2019 (2) TMI 1738 - HC - GST

Power to arrest - requirement of authorization from Commissioner before such arrest - reasons to believe - illegal input tax credit - fake transactions - Section 69 and section 70 of the Central Goods and Services Tax Act, 2017 - HELD THAT - When the summons issued to the petitioners are examined on a conjoint reading of section 69 and section 70 of the Central Goods and Services Tax Act, 2017, it becomes apparent that under section 69 it is the Commissioner who, if he has reasons to believe, can by an order authorize any officer of Central Tax to arrest an assessee. Therefore, the Senior Intelligence Officer who has issued summons to the petitioners cannot arrest the assessee before the Commissioner records his satisfaction on reasons to believe and pass an order authorizing him to affect arrest of the assessee. These writ petitions are disposed of with a direction to the petitioners that they shall appear before the Senior Intelligence Officer who has issued summons to them as and when called and, of course, they shall not be arrested on the first day when they appear before him. It needs no reiteration that the Senior Intelligence Officer shall act fairly and his actions must demonstrate fairness in action. Petition disposed off.

Summary

Issues:
- Apprehension of arrest under section 70 of the Central Goods and Services Tax Act, 2017

Analysis:
The primary concern raised in this batch of writ petitions was the fear of being arrested under section 70 of the Central Goods and Services Tax Act, 2017. The petitioners contended that the Central Intelligence Officer did not have the jurisdiction to arrest them on the first day of their appearance before the Senior Intelligence Officer. They argued that such an action would contravene section 41-A of the Code of Criminal Procedure and various pronouncements by the Supreme Court. The petitioners had not appeared before the Officer due to their apprehension of potential arrest.

The respondents, in their counter-affidavit, mentioned the necessity of the petitioners' testimony to verify the genuineness of transactions related to alleged illegal Input Tax Credit claims. They highlighted the investigation's findings of fake transactions amounting to ?400 crores and emphasized that the power to arrest under section 69 of the CGST Act is exercised only after proper investigation and based on "reasons to believe." The respondents cited precedents from the Calcutta High Court to support their stance on the standard of "reasonable belief" required for arrest.

The court examined sections 69 and 70 of the CGST Act, emphasizing that under section 69, only the Commissioner, upon having "reasons to believe," can authorize the arrest of an individual by a Central Tax officer. Therefore, the Senior Intelligence Officer who issued the summons lacked the authority to arrest the petitioners without the Commissioner's authorization based on "reasons to believe." The court directed the petitioners to appear before the Senior Intelligence Officer as required but ensured that they would not be arrested on the first day of appearance. It stressed the importance of the Officer acting fairly and ensuring procedural fairness in their actions.

In conclusion, the writ petitions were disposed of with the directive for the petitioners to cooperate with the investigation by appearing before the Senior Intelligence Officer when summoned, with the assurance that no immediate arrest would take place on the first day of appearance. The judgment underscored the necessity for adherence to statutory provisions and fair conduct in official actions.