Supreme Court Upholds Constitutionality Of GST Act Provisions On Arrest & Summons

The Supreme Court has upheld the Constitutional validity of Sections 69 and 70 of the Goods and Services Tax Act, which provide for the power to arrest and the power to summon.

The Constitutionality of these provisions were challenged on the ground that the Parliament lacked the legislative competence to enact them. The petitioners argued 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. Referring to Entry 93 of List I to the Seventh Schedule, it was submitted that the Parliament can enact criminal provisions only for the matters in List I. It was further argued that the power to summon, arrest and prosecute are not ancillary and incidental to the power of levying GST and therefore, are beyond the legislative competence of the Parliament under Article 246-A of the Constitution.

Rejecting these arguments, the bench comprising Chief Justice of India Sanjiv Khanna, Justice MM Sundresh and Justice Bela M Trivedi held that the provisions are traceable to Article 246-A, which is a is a special provision defining the source of power and the field of legislation for the Parliament and the State Legislature with respect to GST.

"The Parliament, under Article 246-A of the Constitution, has the power to make laws regarding GST and, as a necessary corollary, enact provisions against tax evasion. Article 246-A of the Constitution is a comprehensive 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," the Court observed.

The judgment authored by CJI Sanjiv Khanna further stated :

"Thus, a penalty or prosecution mechanism for the levy and collection of GST, and for checking its evasion, is a permissible exercise of legislative power. The GST Acts, in pith and substance, pertain to Article 246-A of the Constitution and the powers to summon, arrest and prosecute are ancillary and incidental to the power to levy and collect goods and services tax. In view of the aforesaid, the vires challenge to Sections 69 and 70 of the GST Acts must fail and is accordingly rejected."

Also from the judgment - BNSS/CrPC Provisions On Rights Of Arrested Persons Applicable To GST & Customs Acts : Supreme Court

Anticipatory Bail Application Maintainable Against Arrest Under GST Act : Supreme Court Overrules Its Previous Judgments

Arrest Under GST Act Cannot Be Made Merely To Investigate If Cognizable & Non-Bailable Offence Has Been Committed : Supreme Court

GST Act Arrest Can Be Made Without Final Determination Of Tax Liability If There's Sufficient Degree Of Certainty About Offence : Supreme Court

'Customs Officers' Are Not 'Police Officers', Must Satisfy Higher Threshold Of 'Reasons To Believe' Before Arrest : Supreme Court