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TMI Blog2020 (11) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... nd are being disposed of by this common judgment and order. 3.For the sake of convenience, Special Civil Application No.13679/2019 is treated as the lead matter. 4.A coordinate Bench of this Court to which one of us (Coram : J.B. Pardiwala, J.) was a party passed the following order in the Special Civil Application No.13679/2019 dated 7th August, 2019: "1. One of the main reliefs prayed for by the writ applicant in the present writ application reads as follows : "16(A) To issue a Writ of Mandamus and/or Writ of Prohibition and/or any other appropriate writ, order of direction, directing the respondents not to take any actions against the petitioner being proprietor of the Heugo Metal exercising powers under Section 69 read with Section 132 without following due procedure of law of assessment and adjudication of alleged evasion of GST as contemplated under Section 61, Section 73 of under Section 74 of the Central Goods and Service Tax Act, 2017 i.e. before following provisions of Chapter XII of Central Goods and Service Tax Act, 2017 and Gujarat Goods and Service Tax Act, 2017 and Chapter VIII of Central Goods and Service Tax Rules, 2017 and Gujarat Goods and Service Tax Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd circumspection. Prosecution should normally be launched only after the adjudication is completed. To put it in other words, there must be in the first place a determination that a person is "liable to a penalty". Till that point of time, the entire case proceeds on the basis that there must be an apprehended evasion of tax by the assessee. In the two decisions referred to above, emphasis has been laid on the safeguards as enshrined under the Constitution of India and in particular Article 22 which pertains to arrest and Article 21 which mandates that no person shall be deprived of his life and liberty for the authority of law. The two High Courts have extensively relied upon the decision of the Supreme Court in the case of D.K. Basu vs. State of West Bengal reported in 1997 (1) SCC 416. 4. Let Notice be issued to the respondents returnable on 18th September, 2019. 4.1 In the meantime, no coercive steps of arrest shall be taken against the writ applicant. Direct service is permitted. 4.2 On the returnable date, notify this matter on top of the Board. 4.3 We propose to take up this matter for final hearing as far as possible on the returnable date. The State is requested t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner. It is the case of the petitioner that the officials left the premises without noting any reason in the sealing memo and the search was abandoned. 7.4) The Respondent no.2 thereafter, in exercise of the powers under section 70(1) of the Central Goods and Service Tax Act, 2017 (for short the 'CGST Act') and Gujarat Goods and Service Tax Act, 2017 (for short 'GGST Act') issued the summons dated 23rd July, 2019 to the petitioner to appear on 25th July, 2019 to give the statement. It is the case of the petitioner that since the petitioner was unable to remain present along with the documents and the provisional balance sheet, the petitioner through his advocate addressed a letter dated 25th July, 2019 to the respondent no.2 and requested to give one week time to appear before the respondent no.2 along with the requisite documents. 7.5) The Respondent no.2 again visited the residential premises of the petitioner on 26th July, 2019 and completed the search and seized the purchase and sales files along with the mobile and the laptop and removed the seal applied on the drawer. 7.6) It is the case of the petitioner that though the petitioner had requested for one week time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 106 taxmann.com 301(SC). 11. The learned Senior Advocate Mr. Hemani thereafter submitted on merits of the matter that in order to invoke the provisions of section 69 read with section 132 of the CGST Act, the "twin conditions" need to be satisfied "cumulatively" i.e. (1) the Commissioner has "reasons to believe" that a person has committed the specified offence and (2) It is determined that the concerned person has "committed" an offence which has to be necessarily the post-determination of the demand by following the due process of law. 12. With respect to the first condition that the Commissioner must have "reasons to believe' that a person has committed any of the specified offences, it was submitted by Mr. Hemani that in order to invoke the power to arrest as envisaged under the section 69 of the CGST Act, the Commissioner must have "reasons to believe" that the concerned person has committed any offence specified in the clause (a) or clause (b) or clause (c) or clause (d) of the sub-section(1) of the section 132 which is punishable under the clauses (i) or (ii) of the sub-section(1) or sub-section(2) of the said section. Reliance was placed on the decision of this Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its", which makes it very much evident that act of the "committal of offence" is to be fixed first by following the due process of the assessment as envisaged under the Scheme of the CGST Act prior to imposing the punishment. 15. The learned Senior Advocate thereafter referred to the Scheme of the CGST Act for due process of the assessment by referring to the sections 61, 65, 66, 73 and 74 of the CGST Act and submitted that the powers under the section 69 of the CGST Act can be invoked only on the completion of the assessment as envisaged in the said provision so as to form a reason to believe by the Commissioner that the person has committed the offences as specified in the clause (a) or clause (b) or clause (c) or clause (d) of the sub-section(1) of the section 132 of the CGST Act. 16. Mr. Hemani thereafter submitted that the parliament has not used the words "reasons to believe" in the section 132 of the CGST Act which implies that the provisions of the section 132 can be invoked only when it is established that the offence is committed. Therefore, an analogy was drawn by the learned Senior Advocate that the section 132 cannot be invoked merely on the basis of the "reason to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or more recipients, the excess credit so distributed shall be recovered from such recipients along with interest, and the provisions of Section 73 or Section 74, as the case may be, shall, mutatis mutandis, apply for determination of amount to be recovered. 38. Thus, 'determination' of the excess credit by way of the procedure set out in Section 73 or 74, as the case may be is a pre- requisite for the recovery thereof. Sections 73 and 74 deal with assessments and as such it is clear and unambiguous that such recovery can only be initiated once the amount of excess credit has been quantified and determined in an assessment. When recovery is made subject to 'determination' in an assessment, the argument of the department that punishment for the offence alleged can be imposed even prior to such assessment, is clearly incorrect and amounts to putting the cart before the horse. 39. The exceptions to this rule of assessment are only those cases where the assessee is a habitual offender, that/who has been visited consistently and often with penalties and fines for contraventions of statutory provisions. It is only in such cases that the authorities might be justified in proceedings t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 367(P&H), wherein the Punjab and Haryana High Court has held as under : "10. Taking cue from judgment of Delhi High Court in the case of Make My Trip (Supra) followed by Madras High Court in the case of Jayachandran Alloys (P) Ltd (Supra), law laid down by Hon'ble Supreme Court in the case of Siddharam Satlingappa Mhetre (supra) as well keeping in mind Section 69 and 132 of CGST Act which empower Proper Officer to arrest a person who has committed any offence involving evasion of tax more than Rs. 5 Crore and prescribed maximum sentence of 5 years which falls within purview of Section 41A of Cr. P.C., we are of the opinion that power of arrest should not be exercised at the whims and caprices of any officer or for the sake of recovery or terrorising any businessman or create an atmosphere of fear, whereas it should be exercised in exceptional circumstances during investigation, which illustratively may be: (i) a person is involved in evasion of huge amount of tax and is having no permanent place of business, (ii) a person is not appearing inspite of repeated summons and is involved in huge amount of evasion of tax, (iii) a person is a habitual offender and he has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aint under the section 200 of the Code is filed and hence the section 135 of the CGST Act cannot be pressed into service while invoking the power to arrest under the section 69 of the CGST Act. 20. Reliance was also placed on the decision of the Punjab and Haryana High Court in the case of Sukhdeep Singh Bhoday v. Joint Director General of Foreign Trade and others rendered on 8th August, 2007 in the C.W.P. No. 208/2007 to submit that the power to arrest cannot be invoked before filing of FIR and prosecution can be said have been launched when the magistrate cognizance of the report made by the police and not when the FIR is registered. It was therefore submitted that without intervention of the Magistrate, provision of section 69 of the CGST Act cannot be invoked. 21. It was therefore, submitted that since the presumption under section 135 of the CGST Act is not available at the stage of arrest, the respondent authorities must follow the due process of adjudication and determination of the demand prior to invoking the power to arrest under section 69 of the CGST Act. 22. Mr. Hemani thereafter submitted that the decision of the Delhi High Court in case of Make My Trip (India) Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of section 67 with regard to the power of inspection, search and seizure and the section 69 which provides for the power to arrest with reference to the section 132 prescribing the punishment for certain offences. After referring to the Scheme of the CGST Act, the learned advocate Mr. Pandya submitted that the decision of the Delhi High Court in the case of Make My Trip (India) Pvt. Ltd (supra) is applicable to the facts of the case. He placed reliance upon the paragraph nos. 68 to 83 of the said decision to submit that the power to arrest under the section 69 of the CGST Act is required to be exercised with lot of care and circumspection and such powers can be exercised only after the adjudication is completed by determining the liability to pay the tax and the penalty and till such point of time, the power of arrest cannot be invoked on the basis of apprehension of evasion of tax by the assessee. He referred to the provisions of the section 132 of the CGST Act to submit that the entire objective of the CGST Act would be frustrated, if the power to arrest can be permitted to be invoked prior to the adjudication of the liability of the assessee. He also relied upon the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed if the evasion of the tax is below Rs. One Crore. It was therefore, submitted that when there is no prosecution permitted before the adjudication under the provisions of the CGST Act, the power to arrest conferred by the section 69 read with the section 132 of the CGST Act has to be read as per the Scheme of the CGST Act and not otherwise. 26. The learned advocate Mr. Uchit Sheth relied upon the following decisions in support of his submissions: i) In the case of G.L. Didvania and another v. Income Tax Officer and another reported in 1995 Supplement 2 SCC 724 wherein the Supreme Court held that the whole question was whether the appellant made a false statement regarding the income which according to the Assessing Officer has escaped assessment and apropos the same it was held that the findings of the appellate Tribunal was conclusive and therefore, the prosecution cannot be sustained. Relying upon the decision, it was pointed out that in order to invoke the powers of arrest; the adjudication is sine qua non. ii) Mr. Sheth further relied upon the decision of this Court in the case of Mahadev Enterprise v. State of Gujarat reported in 2016 SCC OnLine Gujarat 8893 to point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t under the provisions of Section 70 of the CGST/GGST Act, whereby the Petitioners have been called upon to give the evidence and their statements with respect to the on-going investigation. Hence, admittedly and undisputedly, as on date, the statutory powers conferred upon the concerned respondent authority under the provisions of the Section 69 of the CGST Act have not yet been exercised and therefore, the captioned petitions filed by the respective petitioners are pre-mature and hence, not maintainable, as no cause of any action of the respondent authorities has arisen so far. 29. It was further submitted that even otherwise, the captioned petitions are not maintainable as the same are filed seeking the writ in the nature of prohibition from this Court against the respondent authorities from arresting the petitioners herein under the powers conferred upon the concerned respondent authority under the Section 69 of the CGST Act. Apropos this, it was submitted that it is nobody's case that the respondent authorities have no jurisdiction to arrest a person under the CGST Act. In fact, the provision of Section 69(1) of the CGST Act categorically empowers the concerned respondent aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the Section 69 of the CGST are neither connected nor dependent upon the provisions of the Section 132 of the CGST Act and hence, it is incorrect to state that the arrest under the Section 69 of the CGST Act cannot be undertaken before the adjudication of the offences referred to in the Section 132 of the CGST Act. In fact, the provisions of the Section 69(1) of the CGST Act can be read along with the Section 135 of the CGST Act, which is similar to the Section 138A of the Customs Act, 1962, which enables an authority to presume the culpable mental state on the part of the alleged offender. Reliance was placed on the decision of the Apex Court in the case of Devchand Kalyan Tandel v. State of Gujarat and another reported in (1996) 6 Supreme Court Cases 255 in support of above submissions. 34. It was further submitted that on a careful reading of the Section 69(1) of the CGST Act, it is discernible that the said sub-section merely refers the offences specified in the clauses (a), (b), (c) and (d) of the Section 132(1) which are punishable under the clauses (i) and (ii) of the Section 132(1) or 132(2) of the CGST Act, for which the power to arrest can be exercised by the concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of the Section 69 of the CGST Act would get redundant / otiose. 37. It was submitted by the learned Advocate General that even otherwise, the steps undertaken under the provisions of the Section 69 of the CGST Act by the appropriate authority are only for the purpose of holding an enquiry under the provisions of the CGST/GGST Act for finding any evasion of the GST and ultimately adjudicating the assessment and to punish the assessee for the offences committed by imposing penalties and initiating the proceedings for the prosecution as per the provisions of the Section 132 of the CGST Act. The concerned authority at the stage of invoking the power to arrest under the section 69 of the CGST Act, only forms an opinion that the concerned authority has the reason to believe the person has committed the specific offence as per the provisions of the section 132 of the CGST Act. It was further submitted that it may happen that after completion of the adjudication process for the assessment and the adjudging penalty and / or the confiscation of goods, as the case may be, the concerned authority may or may not proceed further with the prosecution. Thus, the provisions of the Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of Section 73A of the Service Tax Act is similar to the provisions of Section 73 / 74 of the CGST Act inasmuch as, firstly, the provisions of Section 73 / 74 of the CGST Act are similar to the provisions of Section 73 of the Service Tax Act and not 73A of the Service Tax Act and secondly, the assessment as envisaged under the provisions of Section 74 of the CGST Act would only be undertaken after getting the necessary information from the concerned person and after completion of the investigation. (d) In fact, the Division Bench of Telangana High Court in its aforesaid judgment dated 18.04.2019, has categorically held that the list of offences specified in Section 132(1) of the CGST Act have no correlation with assessment, and that therefore, prosecution can be launched even before the completion of the assessment. (e) Against the said case, the Apex Court vide its order dated 27.05.2019, while dismissing the Special Leave Petition, has confirmed the aforesaid views of the Telangana High Court and in addition thereto, the Apex Court, in its order dated 29.05.2019 passed in the case of Union of India v/s Sapna Jain has observed as under: "... ... ... However, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncognizable under the Code. It was further submitted that for exercising the powers of arrest under Section the 69(1) of the CGST Act, the provision of the Sections 87, 88, 155, 204 and 436 of the Code will not be applicable. It was therefore, submitted that the captioned writ petitions may be dismissed with exemplary costs. REJOINDER ON BEHALF OF THE PETITIONERS : 42. In rejoinder, the learned Senior Advocate Mr. Tushar Hemani submitted that the contention made on behalf of the respondents that the decision in the case of Make My Trip India Pvt. Ltd.(supra) would not be applicable in relation to the proceedings under the CGST Act since the said judgment was delivered in context of the provisions of the Service Tax which did not contain any clause as to "presumption of culpable mental state" as provided under the section 135 of the CGST Act, is not correct. It was submitted that the section 83 of the Service Tax Act makes certain sections of the Central Excise Act, 1944 applicable to the Service Tax and one such section is the section 9C of the Central Excise Act, 1944 which provides for "presumption of culpable mental state". It was therefore, submitted by Mr. Hemani that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led rule for the construction of penal sections." Reliance was also placed on the decision of the Supreme Court in the case of CIT v. Vegetable Products Ltd. reported in (1973) 88 ITR 192 (SC) in support of above submission. 45. The learned advocate Mr. Pandya submitted that the decision of Make My Trip India Pvt. Ltd (supra) is squarely applicable to the facts of the present case as the provisions of service tax are pari materia with that of the CGST Act. He relied upon the following paragraphs of the said judgment: "74. The Customs Act, 1962, has a different approach to the question of offences. Chapter XVI thereof describes with specificity the types of offences and the procedure adopted in prosecuting such offences. Section 138A enables the court to draw a presumption, which is rebuttable, of the culpable mental state of the person charged with an offence under the Customs Act, 1962 which requires such culpable mental state. Even for the purposes of confiscation of smuggled goods, Section 123 of the Customs Act, 1962 shifts the burden of proof in the case of 'smuggling', to the person from whom the goods are seized to show that they are not smuggled goods. Powers ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility as per the provisions of the CGST Act? 48. The other ancillary questions which arise for our consideration are as under : (i) Whether the provisions of section 69 of the CGST Act envisages that the Commissioner is obliged to record his reasons to believe and furnish the same to the person who is sought to be arrested? (ii) Whether the provisions of sections 154, 155(1), 155(2), 155(3), 157, 172 of the Code of Criminal Procedure, 1973 are applicable or should be made applicable for the purpose of invoking the power to arrest under section 69 of the CGST Act? In other words, whether the authorised officer can arrest a person alleged to have committed non cognizable and bailable offences without a warrant of arrest issued by the Magistrate under the provisions of the Code of Criminal Procedure, 1973? (iii) For the purpose of section 69(3) of the CGST Act, whether the officers of the GST department could be said to be a "police officer in charge of a police station" as defined under section 2(o) of the Code of Criminal Procedure, 1973? (iv) Whether the constitutional safeguards laid out by the Supreme Court in D.K. Basu's case [1997 (1) SCC 416] in the context of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to wrongful availment or utilisation of input tax credit or refund of tax; (c) avails input tax credit using such invoice or bill referred to in clause (b); (d) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due; (e) evades tax, fraudulently avails input tax credit or fraudulently obtains refund and where such offence is not covered under clauses (a) to (d); (f) falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information with an intention to evade payment of tax due under this Act; (g) obstructs or prevents any officer in the discharge of his duties under this Act; (h) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with, any goods which he knows or has reasons to believe are liable to confiscation under this Act or the rules made thereunder; (i) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to beli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and bailable. (5) The offences specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) and punishable under clause (i) of that sub-section shall be cognizable and non-bailable. (6) A person shall not be prosecuted for any offence under this section except with the previous sanction of the Commissioner. Explanation.- For the purposes of this section, the term "tax" shall include the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or refund wrongly taken under the provisions of this Act, the State Goods and Services Tax Act, the Integrated Goods and Services Tax Act or the Union Territory Goods and Services Tax Act and cess levied under the Goods and Services Tax (Compensation to States) Act." * Section 135 of the CGST Act reads thus : " Section 135. Presumption of culpable mental state- In any prosecution for an offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner may, on an application made to him in this behalf by the registered person or the chartered accountant or cost accountant or for any material and sufficient reason, extend the said period by a further period of ninety days. (3) The provisions of sub-section (1) shall have effect notwithstanding that the accounts of the registered person have been audited under any other provisions of this Act or any other law for the time being in force. (4) The registered person shall be given an opportunity of being heard in respect of any material gathered on the basis of special audit under sub-section (1) which is proposed to be used in any proceedings against him under this Act or the rules made thereunder. (5) The expenses of the examination and audit of records under sub-section (1), including the remuneration of such chartered accountant or cost accountant, shall be determined and paid by the Commissioner and such determination shall be final. (6) Where the special audit conducted under sub-section (1) results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilised, the proper officer may initiate action under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Act or the rules made thereunder. (7) Where the proper officer is of the opinion that the amount paid under subsection (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable. (8) Where any person chargeable with tax under sub-section (1) or sub-section (3) pays the said tax along with interest payable under section 50 within thirty days of issue of show cause notice, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be concluded. (9) The proper officer shall, after considering the representation, if any, made by person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten per cent. of tax or ten thousand rupees, whichever is higher, due from such person and issue an order. (10) The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax as ascertained by the proper officer and inform the proper officer in writing of such payment. (6) The proper officer, on receipt of such information, shall not serve any notice under sub-section (1), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder. (7) Where the proper officer is of the opinion that the amount paid under subsection (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable. (8) Where any person chargeable with tax under sub-section (1) pays the said tax along with interest payable under section 50 and a penalty equivalent to twenty-five per cent. of such tax within thirty days of issue of the notice, all proceedings in respect of the said notice shall be deemed to be concluded. (9) The proper officer shall, after considering the representation, if any, made by the person chargeable with tax, determine the amount of tax, interest and penalty due from such person and issue an order. (10) The proper officer shall issue the order under sub-section (9) wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r (e) who obstructs a police officer while in the execution of his duty, or who has escaped, or attempts to escape, from lawful custody; or (f) who is reasonably suspected of being a deserter from any of the Armed Forces of the Union; or (g) who has been concerned in, or against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists, of his having been concerned in, any act committed at any place out of India which, if committed in India, would have been punishable as an offence, and for which he is, under any law relating to extradition, or otherwise, liable to be apprehended or detained in custody in India; or (h) who, being a released convict, commits a breach of any rule made under sub- section (5) of section 356; or (i) for whose arrest any requisition, whether written or oral, has been received from another police officer, provided that the requisition specifies the person to be arrested and the offence or other cause for which the arrest is to be made and it appears therefrom that the person might lawfully be arrested without a warrant by the officer who issued the requisition. (2) Any officer in cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by any police officer subordinate to him, in the manner provided by this Code, and such officer shall have all the powers of an officer in charge of the police station in relation to that offence. Section 155. Information as to noncognizable cases and investigation of such cases. (1) When information is given to an officer in charge of a police station of the commission within the limits of such station of a non- cognizable offence, he shall enter or cause to be entered the substance of the information in a book to be kept by such officer in such form as the State Government may prescribe in this behalf, and refer the informant to the Magistrate. (2) No police officer shall investigate a non- cognizable case without the order of a Magistrate having power to try such case or commit the case for trial. (3) Any police officer receiving such order may exercise the same powers in respect of the investigation (except the power to arrest without warrant) as an officer in charge of a police station may exercise in a cognizable case. (4) Where a case relates to two or more offences of which at least one is cognizable, the case shall be deemed to be a cognizable case, notwiths ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Neither the accused nor his agents shall be entitled to call for such diaries, nor shall he or they be entitled to see them merely because they are referred to by the Court; but, if they are used by the police officer who made them to refresh his memory, or if the Court uses them for the purpose of contradicting such police officer, the provisions of section 161 or section 145, as the case may be, of the Indian Evidence Act, 1872 (1 of 1872 ), shall apply, * Section 83 of the Finance Act 1994 read s thus: "83. Application of certain provisions of Act 1 of 1944. The provisions of the following sections of the Central Excise and Salt Act, 1944, as in force from time to time. shall apply, so far as may be, in relation to service tax as they apply in relation to a duty of excise:- M1 M1. In This Principal act, for the figures and letters "9C, 9D,11B, 11BB, 11C, 12, 12A, 12B, 12C, 12D, 12E, 14, 14AA, 15, 33A, 34A, 35F", the figures and letters "9A, 9AA, 9B, 9C, 9D, 9E,11B,11C,12,12A,12B,12C,12D,12E,14,14AA,15 ,33A,34A,35F" shall be substituted BY FINANC ACT, 1994, [Gaz. of India, Exty., Pt. IISec. 1, No.10, dt.8.4.2011, p.1.] [9AA, 9B, 9C, 9D, 9E, 11B, 11BB, 11C, 12, 12A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sonable belief of the Commissioner for the purpose of exercising the power to arrest. Section 69 talks about the opinion which is necessary to be formed for the purpose of effecting arrest of a person suspected of having committed any offence under section 132 of the Act. Any opinion of the authority to be formed is not subject to objective test. The language leaves no room for the relevance of an official examination as to the sufficiency of the ground on which the authority may act in forming its opinion. But at the same time, there must be material based on which alone, the authority could form its opinion that a person has committed any offence as specified under clause (a) to (d) of the section 132 of the CGST Act and it is necessary to arrest such person for the alleged offence. The existence of relevant material is a precondition to the formation of opinion. The use of word "may" indicates not only the discretion, but an obligation to consider that a necessity has arisen to arrest the person concerned alleged to have committed any offence as specified under section 132 of the Act. Therefore, the opinion to be formed by the Commissioner cannot be on imaginary ground, wishful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment or the Board. Since the legislature enacted S. 637 (i) (a) it knew that government would entrust to the Board its power under S. 237 (b). Could the legislature have left without any restraints or limitations the entire power of ordering an investigation to the subjective decision of the Government or the Board? There is no doubt that the formation of opinion by the Central Government is a purely subjective process. There can also be no doubt that since the legislature has provided for the opinion of the government and not of the court such an opinion is not subject to a challenge on the ground of propriety, reasonableness or sufficiency. But the Authority is required to arrive at such an opinion from circumstances suggesting what is set out in sub clauses (i), (ii) or (iii). If these circumstances were not to exist, can the government still say that in its opinion they exist or can the Government say the same thing where the circumstances relevant to the clause do not exist? The legislature no doubt has used the expression "circumstances suggesting". But that expression means that the circumstances need not be such as would conclusively establish an intent to defraud or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of do not always lead to the construction that the process of entertaining "reason to believe" or "the opinion" is an altogether subjective to process not lending itself even to a limited scrutiny by the court that such "a reason to believe" or "opinion" was not formed on relevant facts or within the limits or as Lord Radcliffe and Lord Reid called the restraints of the statute as an alternative safeguard to rules of natural justice where the function is administrative." 54. In the Income-tax Officer, Calcutta and Ors. vs. Lakhmani Mewal Das [AIR 1976 SC 1753], the Supreme Court construed the expression "reason to believe" employed in Section 147 of the Income-Tax Act, 1961 and observed: the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully or truly all material facts. It is not any or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spirit of revenge, but in law this does not affect his exercise of his power. In the same way a private person has an absolute power to allow whom he likes to use his land, to release a debtor, or, where the law permits, to evict a tenant, regardless of his motives. This is unfettered discretion. But a public authority may do none of these things it acts reasonably and in good faith and upon lawful and relevant grounds of public interest. The whole conception of unfettered discretion is inappropriate to a public authority, which possesses powers solely in order that it may use them for the public good. There is nothing paradoxical in the imposition of such legal limits. It would indeed be paradoxical if they were not imposed." The Court is entitled to examine whether there has been any material available with the State Government and the reasons recorded, if any, in the formation of opinion and whether they have any rational connection with or relevant bearing on the formation of the opinion. The Court is entitled particularly, in the event, when the formation of the opinion is challenged to determine whether the formation of opinion is arbitrary, capricious or whimsical. It is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oubt true that the Court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the I.T.O. on the point as to whether action should be initiated for reopening the assessment. At the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and far-fetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. The reason for the formation of the belief must be held in good faith and should not be a mere pretence." 57. The stipulation of the Commissioner to have reason to believe is of utmost importance in section 69(1) of the CGST Act. Section 26 of the Indian Penal Code defines the term "reason to believe". It means a person is said to have "reason to believe" a thing, if he has sufficient cause to believe that thing but not otherwise. "Reason to believe" is a very subjective phrase and may vary in circumstances of each case. Section 147 of the Income Tax Act, 1961 also provides that reassessment can be made, if there is reason to believe by the Assessing Officer that there is escapement of income and fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sonal liberty guaranteed under the Constitution of India. No arrest can be made because it is lawful for the police officer to do so. The existence of the power to arrest is one thing. The justification for the exercise of it is quite another. The Commissioner must be able to justify the arrest apart from his power to do so. Arrest and detention in police lock-up of a person can cause incalculable harm to the reputation and self-esteem of a person. No arrest can be made in a routine manner on a mere allegation of commission of an offence made against a person. It would be prudent for the authority in the interest of protection of the constitutional rights of a citizen and perhaps in his own interest that no arrest should be made without a reasonable satisfaction reached after some investigation as to the genuineness and bona fides of a complaint and a reasonable belief both as to the person's complicity and even so as to the need to effect arrest. Denying a person of his liberty is a serious matter. A person is not liable to arrest merely on the suspicion of complicity in an offence. There must be some reasonable justification in the opinion of the authority effecting the arres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for certain offences. In this context the subsection( 2) of section 69 of the CGST Act is also relevant as it provides that where a person is arrested under the sub-section (1) of section 69, for an offence specified under the sub-section(5) of the section 132 of the CGST Act which provides that the offences specified in the clauses (a), (b), (c) and (d) of the sub-section(1)of the section 132 and punishable under the clause (i) of the sub-section(1)of the section 132, shall be cognizable and non bailable, then the officer authorised to arrest the person shall inform such person of the grounds of arrest and produce him before a Magistrate within twenty-four hours. In other words, when a person is arrested pursuant to the order passed by the Commissioner who has reason to believe that such person has committed any offence specified in the clauses (a), (b), (c) or (d) of sub-section(1) of section 132 of the CGST Act which is punishable under the clause(i) of that sub-section, then such offence being cognizable and non bailable as per sub-section (5) of the CGST Act, the officer authorised to arrest such person is duty bound to inform such person about the grounds of arrest and produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous which provides that during the course of inspection, search and seizure when the Commissioner has reason to believe that the person has committed any offence as per the clauses (a), (b), (c) or (d) of the sub-section(1) of section 132 of the CGST Act, which is punishable under the clause(i) or clause (ii) of the sub-section (1) or the sub-section (2) of the section 132 of the CGST Act, then he may pass an order authorising an officer of the department to arrest such person. Thereafter, if the offence falls under the category of cognizable and non bailable offence as per the sub-section (5) of the section 132, then sub-section (2) of section 69 casts duty upon the officer authorised to arrest such person to inform such person of the grounds of arrest and produce him before the Magistrate within twenty-four hours; whereas if the offence is non-cognizable bailable as per the sub-section(4) of the section 132 then subject to provisions of the Code, the clauses (a) and (b) of the subsection (3) of section 69 provides for enlarging such person on bail by the concerned officer i.e. Deputy Commissioner or Assistant Commissioner exercising the same powers and be subjected to the same pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n proceedings by the Enforcement Directorate is not prosecution by a competent court of law to attract the provisions of Article 20(2) of the Constitution or Section 300 of the Code of Criminal Procedure; (vi) The finding in the adjudication proceedings in favour of the person facing trial for identical violation will depend upon the nature of finding. If the exoneration in adjudication proceedings is on technical ground and not on merit, prosecution may continue; and (vii) In case of exoneration, however, on merits where the allegation is found to be not sustainable at all and the person held innocent, criminal prosecution on the same set of facts and circumstances cannot be allowed to continue, the underlying principle being the higher standard of proof in criminal cases. 67. Thus, what is discernible from the above referred judgment of the Supreme Court and also other precedence is as under: 1) On the same violation alleged against a person, if adjudication proceedings as well as criminal proceedings are permissible, both can be initiated simultaneously. For initiating criminal proceedings one does not have to wait for the outcome of the adjudication proceedings as the tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the departmental proceedings as well as criminal complaint are identical and the exoneration of the concerned person in the departmental proceedings is on merits holding that there is no contravention of the provisions of any Act. 68. We may now refer to and rely upon the decision of the Telangana High Court in case of P.V. Ramana Reddy (supra) wherein elaborate discussion of this issue is made as under : "30. It can be seen from the language employed in sub-Sections (1), (2) and (3) of Section 69, that there are some incongruities. Under sub-Section (1) of Section 69, the power to order arrest is available only in cases where the Commissioner has reasons to believe that a person has committed any offence specified in clauses (a) to (d) of sub- Section (1) of Section 132 CGST Act, 2017. The offences specified in clauses (a) to (d) of sub-Section (1) of Section 132 CGST Act, 2017 are made cognizable and non- bailable under Section 132(5) of the CGST Act, 2017. 31. Therefore, it is clear from sub- Section (1) of Section 69 of the CGST Act that the power of the Commissioner to order the arrest of a person, can be exercised only in cases where such a person is believed to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strate within 24 hours, is co-relatable under sub- Section (2) of Section 69 of the CGST Act, 2017 to Section 132(5) of the CGST Act, 2017 that deals only with cognizable and non-bailable offences. 36. But, interestingly, clauses (a) and (b) of sub-Section (3) of Section 69 of the CGST Act, 2017 deal in entirety only with cases of persons arrested for the offences which are indicated as noncognizable and bailable. The phrase "subject to the provisions of the Code of Criminal Procedure" is used only in sub-Section (3), which deals in entirety only with the procedure to be followed after the arrest of a person who is believed to have committed a noncognizable and bailable offence. While clause (a) of sub-Section (3) gives two options to the Officer carrying out the arrest, namely, to grant bail by himself or to forward the arrested person to the custody of the Magistrate, clause (b) confers the powers of an Officer in charge of a police station, upon the Deputy Commissioner or the Assistant Commissioner (GST), for the purpose of releasing an arrested person on bail, in the case of non-cognizable and bailable offences. 37. In other words, even though Section 69(1) of the CGST Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be correct. 41. Though for the purpose of summoning of witnesses and for summoning the production of documents, the Proper Officer holding the enquiry under the CGST Act, 2017 is treated like a Civil Court, there are four other places in the Act, where a reference is made, directly or indirectly, to the Cr.P.C. They are (1) the reference to Cr.P.C. in relation to search and seizure under Section 67(10) of CGST Act, 2017, (2) the reference to Cr.P.C. under sub- Section (3) of Section 69 in relation to the grant of bail for a person arrested in connection to a non-cognizable and bailable offence, (3) the reference to Cr.P.C. in Section 132 (4) while making all offences under the CGST Act, 2017 except those specified in clauses (a) to (d) of Section 132 (1) of CGST Act, 2017 as non-cognizable and bailable and (4) the reference to Sections 193 and 228 of IPC in Section 70(2) of the CGST Act, 2017. Therefore, the contention of learned Additional Solicitor General that in view of Section 69(3) of the CGST Act, 2017, the petitioners cannot fall back upon the limited protection against arrest, found in Sections 41 and 41A of Cr.P.C., may not be correct. As pointed out earlier, Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , while the requirement under Section 69(1) of CGST Act, 2017 is the "reason to believe". In fact, on the question as to whether or not, reasons to believe should be recorded in the authorization for arrest, the learned Additional Solicitor General submitted that reasons are recorded in files. The learned Additional Solicitor General also produced the files. 46. If reasons to believe are recorded in the files, we do not think it is necessary to record those reasons in the authorization for arrest under Section 69(1) of the CGST Act. Since Section 69(1) of the CGST Act, 2017 specifically uses the words "reasons to believe", in contrast to the words "reasons to be recorded" appearing in Section 41A(3) of Cr.P.C., we think that it is enough if the reasons are found in the file, though not disclosed in the order authorizing the arrest. 47. Once it is found that Article 226 of the Constitution of India can be invoked even in cases where Section 438 Cr.P.C. has no application (in contrast to cases such as those under the SC/ST Act where it stands expressly excluded) and once it is found that the limited protection against arrest available under Sections 41 and 41A Cr.P.C. may be av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of persons who do not file returns, under Section 62, (v) assessment of unregistered persons, under Section 63, (vi) summary assessment in special cases, under Section 64 and (vii) audit under Sections 65 and 66. 52. But, to say that a prosecution can be launched only after the completion of the assessment, goes contrary to Section 132 of the CGST Act, 2017. The list of offences included in sub-Section (1) of Section 132 of CGST Act, 2017 have no co-relation to assessment. Issue of invoices or bills without supply of goods and the availing of ITC by using such invoices or bills, are made offences under clauses (b) and (c) of sub-Section (1) of Section 132 of the CGST Act. The prosecutions for these offences do not depend upon the completion of assessment. Therefore, the argument that there cannot be an arrest even before adjudication or assessment, does not appeal to us. 53. An argument was advanced by Mr. Raghunandan Rao, learned Senior Counsel for the petitioners that all the offences under the Act are compoundable under sub-Section (1) of Section 138 of the CGST Act, 2017, subject to the restrictions contained in the proviso thereto and that therefore, there is no nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven before trial. According to the learned Senior Counsel, the arrest of a person which will not facilitate further investigation, has to be discouraged, since the same has the potential to punish a person before trial. 56. But, the aforesaid contention proceeds on the premise as though the only object of arresting a person pending investigation is just to facilitate further investigation. However, it is not so. The objects of pre-trial arrest and detention to custody pending trial, are manifold as indicated in section 41 of the Code. They are: (a) to prevent such person from committing any further offence; (b) proper investigation of the offence; (c) to prevent such person from causing the evidence of the offence to disappear or tampering with such evidence in any manner; (d) to prevent such person from making any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the Court or to the police officer; Therefore, it is not correct to say that the object of arrest is only to proceed with further investigation with the arrested person. 57. It is true that in some cases arising out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e protection under Sections 41 and 41-A of Cr.P.C., may be available to persons said to have committed cognizable and non-bailable offences under this Act and despite our finding that there are incongruities within Section 69 and between Sections 69 and 132 of the CGST Act, 2017, we do not wish to grant relief to the petitioners against arrest, in view of the special circumstances which we have indicated above." 69. We are in complete agreement with the above dictum of law except with regard to the findings of the Telangana High Court that there is incongruity within section 69(1) and section 69(3) of the Act. We reiterate that the Section 69(1) of the CGST Act provides for the power to arrest for both types of the offences i.e. cognizable and non bailable offences as well non-cognizable and bailable offences as per the provisions of the sub-section(5) and the subsection( 4) of the section 132 of the CGST Act. We again make it clear that in sub-section(5) of the section 132 reference is made to the offences specified in the clauses (a) to (d) of the subsection (1) of the section 132 for which punishment is prescribed in the clause (i) of the sub-section (1) of the section 132 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in charge of a police station in respect of the investigation and report. Instead of defining the power to grant bail in detail, saying as to what they should do or what should not do, the short and expedient way of referring to the powers of another officer when placed in somewhat similar circumstances, has been adopted. By its language, the sub-section does not equate the officers of the GST with an officer in charge of a police station, nor does it make him one by implication. It only, therefore, means that he has got the powers as defined in the Code of Criminal Procedure for the purpose of releasing such person on bail or otherwise. This does not necessarily mean that a person alleged to have committed a non cognizable and bailable offence cannot be arrested without a warrant issued by the Magistrate. 71. We also do not subscribe to the view expressed in the decision of learned Single Judge of Madras High Court in case of Jaychandran Alloys P. Ltd. (supra) wherein it is held in the facts of that case that the officials cannot be seen to be acting in excess of the authority vested in them under the statute and provisions of section 132 of the CGST Act would stand triggered o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted offences other than the aforesaid clauses, such person cannot be arrested. It is required to be made clear that "arrest" and "bail" both are different parallels of law and cannot be mixed together. Clause (a) of subsection( 3) of section 69 of the CGST Act provides for provision of default bail if a person is arrested for any offence specified under sub-section(4) of section 132 of the CGST Act which means offences under the clauses (a)to (d) punishable under the clause(ii) of the sub-section (1) or sub-section (2) of the section 132 of the CGST Act. Therefore, except the offences referred to in sub-section(5) which are cognizable and non bailable, all other offences are bailable and non-cognizable. In order to understand the provisions of section 69, conferring powers to arrest, the same can be summarized as under: OFFENCE AND PUNISHMENT UNDER SECTION 132 OF THE CGST ACT Sr. No. Offence Punishment under clause (i) or (ii) of sub-section (1) or sub-section (2) Bailable or nonbailable under subsection( 4) or (5) 1. Any offence specified in clause (a) to (d) sub-section (1) of section 132. (i) in cases where the amount of tax evaded or the amount of input tax credit wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue which arose for consideration was, whether a police officer was bound to register a First Information Report upon receiving any information relating to commission of a cognizable offence under Section 154 of the Code of Criminal Procedure, 1973, and the police officer has the power to conduct a preliminary enquiry in order to test the veracity of such information before registering the same. The decision in Lalitha Kumari's case does not, as such, apply to the present case. 43. In Soni Vallabhdas Liladhar and another v. The Assistant Collector of Customs, Jamnagar, AIR 1965 SC 481, a Constitution Bench of the Supreme Court held that the Customs Officers are not police officers and the statements made to them were not inadmissible under Section 25 of the Indian Evidence Act. In Ramesh Chandra Mehta v. The State of West Bengal, AIR 1970 SC 940.......... 44. In Illias v. The Collector of Customs, Madras, AIR 1970 SC 1065, a constitution bench of the Supreme Court held: "12. ....... After examining the various provisions of the Central Excise Act and in particular Section 21 it was observed that a police officer for the purpose of clause (b) of Section 190 of the Cod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Maharashtra, (1976) 2 SCC 302), the Customs authorities called the appellant and his companion to the Customs house, took them into custody, and after due compliance with the requirements of law, the Inspector of Customs questioned the appellant and recorded his statement under Section 108 of the Customs Act. The Supreme Court held that under the circumstances it was manifest that at the time when the Customs Officer recorded the statement of the appellant, he was not formally "accused of any offence" and therefore, his statement is not hit by Article 20(3) of the Constitution of India. 49. In Directorate of Enforcement v. Deepak Mahajan and another, (1994)3 SCC 440, the question of law raised for consideration by the Supreme Court was the following: "Whether a Magistrate before whom a person arrested under sub-section (1) of Section 35 of the Foreign Exchange Regulation Act of 1973 which is in pari materia with subsection (1) of Section 104 of the Customs Act of 1962, is produced under sub-section (2) of Section 35 of the Foreign Exchange Regulation Act, has jurisdiction to authorise detention of that person under Section 167(2) of the Code of Criminal Procedure?" 50. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecific provision contrary to that excluding the operation of Section 167. .................... 136. In the result, we hold that sub-sections (1) and (2) of Section 167 are squarely applicable with regard to the production and detention of a person arrested under the provisions of Section 35 of FERA and Section 104 of Customs Act and that the Magistrate has jurisdiction under Section 167(2) to authorise detention of a person arrested by any authorised officer of the Enforcement under FERA and taken to the Magistrate in compliance of Section 35(2) of FERA." 51. In Union of India v. Padam Narain Aggarwal, AIR 2009 SC 254), it was held that the power to arrest a person by a Customs Officer is statutory in character and cannot be interfered with. Referring to Section 108 of the Customs Act, it was held that Section 108 does not contemplate magisterial intervention. The power is exercised by a Gazetted Officer of the Department. It obliges the person summoned to state truth upon any subject respecting which he is examined. He is not absolved from speaking truth on the ground that such statement is admissible in evidence and could be used against him. Section 108 of the Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 137 with the sanction of the Collector of Customs and until a complaint is so filed, the person against whom an inquiry is commenced under the Customs Act does not stand in the character of a person accused of an offence under Section 135. (vii) The Customs Officer is a revenue officer primarily concerned with the detection of smuggling and enforcement and levy of proper duties and prevention of entry into India of dutiable goods without payment of duty and of goods of which the entry is prohibited." 53. In Bhavin Impex Pvt. Ltd.'s case, this Court further held that: "31. The above discussion leads to the inevitable conclusion that Section 13 of the Central Excise Act empowers the Central Excise Officers to arrest a person whom he has reason to believe to be liable to punishment under the Act without issuance of warrant and without registration of an FIR or a complaint before the Magistrate." xxx 55. Thus, the above referred case-law makes it abundantly clear that the Customs/DRI officers are not police officers. A Customs officer conducting an inquiry under Section 107 or Section 108 of the Customs Act is not a police officer and the person against whom suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easonable suspicion, while under the new section he must have reasonable belief that the person has been guilty of an offence. Certainly, the provision is for the benefit of the citizen and it is not intended to invest the Customs officers with larger powers. Sub- section (2) of Section 104 of the Act, 1962, is practically similar to Section 174 of the old Act except that the word 'forthwith' has been substituted with the words 'without unnecessary delay'. This, however, means the same thing. It is intended to meet an inconvenience of a temporary duration. Sub-section (3), however, is very much relied for it provides: "Where an officer of Customs has arrested any person under subsection (1), he shall, for the purpose of releasing such person on bail or otherwise, have the same powers and be subject to the same provisions as the officer-in-charge of a police station has and is subject to under the Code of Criminal Procedure, 1898." 62/ Now, it is true that there is a reference to an 'officer-in- charge of a police station' in this subsection. But then the question is what powers of the police officer are given to the Customs officers. The provision does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods. But a person arrested by a Customs Officer because he is found in possession of smuggled goods or on suspicion that he is concerned in smuggling goods is not when called upon by the Customs Officer to make a statement or to produce a document or thing, a person accused of an offence within the meaning of Article 20 (3) of the Constitution. The steps taken by the Customs Officer are for the purpose of holding an enquiry under the Customs Act and for adjudging confiscation of goods dutiable or prohibited and imposing penalties. The Customs Officer does not at that stage accuse the person suspected of infringing the provision of the Customs Act with the commission of any offence. His primary duty is to prevent smuggling and to recover duties of customs: when collecting evidence in respect of smuggling against a person suspected of infringing the provisions of the Customs Act, he is not accusing the person of any offence punishable at a trial before a Magistrate. (iv) Where a Customs Officer arrests a person and informs that person of the grounds of his arrest (which he is bound to do under Article 22(1) of the Constitution) for the purposes of holding an enquiry into infringe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E : 68. We shall now look into the decision of the Supreme Court in the case of Om Prakash (supra). A three Judge Bench of the Supreme Court, considering the distinction between the offences punishable under the Indian Penal Code and that under the Central Excise Act, 1944, and the Customs Act, 1962, held as under: "16. As has been indicated hereinbefore in this judgment, Section 2(a) of the Code defines 'bailable offence' to be an offence shown as bailable in the First Schedule to the Code or which is made bailable by any other law for the time being in force. The First Schedule to the Code which deals with classification of offences is in two parts. The first part deals with offences under the Penal Code, while the second part deals with classification of offences in respect of other laws. Inasmuch as, the offences relate to the offences under the 1944 Act, it is the second part of the First Schedule which will have application to the cases in hand. The last item in the list of offences provides that if the offence is punishable with imprisonment for less than three years or with fine only, the offence will be non-cognizable and bailable. Accordingly, if the offence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cognizable within the meaning of that Code. There is, therefore, no scope to hold otherwise. It is in the said context that we will have to consider the submissions made by Mr.Rohatgi that since all offences under Section 9 are to be deemed to be noncognizable within the meaning of the Code of Criminal Procedure, such offences must also be held to be bailable. 38.The expression "bailable offence" has been defined in Section 2(a) of the Code and set out hereinabove in para 6 of the judgment, to mean an offence which is either shown to be bailable in the First Schedule to the Code or which is made bailable by any other law for the time being in force. As noticed earlier, the First Schedule to the Code consists of Part I and Part II. While Part I deals with offences under the Penal Code, Part II deals with offences under other laws. Accordingly, if the provisions of Part II of the First Schedule are to be applied, an offence in order to be cognizable (sic non-cognizable) and bailable would have to be an offence which is punishable with imprisonment for less than three years or with fine only, being the third item under the category of offences indicated in the said Part. An offenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 SCC Online Bom 9938. The Division Bench of the Bombay High Court was dealing with a matter under the PMLA Act. The Bombay High Court considered the decision of Om Prakash (supra) and also the question whether the arresting authority under the PMLA Act was required to follow the procedure laid down under Section 155(1) of the Code of Criminal Procedure, 1973........ xxx 77. The only idea with which we have referred to a Division Bench decision of the Bombay High Court drawing a fine distinction between the scheme of Section 108 of the Customs Act and Section 67 of the NDPS Act is to meet with the vociferous submissions of Mr.Pandya as regards the admissibility of such statements in evidence. Mr.Pandya, in the course of his submissions, has referred to Noor Aga (supra), Nirmal Singh Pehalwan @ Nimma (supra) and Vinod Solanki (supra) to make good his submissions that the statements recorded by the Customs Officer while the person is in custody of such officer is inadmissible in evidence and is hit by Section 25 of the Evidence Act, 1872. In all the above referred cases of the Supreme Court, the subject matter was Section 67 of the NDPS Act. 78. In any view of the matter, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 173 of the Code, becomes the complainant, whereas, the prosecuting agency under the special Acts files a complaint as a complainant, i.e. under Section 137 of the Customs Act. (7) The power to arrest a person by a Customs Officer is statutory in character and should not be interfered with. Section 108 of the Act does not contemplate any Magisterial intervention. The statements recorded under Section 108 of the Customs Act are distinct and different from the statements recorded by the Police Officers during the course of investigation under the Code. (8)The expression 'any person' in Section 104 of the Customs Act includes a person who is suspected or believed to be concerned in the smuggling of goods. However, a person arrested by a Customs Officer because he is found to be in possession of smuggled goods or on suspicion that he is concerned in smuggling goods is not, when called upon by the Customs Officer to make a statement or to produce a document or thing, a person is accused of an offence within the meaning of Article 20(3) of the Constitution of India. Where a Customs Officer arrests a person and informs that person of the grounds of his arrest, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w answered in the above judgment as the provisions of the section 69 of the CGST Act is pari materia with that of the section 104 of the Customs Act,1962. CONCLUSION : 77. In view of foregoing reasons and conspectus of law and the analysis of provisions of the section 69 read with section 132 of the CGST Act and provisions of the Code, we may sum up our Final conclusion to answer the questions arising in these petitions as under: (1) Q. whether the power to arrest as provided under section 69 read with section 132 of the CGST Act can be invoked by the Commissioner only upon completion of the adjudication process of finalising the assessment and determination of the liability as per the provisions of the CGST Act? A. we are of the opinion that the power to arrest as provided under section 69 of the CGST Act can be invoked if the Commissioner has reason to believe that the person has committed offences as provided under the clauses (a), (b), (c) or (d) of sub-section(1) of section 132 of the CGST Act, which are punishable under the clause (i) or clause (ii) of sub-section (1) or sub-section (2) of the section 132 of the CGST Act without there being any adjudication for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he person sought to be arrested is guilty of any offence. The expression 'any person' in Section 69 of the CGST Act includes a person who is suspected or believed to be concerned in the evasion of tax or availing illegal input tax credit. However, a person arrested by an authorised Officer because he is found to be evading tax or availing input tax credit as specified in the clauses (a) to (d) of the sub-section (1) of the section 132 of the CGST Act is not, when called upon by the authorised Officer to make a statement or to produce a document or thing, accused of an offence within the meaning of Article 20(3) of the Constitution of India. Where an authorised Officer arrests a person and informs that person of the grounds of his arrest, for the purposes of holding an inquiry into the infringement of the provisions of the CGST Act which he has reason to believe has taken place, there is no formal accusation of an offence. The accusation could be said to have been made when a complaint is lodged by an officer competent in that behalf before the Magistrate. The arrest and detention are only for the purpose of holding effective inquiry under the provisions of the CGST Act with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of sections 154, 155(1), 155(2), 155(3), 157, 172 of the Code of Criminal Procedure, 1973 are applicable or should be made applicable for the purpose of invoking the power to arrest under section 69 of the CGST Act? In other words, whether the authorised officer can arrest a person alleged to have committed non cognizable and bailable offences without a warrant of arrest issued by the Magistrate under the provisions of the Code of Criminal Procedure, 1973? (ii)For the purpose of section 69(3) of the CGST Act, whether the officers of the GST department could be said to be a "police officer in charge of a police station" as defined under section 2(o) of the Code of Criminal Procedure, 1973? A. (i) Any person can be arrested for any offence under the section 69 of the CGST Act, 1962, by the authorised officer to whom authority to arrest is given by the Commissioner if the Commissioner has reasons to believe that such person has committed an offence punishable under the clauses (a) to (d) of the subsection (1) which is punishable under the clause(i) or Clause (ii) of the subsection (1) or sub-section(2) of the Section 132 of CGST Act and in such circumstances, the au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y an authorised Officer is statutory in character and should not be interfered with. Section 69 of the CGST Act does not contemplate any Magisterial intervention. (vii) The main thrust of the decision in the case of Om Prakash (supra) to ascertain whether the offence was bailable or non-bailable, was on the point that the offence being noncognizable, it had to be bailable. In other words, Om Prakash (supra) deals with the question, "whether the offences under the Customs Act, 1962, and the Central Excise Act, 1944, are bailable or not?" However, provisions of the subsections (2) and (3) of the Section 69 of the CGST Act, provides in built mechanism and procedure in case of arrest for non-bailable offences and bailable offences. (4) Q. Whether the constitutional safeguards laid out by the Supreme Court in D.K. Basu's case [1997 (1) SCC 416] in the context of the powers of the police officers under the Code of Criminal Procedure, 1973 and of officers of the Central Excise, Customs and Enforcement Directorate are applicable to the exercise of powers under the provisions of section 69 of the GST Act in equal measure? A. We may now address ourselves on the last question as reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of individuals in the interest of security of the State in various situations prescribed under different statures has been upheld by the Courts. The right to interrogate the detenues, culprits or arrestees in the interest of the nation, must take precedence over an individual's right to personal liberty. The latin maxim salus populi est suprema lex (the safety of the people is the supreme law) and salus republicae est suprema lex (safety of the state is the supreme law) co-exist and are not only important and relevant but lie at the heart of the doctrine that the welfare of an individual must yield to that of the community. The action of the State, however must be "right, just and fair". Using any form of torture for extracting any kind of information would neither be 'right nor just nor fair' and, therefore, would be impermissible, being offensive to Article 21. Such a crime-suspect must be interrogated - indeed subjected to sustained and scientific interrogation determined in accordance with the provisions of law. He cannot, however, be tortured or subjected to third degree methods or eliminated with a view to elicit information, extract confession or drive knowledg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments from the person concerned by perpetuating torture or by applying third degree methods. That, no doubt, will be in clear violation of the right guaranteed under Article 21 of the Constitution of India which is available to all the citizens including a person who will be interrogated under section 70 of the GST Act or section 108 of the Customs Act as held by the Supreme Court in case of D.K. Basu (supra). 78. The petitioners have expressed apprehension of harassment at the end of the respondent authority. Though, such apprehension is not substantiated by any credible material on record, the same would be taken care of by the above observations made in answer to the question no.4. We also clarify that in none of the petitions, any case is made out for grant of any relief having regard to the facts narrated by the petitioners in their respective petitions. What has been observed and discussed by us are general propositions of law keeping in mind the subject matter. 79. We also in this context emphasise the mode of exercise powers of arrest under the GST Law as the power of arrest specified in Section 69 of the CGST Act undoubtedly displeases the corresponding powers of arrest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to be served by the appropriate authority under Ss. (2) would be the one which does not contain the reasons for the passing of the order or is not accompanied by the reasons recorded in writing. It may be permissible to record reasons separately but the order would be an incomplete order unless either the reasons are incorporated therein or are served separately along with the order on the affected party. We are, of the view, that reasons for the order must be communicated to the affected party." 81. We have already indicated in our judgment that the guidelines as laid by the Supreme Court in D.K. Basu (supra) shall apply even to the officers of the GST department. Before being codified in the Code, the specific requirement to draft an arrest memo at the time of arrest was first laid down as a guideline by the Supreme Court in D.K. Basu (supra). In D.K. Basu (supra), the Supreme Court laid down 11 guidelines to be followed in all cases of arrest and detention. As one of these guidelines, the requirement to draw up an arrest memo was first articulated as: "36 (2) That the police officer carrying out the arrest of the arrestee shall prepare a memo of arrest at the time of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the place of detention regarding the arrest of the person which shall also disclose the name of the next friend of the person who has been informed of the arrest and the names and particulars of the police officials in whose custody the arrestee is. (7) The arrestee should, where he so requests, be also examined at the time of his arrest and major and minor injuries, if any, present on his/her body, must be recorded at that time. The "Inspection Memo" must be signed both by the arrestee and the police officer effecting the arrest and its copy provided to the arrestee. (8) The arrestee should be subjected to medical examination by a trained doctor every 48 hours during his detention in custody by a doctor on the panel of approved doctors appointed by Director, Health Services of the concerned State or Union Territory, Director, Health Services should prepare such a panel for all Tehsils and Districts as well. (9) Copies of all the documents including the memo of arrest, referred to above, should be sent to the Illaqa Magistrate for his record. (10) The arrestee may be permitted to meet his lawyer during interrogation, though not throughout the interrogation. (11) A poli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Magistrate can arrive at a subjective satisfaction that the person has been arrested on lawful grounds. It is necessary, therefore, to incorporate some prima-facie material against the accused showing his complicity in the alleged offence. 83. There is no doubt that the arrest memo is a key safeguard against illegal arrest and a crucial component of the legal procedure of arrest. Full and consistent compliance is a responsibility of both, the officers of the GST as well as the Magistrate. It is high time that the GST department prescribes a standardized format for the arrest memo. The format must contain all the mandatory requirements and necessary additions. The gist of the offence alleged to have been committed must be incorporated in the arrest memo. It would be the duty of the concerned Magistrate to check that an arrest memo has been prepared and duly filled. In a given case, if the Magistrate finds that the arrest memo is absent or improperly filled or bereft of necessary particulars, then the Magistrate should decline the production of the arrested person. At this stage, we may refer to a very recent pronouncement of the Supreme Court in the case of Union of India v. Ashok ..... 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