GST Bail Lawyers Chandigarh High Court

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SC puts safeguards in GST, Customs arrest.

NEW DELHI: The Supreme Court on Thursday upheld the power of officers to arrest individuals under the Goods and Services Tax (GST) and Customs Acts but introduced key judicial safeguards to prevent arbitrary detention and clarified the extent and limits of enforcement under these special statutes.

A three-judge bench, led by CJI Sanjiv Khanna, emphasised the necessity of procedural compliance to uphold constitutional rights, while issuing directives to ensure that arrests are not made on “mere suspicion” or “for the sake of investigation”.

Delivering the verdict on a bundle of 281 petitions that assailed the arresting powers aunder the central and state GST laws and the Customs Act, the bench, also comprising justices MM Sundresh and Bela M Trivedi, made several key determinations – the right of a person to seek a pre-arrest bail even in absence of FIR, the supply of A grounds for arrest in writing, the right of legal counsel, and the applicability of the Criminal Procedure Code (now replaced with Bharatiya Nyaya Suraksha Sanhita arrests.

Key features of the SC order…

PROTECTION

Mandates safeguards against arbitrary arrests

PRE-ARREST BAIL

Rules that anticipatory bail provisions are applicable under GST and Customs law

TAX RECOVERIES

Warns against “threats and coercion” for tax recoveries

The bench also addressed concerns that taxpayers were being forced to make voluntary payments under threat of arrest, noting that payments under Section 74(5) of the GST Act must be truly voluntary and not extracted under coercion. It called for strict compliance with legal safeguards to prevent undue pressure on individuals, saying it would be “desirable” that the Central Board of Indirect Taxes and Customs promptly formulate clear guidelines to ensure that no taxpayer is threatened with the power of arrest for recovery of tax in the garb of selfpayment.

With this ruling, the Supreme Court has struck a balance between empowering

CUSTOMS OFFICERS-Reaffirms they are not police officers

CrPC SAFEGUARDS-Holds that safeguards under CrPC are available under GST and Customs law

LEGAL AID- Stresses that right to legal representation remains imperative

WIDER SCRUTINY- It paves the way for magisterial scrutiny of all arrests

tax authorities to curb evasion and ensuring that individuals are protected against arbitrary detention. The judgment asserts the constitutional rights of the accused while requiring strict adherence to procedural safeguards. Going forward, all arrests under the GST and Customs Acts are likely to be subjected to heightened judicial scrutiny to prevent misuse of power.

Referring to Section 104(1) of the Customs Act, the bench clarified that while the provision does not explicitly mention possession of material evidence, a Customs officer cannot conclude that an offence has been committed without substantial justification.

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