2023 (7) TMI 1008 - SC - GST

Summon to remain present for the purpose of interrogation in connection with an inquiry against one M/s. Iyer Enterprise Mundra Kutch - requirement to interrogate the respondents in regard to the alleged evasion of Goods and Service Tax Liability/Contravention of the Provision of the Finance Act 1994 and CGST Act 2017 - Section 83 of the Finance Act, 1994 and Section 70 of the Central Goods and Service Tax Act, 2017 - HELD THAT - It is well-settled position of law that power to arrest a person by an empowered authority under the GST Act and could be termed as statutory in character and ordinarily the writ court should not interfere with exercise of such power - this is so because such power of arrest can be exercised only in those cases where the Commissioner or his delegatee has reasons to believe that the person has committed any offence specified in Clause (a) or Clause (b) or Clause(c) or Clause (d) of sub-Section (1) of Section 132 which is punishable under clause (i) or (ii) or sub-section (1) or sub5 Section (2) of the said Section. This Court in UNION OF INDIA VERSUS PADAM NARAIN AGGARWAL ETC. 2008 (10) TMI 1 - SUPREME COURT made it very clear that ordinarily the Court should not impose any condition before effecting arrest. If any conditions are imposed before effecting arrest for instance giving prior intimation to the person concerned etc., the statutory provisions would be rendered ineffective, nugatory and meaningless. The position of law is that if any person is summoned under Section 69 of the CGST Act, 2017 for the purpose of recording of his statement, the provisions of Section 438 of Criminal Procedure Code, 1908 cannot be invoked - as no First Information Report gets registered before the power of arrest under Section 69(1) of the CGST Act, 2017 is invoked and in such circumstances, the person summoned cannot invoke Section 438 of the Code of Criminal Procedure for anticipatory bail. The only way a person summoned can seek protection against the pre-trial arrest is to invoke the jurisdiction of the High Court under Article 226 of the Constitution of India. Undoubtedly, this is exactly what the respondents did in the present case. What the respondents sought by filing two criminal applications under Article 226 of the Constitution before the High Court was the direction to the appellant herein not to arrest them in exercise of the power conferred by Section 69(1) of the GST Act, 2017. This, in essence, is key to prayer for anticipatory bail. However, at the stage of summons, the person summoned cannot invoke Section 438 of the Code of Criminal Procedure. One more opportunity provided to both the respondents to appear before the authorities for the purpose of recording of their statements. If the respondents fail to appear, then it shall be open for the authority concerned to proceed further in accordance with law - appeal allowed.

Summary

Issues Involved:
1. Validity of High Court's order directing the adjudicatory process completion within eight weeks.
2. Respondents' apprehension of arrest and their failure to comply with summons.
3. Legal principles governing the power of arrest under the CGST Act, 2017.

Summary:

1. Validity of High Court's Order:
The Supreme Court examined the High Court's order that directed the adjudicatory process to be completed within eight weeks. The Supreme Court was not convinced with the manner in which the High Court disposed of the writ applications filed by the respondents. The Court observed that the respondents were expected to honor the summons and appear before the authority for interrogation.

2. Respondents' Apprehension of Arrest:
The respondents apprehended arrest upon receiving summons under Section 145 of the Central Excise Act, 1944, as applicable to service tax, and Section 70 of the CGST Act, 2017. They filed writ applications before the High Court seeking protection against arrest. The High Court's order provided a timeline for the adjudicatory process and directed the respondents to appear before the concerned Police Station.

3. Legal Principles Governing the Power of Arrest:
The Supreme Court reiterated the well-settled position of law that the power to arrest under the GST Act is statutory in character, and ordinarily, the writ court should not interfere with the exercise of such power. The Court cited Union of India Vs. Padam Narain Aggarwal, emphasizing that statutory powers must be exercised on objective facts of commission of an offense. The Court also referred to Kartar Singh Vs. State of Punjab, clarifying that pre-arrest protection is not a statutory right or guaranteed under the Constitution but can be sought under exceptional circumstances through Article 226.

The Court highlighted the observations from the High Court of Telangana in P.V. Ramana Reddy Vs. Union of India, noting the incongruities between Section 69(1) and Section 132 of the CGST Act, 2017, regarding the power of arrest and the procedure for granting bail.

Conclusion:
The Supreme Court allowed the appeals, set aside the High Court's common order dated 24.12.2018, and provided the respondents one more opportunity to appear before the authorities for recording their statements. If the respondents fail to appear, the authority may proceed in accordance with the law.