Three-Judge Bench Of SC To Examine Power Of GST Officers To Arrest Suspected Tax Evaders

The question of law regarding the power of Goods and Services Tax officers to arrest suspected evaders will be examined by a three-judge bench, said the vacation bench of Chief Justice Ranjan Gogoi and Justice Aniruddha Bose today.

The bench also issued notice to the Centre and sought its reply on a batch of pleas challenging the provision of arrest under the CGST Act.

On May 27, the same bench had dismissed a challenge brought against the verdict of Telengana High Court upholding GST authorities' power of arrest. The HC observed that sub Section (1) of Section 69 of the Act empowers the Commissioner to order the arrest of a person, when such a person is believed to have committed a cognizable and non bailable offence. The High court had also rejected the contention that here cannot be an arrest even before adjudication or assessment.

The SLP against the Telengana HC judgment was summarily dismissed by the SC.

However, the Bombay High Court has taken a contrary view by holding that arrest can be made only as per the procedure in Code of Criminal Procedure. Challenging this, the Centre has filed a Special Leave Petition in the SC, contending that the Bombay HC judgment had the effect of nullifying Section 69(1) of the CGST Act.

Appearing for the Centre, Solicitor General Thushar Mehta today submitted that High Courts have taken divergent views in the matter, and a trend was emerging amongst tax evaders to seek protection against arrest by filing writ petitions.

""The UOI has observed that there is a growing tendency and a practice of short-circuiting the procedure established by law by individuals being investigated for economic offences by filing writ petitions, challenging the constitutional validity of each every provision, they being investigated under and seeking either regular bail or a custodial bail", said the petition filed by the Centre.

The Solicitor General requested for referring the matter to a three-judge bench for an authoritative pronouncement, and the bench agreed.

The bench said that different high courts had taken different views in granting relief to individuals accused of GST evasion and therefore, it needs to decide the question of law on the power of arrest.

Click here to read/download the order