Should Penal Provisions Of Customs Act, GST Act Etc. Be Compatible With CrPC? Supreme Court Starts Hearing

The Supreme Court today(May 1) started hearing a batch of 281 petitions challenging penal provisions of various laws such as the Customs Act, Excise Act and GST Act as non-compatible with the Code of Criminal Procedure (CrPC) and the Constitution.

The pleas were listed before a Bench of Justices Sanjiv Khanna, MM Sundresh and Bela M Trivedi. After a day-long hearing, the same would again be taken up tomorrow.

Today, Senior Advocates Vikram Chaudhri and Siddharth Luthra led arguments on behalf of certain petitioners. The respondent-authorities, on the other hand, were represented by Solicitor General Tushar Mehta and ASG SV Raju.

At the outset of the hearing, Raju pointed out that some petitions, such as those pertaining to the Black Money Act, were not connected to the issues raised in the batch, but were tagged. The ASG also complained that the authorities were not served with copies of some petitions.

In response, Justice Khanna asked the ASG to give a list of unconnected matters so that they can be considered separately at first call tomorrow. The court then proceeded to hear arguments, but not before making it clear that petitions, wherever not served, be supplied to the ASG else the concerned cases would be dismissed for non-prosecution.  

Submissions of Vikram Chaudhri

Chaudhri addressed arguments in relation to the Customs Act. He began by saying that the customs law regime was a non-cognizable regime for a long time. But now, in light of the amendments that have been made, there is no difference between how a Customs/Excise Officer would act in relation to a cognizable offense vis-a-vis a non-cognizable offense.

To quote, "What is the distinction for him? Nothing. For him, whether it is cognizable or not cognizable, it is nothing. He would still go summon under Section 108, he would still arrest, he does not require a warrant to arrest, he does not follow any order from a Magistrate. For him, it is the same procedure whether it is cognizable or non-cognizable".

The senior counsel pled that even if an offence has been made cognizable by the legislature, FIR ought to be registered under Section 154 CrPC. On a query by Justice Trivedi as to whether the vires of the Customs Act or any of its provisions had been challenged, he replied in the negative.

Chaudhri proceeded to argue that the consistent view of few Constitution benches of the court (and other benches) was that Customs officers/Excise officers could not be equated to Police officers.

It was further asserted that CrPC has been held to be the parent statute and thus it applies, unless specifically excluded: "It always applies. It is only where a special statute displaces CrPC or special statute expressly bars application of CrPC that CrPC will not be applied...otherwise CrPC will be the parent statute. Customs Act does not carry any provision which would displace the application of Chapter XII of CrPC".

To buttress his submissions, Chaudhri referred to the decisions in Directorate of Enforcement v. Deepak Mahajan (1994) and Om Prakash v. Union of India (2011). 

Upon hearing Chaudhri, Justice Khanna observed, "Both in the Excise Act and the Customs Act, primary reason is to adjudicate...to collect duty. Ofcourse, there are mechanisms now in place which say...but the primary function of all these officers is not to investigate crime, unlike Police officers. That is the reason why in all the earlier judgments, Excise officers/Customs officers were not equated with Police officers".

The judge also remarked: "If it is a non-cognizable offence, the judgement in Om Prakash applies, subject to what they (authorities) argue. But [they are not to] arrest till [they're] sure that it is cognizable".

Submissions of Siddharth Luthra

Luthra supplemented the arguments addressed by Chaudhri, focusing on both the Customs Act and the Central Goods and Services Tax Act, 2017. It was his contention that if a person's liberty is to be taken away, the same has to be by law, not by executive instructions or administrative circulars. To quote Luthra, "It has to be statutory law, it may be delegated, but statutory law which has the force of law".

The senior lawyer highlighted that the prosecution can act under two bodies - the CrPC, or, special statutes. However there cannot be a situation where Department determines how to proceed against an individual. In this regard, he referred to the judgment in Lalita Kumari v. State of UP (2012) to say that CBI manual is part of executive instructions.

Luthra further contended that there is no restriction in the Customs Act that CrPC provisions with respect recording of case diary, etc. will not apply: "The application of CrPC is complete, there cannot be any exclusion of the CrPC except as provided by statute...it cannot be a situation that you are going to deprive me of my liberty and say because I am not a police officer, I will record this internally, I will not share this with you and I will proceed".

On Justice Khanna enquiring as to what would be gained if these provisions applied to Customs Act, etc., Luthra answered, "if the mandate of CrPC applies to these proceedings...then the rigors of CrPC apply and liberties are [protected]".

Notably, Khanna J expressed during the hearing, "they (authorities) will only arrest when the conditions are satisfied. In case benefit of doubt is to be given, benefit of doubt will go to the accused because life and liberty are precious. Subject to what they will argue, they cannot be permitted to say even if I am in doubt, I'll arrest. When in doubt, don't arrest."

The proceedings, however, took a turn when the bench was apprised that the petitioners whom Luthra was representing (in context of Customs Act) had not been arrested and the criminal complaint had been filed in their respect before the concerned Magistrate. In view of the position, the writ petition was dismissed as withdrawn/infructuous. The interim order protecting petitioners from arrest was extended for 15 days to enable them to approach the trial court for appropriate relief.

Further, the bench permitted the trial court to proceed with the criminal proceedings in the particular matter. To avoid confusion and do away with controversy, it was clarified that the interim protection from arrest granted earlier did not preclude the Department of Customs from conducting investigation and filing of criminal complaint.

Briefly stated, with respect to GST Act, Luthra raised the following issues : (i) whether Sections 69 and 132 of GST Act (penal in nature) are beyond legislative competence of Parliament under Article 246A of the Constitution? (ii) whether CGST is a code in itself wrt investigation, arrest and prosecution when it makes some provisions of CrPC applicable? (iii) whether the procedural safeguards under Chapter XII CrPC are applicable to the CGST Act when there is no express bar?

Case Title: Radhika Agarwal v. Union of India and Ors., W.P.(Crl.) No. 336/2018 (and connected matters)