TaxTMI 
TaxTMI 
2025 (2) TMI 1162
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....PECIAL LEAVE PETITION (CRIMINAL) NOS.4322-4324 OF 2019) CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.4546 OF 2019) CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO. 9541 OF 2019) CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.3366 OF 2020) CIVIL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO.20310 OF 2021) CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.6660 OF 2020) WRIT PETITION (CRIMINAL) NO.6 OF 2021 WRIT PETITION (CRIMINAL) NO.40 OF 2021 WRIT PETITION (CRIMINAL) NO.47 OF 2021 CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.1031 OF 2021) CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.1107 OF 2021) WRIT PETITION (CRIMINAL) NO.144 OF 2021 WRIT PETITION (CRIMINAL) NO.445 OF 2023 WRIT PETITION (CRIMINAL) NO.585 OF 2023 CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.11839 OF 2019) TRANSFERRED CASE (CRIMINAL) NO.5 OF 2018 WRIT PETITION (CRIMINAL) NO.118 OF 2019 WRIT PETITION (CRIMINAL) NO.119 OF 2019 CRIMINAL APPEAL NO. OF 2025 (A....
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....ON (CRIMINAL) NO.4 OF 2021 WRIT PETITION (CIVIL) NO.56 OF 2021 WRIT PETITION (CRIMINAL) NO.33 OF 2021 CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.1073 OF 2021) CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.1072 OF 2021) CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NOS.2050-2054 OF 2021) WRIT PETITION (CRIMINAL) NO.301 OF 2021 CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.6338 OF 2021) CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.6847 OF 2021) CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO. OF 2025) (ARISING OUT OF DIARY NO.31616 OF 2021) WRIT PETITION (CRIMINAL) NO.175 OF 2022 WRIT PETITION (CRIMINAL) NO.222 OF 2022 CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.6395 OF 2022) CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.10421 OF 2022) WRIT PETITION (CRIMINAL) NO.402 OF 2022 WRIT PETITION (CRIMINAL) NO.385 OF 2022 WRIT PETITION (CRIMINAL) NO.426 OF 2022 WRIT PETITION (CRIMINAL) NO.434 OF 2022 WRIT PETITION (....
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....O.526 OF 2023 WRIT PETITION (CRIMINAL) NO.529 OF 2023 WRIT PETITION (CRIMINAL) NO.521 OF 2023 WRIT PETITION (CRIMINAL) NO.516 OF 2023 WRIT PETITION (CRIMINAL) NO.518 OF 2023 WRIT PETITION (CRIMINAL) NO.562 OF 2023 WRIT PETITION (CRIMINAL) NO.539 OF 2023 WRIT PETITION (CRIMINAL) NO.549 OF 2023 WRIT PETITION (CRIMINAL) NO.610 OF 2023 WRIT PETITION (CRIMINAL) NO.548 OF 2023 WRIT PETITION (CRIMINAL) NO.550 OF 2023 WRIT PETITION (CRIMINAL) NO.551 OF 2023 WRIT PETITION (CRIMINAL) NO.542 OF 2023 WRIT PETITION (CRIMINAL) NO.569 OF 2023 WRIT PETITION (CRIMINAL) NO.537 OF 2023 WRIT PETITION (CRIMINAL) NO.573 OF 2023 WRIT PETITION (CRIMINAL) NO.570 OF 2023 WRIT PETITION (CRIMINAL) NO.564 OF 2023 WRIT PETITION (CRIMINAL) NO.560 OF 2023 WRIT PETITION (CRIMINAL) NO.544 OF 2023 WRIT PETITION (CRIMINAL) NO.545 OF 2023 WRIT PETITION (CRIMINAL) NO.563 OF 2023 WRIT PETITION (CRIMINAL) NO.578 OF 2023 WRIT PETITION (CRIMINAL) NO.575 OF 2023 WRIT PETITION (CRIMINAL) NO.572 OF 2023 WRIT PETITION (CRIMINAL) NO.592 OF 2023 WRIT PETITION (CRIMINAL) NO.571 OF 2023 WRIT PETITION (CRIMINAL) NO.604 OF 2023 WRIT PETITION (CRIMINAL) NO.597 OF 2023 WRIT PETITION (CRIMINAL) NO.600 OF 2023 WRIT PETITION (CRIMINAL) N....
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....WRIT PETITION (CRIMINAL) NO.103 OF 2024 WRIT PETITION (CRIMINAL) NO.89 OF 2024 WRIT PETITION (CRIMINAL) NO.101 OF 2024 WRIT PETITION (CRIMINAL) NO.99 OF 2024 WRIT PETITION (CRIMINAL) NO.100 OF 2024 WRIT PETITION (CRIMINAL) NO.102 OF 2024 WRIT PETITION (CRIMINAL) NO.118 OF 2024 WRIT PETITION (CRIMINAL) NO.113 OF 2024 WRIT PETITION (CRIMINAL) NO.111 OF 2024 WRIT PETITION (CRIMINAL) NO.131 OF 2024 WRIT PETITION (CRIMINAL) NO.133 OF 2024 WRIT PETITION (CRIMINAL) NO.130 OF 2024 WRIT PETITION (CRIMINAL) NO.117 OF 2024 WRIT PETITION (CRIMINAL) NO.135 OF 2024 WRIT PETITION (CRIMINAL) NO.134 OF 2024 WRIT PETITION (CRIMINAL) NO.132 OF 2024 WRIT PETITION (CRIMINAL) NO.162 OF 2024 WRIT PETITION (CRIMINAL) NO.163 OF 2024 WRIT PETITION (CRIMINAL) NO.136 OF 2024 WRIT PETITION (CRIMINAL) NO.161 OF 2024 WRIT PETITION (CRIMINAL) NO.139 OF 2024 WRIT PETITION (CRIMINAL) NO.143 OF 2024 WRIT PETITION (CRIMINAL) NO.152 OF 2024 WRIT PETITION (CRIMINAL) NO.172 OF 2024 WRIT PETITION (CRIMINAL) NO.167 OF 2024 WRIT PETITION (CRIMINAL) NO.171 OF 2024 WRIT PETITION (CRIMINAL) NO.181 OF 2024 WRIT PETITION (CRIMINAL) NO.179 OF 2024 WRIT PETITION (CRIMINAL) NO.177 OF 2024 WRIT PETITION (CRIMINAL) NO.173 OF 2024 WR....
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.... in the GST Act. * Thirdly, the ratio in Om Prakash (supra) promotes and protects the life and liberty of citizens and, corrects earlier prevalent wrongdoings which diminished the constitutional and statutory rights of citizens. However, we would refer to certain portions of Om Prakash (supra) in the context of the present litigation to interpret relevant provisions of the Customs Act and the GST Act. 5. 'Cognizable offence', defined in Section 2(c) of the Code, means an offence for which the police officer may, in accordance with the First Schedule of the Code or any other law for the time being in force, arrest without a warrant. 'Noncognizable offence', defined in Section 2(l) of the Code, means an offence for which a police officer has no authority to arrest without a warrant. 6. Section 155 of the Code enjoins a duty on the officer in charge of a police station to enter, or cause to be entered, the substance of any information received regarding the commission of a non-cognizable offence in a book, maintained in the prescribed format. The officer must then refer such informant to the Magistrate. Police officers do not possess the authority to investigate nonc....
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....er Section 11 which are also notified under sub-clause (c) of clause (i) of subsection (1) of Section 135; or (c) import or export of any goods which have not been declared in accordance with the provisions of this Act and the market price of which exceeds one crore rupees; or (d) fraudulently availing of or attempt to avail of drawback or any exemption from duty provided under this Act, if the amount of drawback or exemption from duty exceeds fifty lakh rupees; or (e) fraudulently obtaining an instrument for the purposes of this Act or the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992), and such instrument is utilised under this Act, where duty relatable to such utilisation of instrument exceeds fifty lakh rupees, shall be non-bailable." Sub-section (7) to Section 104 reads: "(7) Save as otherwise provided in sub-section (6), all other offences under this Act shall be bailable." 10. The net effect is that offences in Clauses (a) to (d) to Section 104(6) above, inserted vide the 2013 Amendment, and Clause (e), inserted vide the 2019 Amendment, are treated as non-bailable offences. All other offences under the Customs Act,....
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....rovision in the special act or any special provision excluding the jurisdiction and applicability of the Code. See paragraph 128 of Directorate of Enforcement v. Deepak Mahajan, (1994) 3 SCC 440 In A.R. Antulay v. Ramdas Sriniwas Nayak and Another, (1984) 2 SCC 500 a Constitution Bench of this Court has clarified this position while discussing the applicability of the Code to offences under the Prevention of Corruption Act, 1988. The relevant portion reads: "16...In the absence of a specific provision made in the statute indicating that offences will have to be investigated, inquired into, tried and otherwise dealt with according to that statute, the same will have to be investigated, inquired into, tried and otherwise dealt with according to the Code of Criminal Procedure. In other words, Code of Criminal is the parent statute which provides for investigation, inquiring into and trial of cases by criminal courts of various designations." 14. Before discussing the provisions of Chapter XII of the Code and determining which of its provisions apply to offences under the Customs Act, it is relevant to address the writ petitioners' submission that customs officers are polic....
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....erplay of Section 167 of the Code25 and Section 104 of the Customs Act. Section 167(2) of the Code allows a police officer to request police remand/custody of a person arrested for a period not exceeding 15 days when an investigation cannot be completed within 24 hours of the arrest. Deepak Mahajan (supra) clarifies that Section 167(2) of the Code applies equally to Section 104 of the Customs Act. Thus, a Magistrate has the authority under Section 167(2) of the Code to authorise detention of such person to the custody of a customs officer. 19. On the issue of anticipatory bail, Deepak Mahajan (supra), referring to the dictum in Shri Gurbaksh Singh Sibbia and Others v. State of Punjab, (1980) 2 SCC 565 observes that the registration of a case and entries of a case diary are not compulsory when entertaining an application for grant of anticipatory bail under Sections 438 and 439 of the Code. Anticipatory bail can be invoked on the likelihood of arrest based on reasonable belief of the person having committed a non-bailable offence. At the same time, Deepak Mahajan (supra) holds that customs officer must mandatorily maintain case diaries : "112. The expression 'diary' refe....
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.... question declared the offences to be non-cognizable, the officer exercising the power of arrest, could not arrest, except after obtaining a warrant for the said purpose. That they may not arrest without obtaining a warrant in respect of the non-cognizable offences, being the view taken by this Court, cannot be squared with the view taken by the Punjab and Haryana High Court and the Gujarat High Court, respectively, in Sunil Gupta and also Bhavin Impex (P) Ltd., which took the view in effecting arrest under the Central Excise Act, no warrant was required. It is apparently consequent upon the same that the legislature stepped in with amendments. xxx xxx xxx 150. The result would appear to be that acknowledging the effect of making the offences being non-cognizable to be to limit the power of the authorities under the Act for effecting arrest under the Act, to require a warrant, certain offences were declared to be cognizable as noticed in Section 9-A, as amended after the judgment in Om Prakash. The resultant position after the amendment is, it became open to the officers to effect the arrest in regard to a cognizable offence without obtaining a warrant. 1....
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.... which constitutes an offence under the Chapter of the Drugs and Cosmetics Act and the provisions of the Code - this Court rejected the contention that the police could investigate and file a charge-sheet under the provisions of the Code. There is also a detailed discussion on the power of arrest and its exercise, including power of search and seizure. While affirming that the power of arrest under the Drugs and Cosmetics Act does not vest with the officers in charge of the police station, this Court issued several directions emphasising the necessity of compliance with the provisions of the Code by the arresting officer. Additionally, the arresting officer shall follow the guidelines laid down in D.K. Basu v. State of West Bengal. (1997) 1 SCC 416 Finally, this Court issued a saving order in exercise of power under Article 142 of the Constitution to fend earlier cases where FIR had been registered, and cognisance had already been taken. 22. The amendments made to the Customs Act in 2012, 2013 and 2019 are substantive and were introduced to effectively modify the application of Om Prakash (supra), which required a customs officer to obtain prior approval from a Magistrate before....
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....-CUS(AS)), referenced the decision in D.K. Basu (supra).^34 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. 26. 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.^35 In Senior Intelligence Officer, Directorate of Revenue Intelligence v. Jugal Kishore Samra, (2011) 12 SCC 362. this Court held that an advocate/authorised person may be present within visual distance during interrogation, but he cannot be within hearing distance of the proceedings nor can there be any consultations with such advocate/authorised person during the course of the interrogation. The relevant portion reads: "29. Taking a cue, therefore, from the direction made in D.K. Basu and having regard to the special facts and circumstances of the case, we deem it appropriate to direct that the interrogation of the respondent may be held within the sight of his a....
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.... Director, or an authorised officer to arrest a person, it is fenced with preconditions and requirements, which must be satisfied prior to the arrest of a person. The conditions are - ⇒ The officer must have material in his possession. ⇒ On the basis of such material, the authorised officer should form and record in writing, "reasons to believe" that the person to be arrested, is guilty of an offence punishable under the PML Act. ⇒ The person arrested, as soon as may be, must be informed of the grounds of arrest. These preconditions act as stringent safeguards to protect life and liberty of individuals. We shall subsequently interpret the words "material", "reason to believe", and "guilty of the offence". Before that, we will refer to some judgments of this Court on the importance of Section 19(1) and the effect on the legality of the arrest upon failure to comply with the statutory requirements." 31. In Arvind Kejriwal (supra), a combined reading of Pankaj Bansal v. Union of India and Others, 2023 SCC OnLine SC 1244 Prabir Purkayastha v. State of NCT of Delhi, (2024) 7 SCC 576 and Vijay Madanlal Choudhary and Others v. Union of....
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....nce with law, is amenable to judicial review. It follows that the "reasons to believe" should be furnished to the arrestee to enable him to exercise his right to challenge the validity of arrest. 42. We would accept that in a one-off case, it may not be feasible to reveal all material, including names of witnesses and details of documents, when the investigation is in progress. This will not be the position in most cases. DoE may claim redaction and exclusion of specific particulars and details. However, the onus to justify redaction would be on the DoE. The officers of the DoE are the authors of the "reasons to believe" and can use appropriate wordings, with details of the material, as are necessary in a particular case. As there may only be a small number of cases where redaction is justified for good cause, this reason is not a good ground to deny the accused's access to a copy of the "reasons to believe" in most cases. Where the nondisclosure of the "reasons to believe" with redaction is justified and claimed, the court must be informed. The file, including the documents, must be produced before the court. Thereupon, the court should examine the request and if they....
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.... arrestee is guilty." 35. The investigating officer is also required to look at the whole material and cannot ignore material that exonerates the arrestee. A wrong application of law or arbitrary exercise of duty by the designated officer can lead to illegality in the process. The court can exercise judicial review to strike down such a decision. Referring to errors in the decision-making process, Arvind Kejriwal (supra) records how such errors can vitiate the judgment or decision of the statutory authority. The relevant portion reads: "67. Error in decision making process can vitiate a judgment/decision of a statutory authority. In terms of Section 19(1) of the PML Act, a decision-making error can lead to the arrest and deprivation of liberty of the arrestee. Though not akin to preventive detention cases, but given the nature of the order entailing arrest - it requires careful scrutiny and consideration. Yet, at the same time, the courts should not go into the correctness of the opinion formed or sufficiency of the material on which it is based, albeit if a vital ground or fact is not considered or the ground or reason is found to be non-existent, the order of detentio....
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....different facets of judicial review available with the Court while examining the legality of arrests, Arvind Kejriwal (supra) states: "65. ...We have already referred to the contours of judicial review expounded in Padam Narain Aggarwal (supra), and Dr. Pratap Singh (supra). We have also referred to the principles of Wednesbury reasonableness. 66. In Amarendra Kumar Pandey v. Union of India, this Court elaborated on the different facets of judicial review regarding subjective opinion or satisfaction. It was held that the courts should not inquire into correctness or otherwise of the facts found except where the facts found existing are not supported by any evidence at all or the finding is so perverse that no reasonable man would say that the facts and circumstances exist. Secondly, it is permissible to inquire whether the facts and circumstances so found to exist have a reasonable nexus with the purpose for which the power is to be exercised. In simple words, the conclusion has to logically flow from the facts. If it does not, then the courts can interfere, treating the lack of reasonable nexus as an error of law. Thirdly, jurisdictional review permits review of ....
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....cipal Commissioner of Customs or Commissioner of Customs, has "reasons to believe" that an offence has been "committed" in terms of Section 132 or Section 133 or Section 135 or Section 135-A or Section 136 of the Customs Act. Thus, Section 104(1), effectively incorporates safeguards similar to those outlined in Section 19(1) of the PML Act. The semantical distinction, however, between Section 19(1) and Section 104(1), is twofold: first, Section 104(1) does not explicitly stipulate the requirement of a customs officer having "material in their possession"; and second, Section 104(1) does not explicitly state that the customs officer must reasonably believe that the arrestee is "guilty of an offence". Instead, Section 104(1) states that the customs officer must have "reasons to believe" that the arrestee has "committed an offence". 41. We are of the opinion that there is substantively no difference between a person being guilty of an offence and a person committing an offence. In a catena of judgments of this Court, it has been held that words of a statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning, unless su....
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....son to believe" a thing, if they have sufficient cause to believe that thing but not otherwise.47 This represents a more stringent standard than the "mere suspicion" threshold provided under Section 41. 44. Thirdly, given the framework of the Customs Act, which explicitly classifies offences into bailable and non-bailable, as well as cognizable and noncognizable, the "reasons to believe" must reflect these classifications when justifying an arrest. The reasoning must weigh in why an arrest is being made in a specific case, particularly given the specific severity assigned to the offence by the legislature. The reasoning must also state how the monetary thresholds outlined in the Act are met. Subclauses (b) to (d) of Section 104(4) provide monetary thresholds for cognizable offences, while subclauses (a) and (c) to (e) of Section 104(6) provide those for non-bailable offences. The "reasons to believe" must include a computation and/or an explanation, based on factors such as the goods seized, from which a conclusion of guilt can be drawn. This level of detail is crucial, as it facilitates judicial review of the exercise of the power to arrest. The department's authority to arrest....
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....endments as well as provisions of the Customs Act. Reliance placed by the petitioners on the decision of this Court in Om Prakash (supra) is misconceived as the statutory provisions have undergone amendments to bring them in consonance with the law of the land. Moreover, the provisions themselves provide enough safeguards against arbitrary and wrongful arrests. 49. We shall now draw our attention to the provisions of the GST Acts.^48 50. 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. Sub-section (10) to Section 67 of the GST Acts postulates that the provisions of the Code relating to search and seizure shall, as far as may be, apply to search and seizure under the GST Acts, subject to the modification that for the purpose of sub-section (5) to Section 165 of the Code, the word 'Magistrate' shall be substituted with the word 'Commissioner'. Section 69, which deals with the power of arrest, a provision which we will refer to subsequently, also deals with the provisions of the Code when the person arrested for any offence under the GST Acts is produced....
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....is Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax; (c) avails input tax credit using the invoice or bill referred to in clause (b) or fraudulently avails input tax credit without any invoice or bill; (d) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due; (e) evades tax or fraudulently obtains refund and where such offence is not covered under clauses (a) to (d); (f) falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information with an intention to evade payment of tax due under this Act; (h) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with, any goods which he knows or has reasons to believe are liable to confiscation under this Act or the rules made thereunder; (i) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he ....
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....6) A person shall not be prosecuted for any offence under this section except with the previous sanction of the Commissioner. Explanation.-For the purposes of this section, the term "tax" shall include the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or refund wrongly taken under the provisions of this Act, the State Goods and Services Tax Act, the Integrated Goods and Services Tax Act or the Union Territory Goods and Services Tax Act and cess levied under the Goods and Services Tax (Compensation to States) Act." 54. Sub-section (1) to Section 132 consists of as many as 9 clauses in the form of clauses (a) to (l). Offences under the said clauses are then graded in clauses (i) to (iii) depending upon the amount of tax evaded, the amount of input tax wrongly availed or utilised, or the amount of refund wrongly taken. In case of clause (i) where the amount exceeds Rs.500 lakhs, the punishment may extend to imprisonment for five years and with fine; where the amount is less than Rs.500 lakhs but exceeds Rs. 200 lakhs, the punishment may extend to imprisonment for three years and with fine. Where the amount of tax is less than Rs. 200 la....
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....ommitted a non-bailable offence and that the pre-conditions of sub-section (5) to Section 132 of the Act are satisfied. Failure to do so would result in an illegal arrest. With regard to the submission made on behalf of the Revenue that arrests are not made in case of bailable offences, in our considered view, the Commissioner, while recording the reasons to believe should state his satisfaction and refer to the 'material' forming the basis of his finding regarding the commission of a non-bailable offence specified in clauses (a) to (d) of sub-section (1) to Section 132. The computation of the tax involved in terms of the monetary limits under clause (i) of sub-section (1), which make the offence cognizable and non-bailable, should be supported by referring to relevant and sufficient material. 57. The aforesaid exercise should be undertaken in right earnest and objectively, and not on mere ipse dixit without foundational reasoning and material. The arrest must proceed on the belief supported by reasons relying on material that the conditions specified in sub-section (5) of Section 132 are satisfied, and not on suspicion alone. An arrest cannot be made to merely investigate wheth....
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....e must be explicit and refer to the material and evidence underlying such opinion. There has to be a degree of certainty to establish that the offence is committed and that such offence is non-bailable. The principle of benefit of doubt would equally be applicable and should not be ignored either by the Commissioner or by the Magistrate when the accused is produced before the Magistrate. 60. The findings and the ratio recorded in paragraphs 30 to 47 above with reference to the Customs Act would equally apply insofar as maintenance of records as well as obligations of the arresting officer and rights of the accused/person arrested are concerned. Compliance in this regard must be made. 61. The Central Board of Indirect Taxes and Customs (GST-Investigation Wing), has accepted the said position vide circular dated 17.08.2022, the relevant portion of which reads as under: " F.No. GST/INV/Instructions/2021-22 GST-Investigation Unit 17th August 2022 Instruction No. 02/2022-23 [GST - Investigation] Subject: Guidelines for arrest and bail in relation to offence punishable under the CGST Act, 2017 - reg. Hon'ble Supreme Court of India in its....
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....to any or some of the following questions is in the affirmative: 3.2.1 Whether the person was concerned in the nonbailable offence or credible information has been received, or a reasonable suspicion exists, of his having been so concerned? 3.2.2 Whether arrest is necessary to ensure proper investigation of the offence? 3.2.3 Whether the person, if not restricted, is likely to tamper the course of further investigation or is likely to tamper with evidence or intimidate or influence witnesses? 3.2.4 Whether person is mastermind or key operator effecting proxy/ benami transaction in the name of dummy GSTIN or non-existent persons, etc. for passing fraudulent input tax credit etc.? 3.2.5 As unless such person is arrested, his presence before investigating officer cannot be ensured. 3.3 Approval to arrest should be granted only where the intent to evade tax or commit acts leading to availment or utilization of wrongful Input Tax Credit or fraudulent refund of tax or failure to pay amount collected as tax as specified in sub-section (1) of Section 132 of the CGST Act 2017, is evident and element of mens rea / guilty mind is palpable.....
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....022 further lays down that a person nominated or authorised by the arrested person should be informed immediately, and this fact must be recorded in the arrest memo. The date and time of the arrest should also be mentioned in the arrest memo. Lastly, a copy of the arrest memo should be given to the person arrested under proper acknowledgement. The circular also makes other directions concerning medical examination, the duty to take reasonable care of the health and safety of the arrested person, and the procedure of arresting a woman, etc. It also lays down the post-arrest formalities which have to be complied with. It further states that efforts should be made to file a prosecution complaint under Section 132 of the GST Acts at the earliest and preferably within 60 days of arrest, where no bail is granted. Even otherwise, the complaint should be filed within a definite time frame. A report of arrests made must be maintained and submitted as provided in paragraph 6.1 of the Instruction. The aforesaid directions in the Circular/instruction should be read along with the specific directions outlined in the earlier judgments of this Court and the present judgment. 63. One of the ass....
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...." 65. The circular notes that instances have been noticed where allegations of force and coercion were made by the officers for making recovery during the course of search, inspection and investigation. Some of the taxpayers had accordingly approached the High Courts. Reference is made to Section 79 of the GST Acts to state that recovery can be made only after following the due process of issuance of notice and subsequent confirmation of demand by issuance of an adjudicating order. On the last aspect, reference is made to Sections 73(5) and 74(5) of the GST Acts, which help the taxpayers in discharging their admitted liability, self-ascertained or as ascertained by the tax officer, without having to bear the burden of interest under Section 50 of the GST Acts. The statement in the circular that an assessee may voluntarily deposit tax as noticed was a cause of discussion before us. In this regard, our attention was drawn to Section 74(5) of the GST Acts, which states that a person chargeable with tax may, before service of notice under sub-section (1), pay the amount of tax along with interest payable under Section 50 and a penalty equivalent to 15% of such tax on the basis of hi....
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.... 224 DGGI 3840 31137 8855 236 Total 12596 49384 12235 460 2021-22 CGST Zones 8770 24757 5393 191 DGGI 3804 48481 19764 151 Total 12574 73238 25157 342 2022-23 CGST Zones 10500 31053 12509 93 DGGI 5062 100560 20717 97 Total 15562 131613 33226 190 2023-24 (upto March 2024) CGST Zones 14492 35377 7742 84 DGGI 6090 194955 24016 139 Total 20582 230332 31758 223 Total Number of ITC Fraud Cases Period: July 2017 to March 2024 Period Formation No. of Cases Detection Recovery ....
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....s are put under threat, force or coercion, the assessees would be entitled to move the courts and seek a refund of tax deposited by them. The department would also take appropriate action against the officers in such cases. 69. However, we may clarify 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, as has been held in the case of Deepak Mahajan (supra). This is because the prohibitive sweep of Article 20(3) of the Constitution does not go back to the stage of interrogation. Reference in this regard has been placed on Poolpandi and Others v. Superintendent, Central Excise and Others (1992) 3 SCC 259 and Dukhishyam Benupani, Asst. Director, Enforcement Directorate (FERA) v. Arun Kumar Bajoria. (1998) 1 SCC 52 It is obvious that the investigation must be allowed to proceed in accordance with law and there should not be any attempt to dictate the investigator and at the same time, there should not be any misuse of power and authority. 70. 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 Code, affi....
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....n application for compounding of offences. We would reject the said submission because there is a difference between the compounding of offences and the arrest of a person. We have already stipulated sufficient safeguards to ensure that no arrests are made till the Commissioner is able to show and establish, on the basis of material and evidence, that the conditions of clauses (a) to (d) as well as clause (i) of sub-section 1 to Section 132 of the GST Acts are satisfied and therefore the offences are non-bailable. 72. The last issue for our determination concerns the constitutional validity of W.P.(Crl.) No.336 of 2018 & Connected matters Page 60 of 63 Sections 69 and 70 of the GST Acts which provide for the power to arrest and the power to summon. The petitioners assail the vires of these provisions on the grounds of legislative competence. It is submitted that Article 246-A of the Constitution while conferring legislative powers on Parliament and State Legislatures to levy and collect GST, does not explicitly authorize the violations thereof to be made criminal offences. Our attention was drawn to Lists I and II of the Seventh Schedule to the Constitution which demarcate the l....
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....rehensive provision and the doctrine of pith and substance applies. The impugned provisions lay down the power to summon and arrest, powers necessary for the effective levy and collection of GST. Time and again this Court has held that while deciding the issue of legislative competence, entries should not be read in a narrow or pedantic sense but given their broadest meaning and the widest amplitude because they are intrinsic to a machinery of government. Mineral Area Development Authority and Another v. Steel Authority of India and Another, (2024) 10 SCC 1; Hans Muller of Nurenburg v. Superintendent, Presidency Jail, Calcutta and Others, (1955) 1 SCR 1284; Elel Hotels & Investments Ltd. and Others v. Union of India, (1989) 3 SCC 698; State of Rajasthan v. G. Chawla and Another, 1958 SCC OnLine SC 33. The ambit of an entry or article laying down the legislative field extends to all ancillary and subsidiary matters which fairly and reasonably can be said to be comprehended in it. The United Provinces v. Mst. Atiqa Begum and Others, AIR 1941 FC 16 : 1940 SCC OnLine FC 11; Mineral Area Development Authority (supra); Express Hotels (P) Ltd. v. State of Gujarat and Another, (1989) 3 SCC....
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....esaid terms. The matters are directed to be listed before an appropriate Bench in the week commencing 17.03.2025 for final hearing and disposal. ......................................CJI. (SANJIV KHANNA) ........................................J. (M.M. SUNDRESH) JUDGMENT BELA M. TRIVEDI, J. 1. While 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, I have thought it expedient to pen down my views on the jurisdictionary powers of judicial review under Article 32 and Article 226 of the Constitution of India, when the arrest of a person is challenged. 2. At the outset, it may be noted that as well settled, though the powers of judicial review under Article 32 and 226 of the Constitution of India are very wide and untrammeled and are vested in the superior courts to protect the legal and fundamental rights of the citizens and even non-citizens, the courts over the years have evolved certain self-restraints for exercising these powers. They have done so in the interest of the administration of justice and for better and more efficient and infor....
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....ecretary to the Government of India and Others vs. Smt. Alka Subhash Gadia and Another (1992) Supp (1) SCC 496, deserves to be made. The three judge bench in the said case while discussing the Law on Preventive Detention, observed as under:- "11. The provisions of Articles 21 and 22 read together, therefore, make it clear that a person can be deprived of his life or personal liberty according to procedure established by law, and if the law made for the purpose is valid, the person who is deprived of his life or liberty has to challenge his arrest or detention, as the case may be, according to the provisions of the law under which he is arrested or detained. This proposition is valid both for punitive and preventive detention. The difference between them is made by the limitations placed by subclauses (1) and (2) on the one hand and subclauses (4) to (7) on the other of Article 22, to which we have already referred above. What is necessary to remember for our purpose is that the Constitution permits both punitive and preventive detention provided it is according to procedure established by law made for the purpose and if both the law and the procedure laid down by it, are v....
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....Similarly, as per Article 22(1) of the Constitution, no person who is arrested, could be detained in custody without being informed, as soon as may be, of the grounds for such arrest. Thus, the grounds for such arrest have to be communicated to him as soon as may be after the arrest is made. Tersely put, there has to be due compliance of the Constitutional and Statutory mandates, whenever an arrest is made of a person under the Special Acts. 7. So far as the arrest made under the Customs Act, 1962 is concerned, in Union of India Vs. Padam Narain Aggarwal and Others 2008 (13) SCC 305, it has been observed that the power to arrest a person by a Custom officer is statutory in character and cannot be interfered with. Such power of arrest can be exercised only in those cases where the Customs officer has a reason to believe that the person is guilty of an offence punishable under the said Act. Thus, the power must be exercised on objective facts of commission of an offence enumerated, and when the customs officer has a reason to believe that the person sought to be arrested has been guilty of commission of such offences. It has been further observed that the law on one hand allows a ....
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.... 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. 11. As held in Adri Dharan Das vs. State of W.B. (2005) 4 SCC 303, ordinarily arrest is a part of the process of investigation intended to secure several purposes. The accused may have to be questioned in detail regarding various facets of motive, preparation, commission and afterm....
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....the power of judicial review keeps a check and balance on the functioning of the public authorities and is exercised for better and more efficient and informed exercise of their powers, such power has to be exercised very cautiously keeping in mind that such exercise of power of judicial review may not lead to judicial overreach, undermining the powers of the statutory authorities. To sum up, the powers of judicial review may not be exercised unless there is manifest arbitrariness or gross violation or non-compliance of the statutory safeguards provided under the special Acts, required to be followed by the authorized officers when an arrest is made of a person prima facie guilty of or having committed offence under the special Act. FOOT NOTE 1 For short, "Customs Act". 2 For short, "GST Act". 4 For short, "Excise Act". 5 Pursuant to Sections 132, 133, 135, 135A and 136 of the Customs Act and Section 13 of the Central Excise Act, 1944. 6 Section 41 of the Code delineates circumstances when the police may arrest without a warrant. 7 For short, "Code". 8 Part II of the First Schedule to the Code provides that offences which bear an imprisonment term of less th....
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....the case or commit it for trial, and considers further detention unnecessary, he may order the accused to be forwarded to a Magistrate having such jurisdiction." 28 For short, "Drugs & Cosmetics Act". 29 Drugs and Cosmetics (Amendment) Act, 2008, Act No. 26 of 2008. 31 Act 5 of 2009. 32 Act 5 of 2009. 33 41-B. Procedure of arrest and duties of officer making arrest.-Every police officer while making an arrest shall- (a) bear an accurate, visible and clear identification of his name which will facilitate easy identification; (b) prepare a memorandum of arrest which shall be- (i) attested by at least one witness, who is a member of the family of the person arrested or a respectable member of the locality where the arrest is made; (ii) countersigned by the person arrested; and (c) inform the person arrested, unless the memorandum is attested by a member of his family, that he has a right to have a relative or a friend named by him to be informed of his arrest. 34 See also Circular dated 17.09.2013 [File No. 394/68/2013-CUS(AS)]. 35 In 2009, Section 41D was inserted in the Code vide Act 4 of 2009, in furtherance of the principles laid down in D.K. Basu (supra). It ....