, subject to the clarified pre-conditions and procedural safeguards governing exercise of arrest powers.
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