ARREST UNDER CUSTOMS AND GST ACTS: COMPLETE ANALYSIS OF RADHIKA AGARWAL JUDGMENT

[Ansh Mishra]

I. OVERVIEW

This judgment plays an important role for aligning and clarifying the procedures for arrest under the Customs and GST Acts. This judgment clarifies the domain of “reason to believe” for arrest, what procedures should be followed for arrest, for what reasons arrest could be commence, what are the rights of the arrestee or accused and also interpretation of laws under the Customs and GST Acts.

II. LEGAL PRECEDENTS REFERRED IN THIS MATTER

1. OM PRAKASH AND CHOITH NANIKRAM HARCHANDANI VERSUS UNION OF INDIA - 2011 (9) TMI 65 - SUPREME COURT (Offences under Customs and Central Excise Act both bailable, bearing a punishment of less than 3 years)
2. AR. ANTULAY VERSUS RAMDAS SRINIWAS NAYAK - 1984 (2) TMI 317 - SUPREME COURT
3. STATE OF PUNJAB VERSUS BARKAT RAM - 1961 (8) TMI 28 - SUPREME COURT
4. ROMESH CHANDRA MEHTA VERSUS STATE OF WEST BENGAL - 1968 (10) TMI 50 - SUPREME COURT
5. ILLIAS VERSUS COLLECTOR OF CUSTOMS, MADRAS - 1968 (10) TMI 48 - SUPREME COURT
6. TOFAN SINGH VERSUS STATE OF TAMIL NADU - 2020 (11) TMI 55 - SUPREME COURT
7. DIRECTORATE OF ENFORCEMENT VERSUS DEEPAK MAHAJAN - 1994 (1) TMI 87 - SUPREME COURT
8. GURBAKSH SINGH SIBBIA VERSUS STATE OF PUNJAB - 1980 (4) TMI 295 - SUPREME COURT
9. UNION OF INDIA (UOI) VERSUS ASHOK KUMAR SHARMA AND ORS. - 2020 (8) TMI 827 - SUPREME COURT
10. SHRI DK. BASU, ASHOK K. JOHRI VERSUS STATE OF WEST BENGAL, STATE OF UP. - 1996 (12) TMI 350 - SUPREME COURT
11. SENIOR INTELLIGENCE OFFICER VERSUS JUGAL KISHORE SAMRA - 2011 (7) TMI 910 - SUPREME COURT
12. ARVIND KEJRIWAL VERSUS DIRECTORATE OF ENFORCEMENT - 2024 (7) TMI 760 - SUPREME COURT
13. PANKAJ BANSAL VERSUS UNION OF INDIA & ORS. - 2023 (10) TMI 175 - SUPREME COURT
14. PRABIR PURKAYASTHA VERSUS STATE (NCT OF DELHI) - 2024 (5) TMI 1104 - SUPREME COURT
15. VIJAY MADANLAL CHOUDHARY & ORS. VERSUS UNION OF INDIA & ORS. - 2022 (7) TMI 1316 - SUPREME COURT (LB)
16. ASHOK MUNILAL JAIN AND ANR. VERSUS ASSISTANT DIRECTOR, DIRECTORATE OF ENFORCEMENT - 2017 (3) TMI 1642 - SUPREME COURT
17. MAKEMYTRIP (INDIA) PVT. LTD. & IBIBO GROUP PVT. LTD. VERSUS UNION OF INDIA & ORS - 2016 (9) TMI 52 - DELHI HIGH COURT
18. NANDINI SATPATHY (SMT.) VERSUS P.L. DANI - 1978 (4) TMI 236 - SUPREME COURT
19. POOLPANDI VERSUS SUPERINTENDENT, CENTRAL EXCISE - 1992 (5) TMI 147 - SUPREME COURT
20. DUKHISHYAM BENUPANI VERSUS ARUN KUMAR BAJORIA - 1997 (11) TMI 428 - SUPREME COURT
21. SUSHILA AGGARWAL AND OTHERS VERSUS STATE (NCT OF DELHI) AND ANOTHER - 2020 (1) TMI 1193 - SUPREME COURT
22. UNION OF INDIA & ORS. VERSUS VKC FOOTSTEPS INDIA PVT LTD. - 2021 (9) TMI 626 - SUPREME COURT
23. RS. JOSHI, SALES TAX OFFICER, GUJARAT VERSUS AJIT MILLS LIMITED AND ANOTHER (AND ANOTHER CASE) - 1977 (8) TMI 140 - SUPREME COURT
24. ADDL. SECRETARY TO GOVT. OF INDIA VERSUS ALKA SUBHASH GADIA - 1990 (12) TMI 216 - SUPREME COURT
25. UNION OF INDIA VERSUS PADAM NARAIN AGGARWAL ETC. - 2008 (10) TMI 1 - SUPREME COURT
26. VIJAY MADANLAL CHOUDHARY & ORS. VERSUS UNION OF INDIA & ORS. - 2022 (7) TMI 1316 - SUPREME COURT (LB)
27. ADRI DHARAN DAS VERSUS STATE OF WB. - 2005 (2) TMI 817 - SUPREME COURT

III. ISSUES

1. Are Customs Officers Police Officers?

No, customs officers are not police officers. The Supreme Court reaffirmed this distinction in TOFAN SINGH VERSUS STATE OF TAMIL NADU - 2020 (11) TMI 55 - SUPREME COURT and earlier Constitution Bench judgments such as STATE OF PUNJAB VERSUS BARKAT RAM - 1961 (8) TMI 28 - SUPREME COURT, ROMESH CHANDRA MEHTA VERSUS STATE OF WEST BENGAL - 1968 (10) TMI 50 - SUPREME COURT, and ILLIAS VERSUS COLLECTOR OF CUSTOMS, MADRAS - 1968 (10) TMI 48 - SUPREME COURT. The reasoning is that customs officers do not have all the powers of police officers, especially the authority to file a report under Section 173 of CrPC.[1]

2. Can persons arrested under the Customs Act be committed to the custody of a customs officer?

Yes, the Supreme Court, relying on DIRECTORATE OF ENFORCEMENT VERSUS DEEPAK MAHAJAN - 1994 (1) TMI 87 - SUPREME COURT, held that a Magistrate has the power under Section 167(2) of CrPC to authorize the detention of a person arrested under the Customs Act in the custody of a customs officer.

3. Is it mandatory for customs officers to maintain a diary of proceedings?

Yes, customs officers must maintain records of their statutory functions, including:

3. 1. 1. 1. Name of the informant
         2. Name of the person who violated the law
         3. Nature of information received
         4. Time of arrest
         5. Seizure details
         6. Statements recorded during the detection of the offence
            This is in line with the ruling in Deepak Mahajan, which stated that customs officers must maintain detailed records similar to police case diaries.
4. Is it mandatory to provide the ground of arrest to the arrestee?

Yes, the judgment emphasizes that customs officers must inform the arrestee about the grounds of arrest. This obligation arises from Article 22(1) of the Constitution and Section 50 of CrPC. The ruling in Arvind Kejriwal v. Directorate of Enforcement also highlights that reasons for arrest must be communicated to allow the arrestee to challenge the legality of the arrest.

5. Is the GST Act a complete code for search, seizure, and arrest?

The bench stated that GST Acts are not a complete code when it comes to the provisions of search and seizure, and arrest. So when any provision is not mentioned in the GST Act then the provision on CRPC would be applicable.

 IV. PRE-CONDITIONS OF THE ARREST

The Supreme Court in ARVIND KEJRIWAL VERSUS DIRECTORATE OF ENFORCEMENT - 2024 (7) TMI 760 - SUPREME COURT emphasized the following conditions before making an arrest:

1. Material must be in possession of the customs officer.
2. "Reasons to believe" must be recorded in writing before arrest and arrest under Customs and GST Act should not be on mere suspicion.
3. The person arrested must be informed of the grounds of arrest immediately.
4. The decision to arrest must be based on admissible evidence, not arbitrary discretion.

V. ESSENTIALS FOR ARREST UNDER SECTION 104(1) OF THE CUSTOMS ACT

104. Power to arrest.—429[(1) If an officer of customs empowered in this behalf by general or special order of the Principal Commissioner of Customs or Commissioner of Customs has reason to believe that any person has committed an offence punishable under Section 132 or Section 133 or Section 135 or Section 135-A or Section 136, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest. Points to be noted while making an arrest under this section are as follows:

1. That person being “guilty of an offence” and a person “committing an offence” are both same and is used interchangeably.
2. That Section 104(1) does not explicitly require a customs officer to have “material in their possession” does not imply that a customs officer can conclude that an offence has been committed out of thin air or mere suspicion.
3. That the framework of the Customs Act, which explicitly classifies offences into bailable and non-bailable, as well as cognizable and non-cognizable, the “reasons to believe” must reflect these classifications when justifying an arrest. The reasoning must weigh in why an arrest is being made in a specific case, particularly given the specific severity assigned to the offence by the legislature.

Same provision should be followed under the GST Act when the arrest is commenced under Section 69 of the GST Acts.

VI. RIGHTS OF THE ARRESTEE

The rights of the arrestee which should fundamentally be provided while making an arrest either under Customs or GST Acts are as follows:

1. Right to be informed of the grounds of arrest (Article 22(1) of the Constitution, Section 50 of CrPC).
2. Right to meet an advocate during interrogation but not throughout.
3. Right to have a relative or friend informed of the arrest (Section 50A of CrPC).
4. Right to reasonable care of health and safety while in custody (Section 55A of CrPC).

VII. THREAT OF ARREST

The Supreme Court ruled that arrest should not be used as a tool of harassment. Arrests must be based on "reasons to believe" and proper material, not mere suspicion or external pressure. Judicial review is available to challenge illegal or arbitrary arrests. The bench stated that “The authorities exercise due care and caution as coercion and threat to arrest would amount to a violation of fundamental rights and the law of the land. It is 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 self-payment.”

VIII. CONCLUSION

This judgment serves as a landmark ruling in streamlining arrest procedures under the Customs and GST Acts, reinforcing legal safeguards and upholding the constitutional rights of the arrestee. Previously, due to misinterpretation of the law and the absence of complete procedures, there were frequent violations of fundamental rights by enforcement officers while making arrests under these laws. By clarifying the legal framework, setting procedural safeguards, and ensuring judicial oversight, this judgment prevents arbitrary detentions and strengthens the rule of law, ensuring that enforcement actions are carried out fairly, transparently, and in strict compliance with constitutional principles.

[1] TOFAN SINGH VERSUS STATE OF TAMIL NADU - 2020 (11) TMI 55 - SUPREME COURT