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TMI Blog2025 (2) TMI 1162X X X X Extracts X X X X X X X X Extracts X X X X ..... e Code, which states that every police officer or other person making an arrest under the Code shall forthwith give information regarding such arrest and place where the arrested person is being held to any of his friends, relatives, or other person as may be disclosed or nominated by the arrested person for the purpose of giving such information. The arrested person must be informed of this right - the details of compliance with this mandate must be entered into the diary maintained by customs officer. It is the duty of the Magistrate, when an arrested person is produced, to satisfy himself that the requirements of Section 50A(2) and (3) have been complied with. Thus, these stipulations will apply in cases of arrests made by the customs officers. Arvind Kejriwal v. Directorate of Enforcement, [2024 (7) TMI 760 - SUPREME COURT] a recent judgment authored by one of us (Sanjiv Khanna, J.), is a dictum relating to the Prevention of Money Laundering Act, 2002. This Court held that the power of arrest granted to the Directorate of Enforcement under Section 19 of the PML Act is fenced with certain pre-conditions. These pre-conditions act as stringent safeguards to protect the life and l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d noncognizable, 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. The reasoning must also state how the monetary thresholds outlined in the Act are met. There are no inconsistency between Section 19(1) of the PML Act and Section 104(1) of the Customs Act. We are of the opinion that principles and ratio developed in the case of Arvind Kejriwal, and the principles specifically discussed and delineated in paragraphs 30 to 45 of this judgment, are equally applicable to the power of arrest under Section 104 of the Customs Act. The respondent authorities are, therefore, directed to comply with the mandate of this judgment and that of Arvind Kejriwal. The challenge to the amendments as well as provisions of the Customs Act is rejected. Reliance placed by the petitioners on the decision of this Court in Om Prakash [2011 (9) TMI 65 - SUPREME COURT] is misconceived as the statutory provisions have undergone amendments to bring them in consonance with the law of the land. Moreover, the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d clarification on the pre-conditions and when and how the power of arrest is to be exercised. The matters are directed to be listed before an appropriate Bench in the week commencing 17.03.2025 for final hearing and disposal. As per Bela M. Trivedi, J HELD THAT:- Whenever the jurisdiction of the High Court or the Supreme Court is invoked under Article 226 or Article 32 as the case may be, challenging the punitive or preventive detention, the Court is expected to take into consideration the nature of right infringed, the scope and object of the legislation under which such arrest or detention is made, the need to balance the rights and interests of the individual as against those of the society, the circumstances under which and the persons by whom the jurisdiction is invoked etc. In exercise of their discretionary jurisdiction, the High Courts and the Supreme Court do not, as courts of appeal or revision, correct errors of law or of facts. The judicial intervention is warranted only in exceptional circumstances when the arrest is prima facie found to be malafide; or is prompted by extraneous circumstances, or is made in contravention of or in breach of provisions of the concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RIMINAL) NO.4546 OF 2019) CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO. 9541 OF 2019) CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.3366 OF 2020) CIVIL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CIVIL) NO.20310 OF 2021) CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.6660 OF 2020) WRIT PETITION (CRIMINAL) NO.6 OF 2021 WRIT PETITION (CRIMINAL) NO.40 OF 2021 WRIT PETITION (CRIMINAL) NO.47 OF 2021 CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.1031 OF 2021) CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.1107 OF 2021) WRIT PETITION (CRIMINAL) NO.144 OF 2021 WRIT PETITION (CRIMINAL) NO.445 OF 2023 WRIT PETITION (CRIMINAL) NO.585 OF 2023 CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.11839 OF 2019) TRANSFERRED CASE (CRIMINAL) NO.5 OF 2018 WRIT PETITION (CRIMINAL) NO.118 OF 2019 WRIT PETITION (CRIMINAL) NO.119 OF 2019 CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.6834 OF 2019) WRIT PETITION (CRIMINAL) NO.212 OF 2019 WRIT PETITION (CRIMI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.1073 OF 2021) CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.1072 OF 2021) CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NOS.2050-2054 OF 2021) WRIT PETITION (CRIMINAL) NO.301 OF 2021 CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.6338 OF 2021) CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.6847 OF 2021) CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO. OF 2025) (ARISING OUT OF DIARY NO.31616 OF 2021) WRIT PETITION (CRIMINAL) NO.175 OF 2022 WRIT PETITION (CRIMINAL) NO.222 OF 2022 CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.6395 OF 2022) CRIMINAL APPEAL NO. OF 2025 (ARISING OUT OF SPECIAL LEAVE PETITION (CRIMINAL) NO.10421 OF 2022) WRIT PETITION (CRIMINAL) NO.402 OF 2022 WRIT PETITION (CRIMINAL) NO.385 OF 2022 WRIT PETITION (CRIMINAL) NO.426 OF 2022 WRIT PETITION (CRIMINAL) NO.434 OF 2022 WRIT PETITION (CRIMINAL) NO.453 OF 2022 WRIT PETITION (CRIMINAL) NO.456 OF 2022 WRIT PETITION (CRIMINAL) NO.466 OF 2022 WRIT PETITION (CRIMI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OF 2023 WRIT PETITION (CRIMINAL) NO.518 OF 2023 WRIT PETITION (CRIMINAL) NO.562 OF 2023 WRIT PETITION (CRIMINAL) NO.539 OF 2023 WRIT PETITION (CRIMINAL) NO.549 OF 2023 WRIT PETITION (CRIMINAL) NO.610 OF 2023 WRIT PETITION (CRIMINAL) NO.548 OF 2023 WRIT PETITION (CRIMINAL) NO.550 OF 2023 WRIT PETITION (CRIMINAL) NO.551 OF 2023 WRIT PETITION (CRIMINAL) NO.542 OF 2023 WRIT PETITION (CRIMINAL) NO.569 OF 2023 WRIT PETITION (CRIMINAL) NO.537 OF 2023 WRIT PETITION (CRIMINAL) NO.573 OF 2023 WRIT PETITION (CRIMINAL) NO.570 OF 2023 WRIT PETITION (CRIMINAL) NO.564 OF 2023 WRIT PETITION (CRIMINAL) NO.560 OF 2023 WRIT PETITION (CRIMINAL) NO.544 OF 2023 WRIT PETITION (CRIMINAL) NO.545 OF 2023 WRIT PETITION (CRIMINAL) NO.563 OF 2023 WRIT PETITION (CRIMINAL) NO.578 OF 2023 WRIT PETITION (CRIMINAL) NO.575 OF 2023 WRIT PETITION (CRIMINAL) NO.572 OF 2023 WRIT PETITION (CRIMINAL) NO.592 OF 2023 WRIT PETITION (CRIMINAL) NO.571 OF 2023 WRIT PETITION (CRIMINAL) NO.604 OF 2023 WRIT PETITION (CRIMINAL) NO.597 OF 2023 WRIT PETITION (CRIMINAL) NO.600 OF 2023 WRIT PETITION (CRIMINAL) NO.611 OF 2023 WRIT PETITION (CRIMINAL) NO.617 OF 2023 WRIT PETITION (CRIMINAL) NO.626 OF 2023 WRIT PETITION (CRIMINAL) NO.623 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ETITION (CRIMINAL) NO.99 OF 2024 WRIT PETITION (CRIMINAL) NO.100 OF 2024 WRIT PETITION (CRIMINAL) NO.102 OF 2024 WRIT PETITION (CRIMINAL) NO.118 OF 2024 WRIT PETITION (CRIMINAL) NO.113 OF 2024 WRIT PETITION (CRIMINAL) NO.111 OF 2024 WRIT PETITION (CRIMINAL) NO.131 OF 2024 WRIT PETITION (CRIMINAL) NO.133 OF 2024 WRIT PETITION (CRIMINAL) NO.130 OF 2024 WRIT PETITION (CRIMINAL) NO.117 OF 2024 WRIT PETITION (CRIMINAL) NO.135 OF 2024 WRIT PETITION (CRIMINAL) NO.134 OF 2024 WRIT PETITION (CRIMINAL) NO.132 OF 2024 WRIT PETITION (CRIMINAL) NO.162 OF 2024 WRIT PETITION (CRIMINAL) NO.163 OF 2024 WRIT PETITION (CRIMINAL) NO.136 OF 2024 WRIT PETITION (CRIMINAL) NO.161 OF 2024 WRIT PETITION (CRIMINAL) NO.139 OF 2024 WRIT PETITION (CRIMINAL) NO.143 OF 2024 WRIT PETITION (CRIMINAL) NO.152 OF 2024 WRIT PETITION (CRIMINAL) NO.172 OF 2024 WRIT PETITION (CRIMINAL) NO.167 OF 2024 WRIT PETITION (CRIMINAL) NO.171 OF 2024 WRIT PETITION (CRIMINAL) NO.181 OF 2024 WRIT PETITION (CRIMINAL) NO.179 OF 2024 WRIT PETITION (CRIMINAL) NO.177 OF 2024 WRIT PETITION (CRIMINAL) NO.173 OF 2024 WRIT PETITION (CRIMINAL) NO.185 OF 2024 WRIT PETITION (CRIMINAL) NO.176 OF 2024 WRIT PETITION (CRIMINAL) NO.192 OF 2024 WRIT PE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which diminished the constitutional and statutory rights of citizens. However, we would refer to certain portions of Om Prakash (supra) in the context of the present litigation to interpret relevant provisions of the Customs Act and the GST Act. 5. 'Cognizable offence', defined in Section 2(c) of the Code, means an offence for which the police officer may, in accordance with the First Schedule of the Code or any other law for the time being in force, arrest without a warrant. 'Noncognizable offence', defined in Section 2(l) of the Code, means an offence for which a police officer has no authority to arrest without a warrant. 6. Section 155 of the Code enjoins a duty on the officer in charge of a police station to enter, or cause to be entered, the substance of any information received regarding the commission of a non-cognizable offence in a book, maintained in the prescribed format. The officer must then refer such informant to the Magistrate. Police officers do not possess the authority to investigate noncognizable cases without an order from the Magistrate having the power to try such a case or committing it for trial.11 Upon receiving such an order from the Magistrate, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of which exceeds one crore rupees; or (d) fraudulently availing of or attempt to avail of drawback or any exemption from duty provided under this Act, if the amount of drawback or exemption from duty exceeds fifty lakh rupees; or (e) fraudulently obtaining an instrument for the purposes of this Act or the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992), and such instrument is utilised under this Act, where duty relatable to such utilisation of instrument exceeds fifty lakh rupees, shall be non-bailable." Sub-section (7) to Section 104 reads: "(7) Save as otherwise provided in sub-section (6), all other offences under this Act shall be bailable." 10. The net effect is that offences in Clauses (a) to (d) to Section 104(6) above, inserted vide the 2013 Amendment, and Clause (e), inserted vide the 2019 Amendment, are treated as non-bailable offences. All other offences under the Customs Act, barring aforementioned Clauses (a) to (e) in Section 104(6) of the Customs Act, are bailable.17 11. Therefore, given the amendments enacted after Om Prakash (supra) - the 2012 Amendment, the 2013 Amendment, and the 2019 Amendment - certain categories of offences hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has clarified this position while discussing the applicability of the Code to offences under the Prevention of Corruption Act, 1988. The relevant portion reads: "16...In the absence of a specific provision made in the statute indicating that offences will have to be investigated, inquired into, tried and otherwise dealt with according to that statute, the same will have to be investigated, inquired into, tried and otherwise dealt with according to the Code of Criminal Procedure. In other words, Code of Criminal is the parent statute which provides for investigation, inquiring into and trial of cases by criminal courts of various designations." 14. Before discussing the provisions of Chapter XII of the Code and determining which of its provisions apply to offences under the Customs Act, it is relevant to address the writ petitioners' submission that customs officers are police officers. In our opinion, this submission is both unfounded and flawed. 15. In a line of decisions of this Court - State of Punjab v. Barkat Ram, (1962) 3 SCR 338 Ramesh Chandra Mehta v. State of West Bengal, (1969) 2 SCR 461 and Illias v. Collector of Customs (1969) 2 SCR 613 - it has been decisively h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplies equally to Section 104 of the Customs Act. Thus, a Magistrate has the authority under Section 167(2) of the Code to authorise detention of such person to the custody of a customs officer. 19. On the issue of anticipatory bail, Deepak Mahajan (supra), referring to the dictum in Shri Gurbaksh Singh Sibbia and Others v. State of Punjab, (1980) 2 SCC 565 observes that the registration of a case and entries of a case diary are not compulsory when entertaining an application for grant of anticipatory bail under Sections 438 and 439 of the Code. Anticipatory bail can be invoked on the likelihood of arrest based on reasonable belief of the person having committed a non-bailable offence. At the same time, Deepak Mahajan (supra) holds that customs officer must mandatorily maintain case diaries : "112. The expression 'diary' referred to in Section 167(1) of the Code is the special diary mentioned in Section 167(2) which should contain full and unabridged statements of persons examined by the police so as to give the Magistrates on a perusal of the said diary, a satisfactory and complete source of information which would enable him to decide whether or not the accused person should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt and the Gujarat High Court, respectively, in Sunil Gupta and also Bhavin Impex (P) Ltd., which took the view in effecting arrest under the Central Excise Act, no warrant was required. It is apparently consequent upon the same that the legislature stepped in with amendments. xxx xxx xxx 150. The result would appear to be that acknowledging the effect of making the offences being non-cognizable to be to limit the power of the authorities under the Act for effecting arrest under the Act, to require a warrant, certain offences were declared to be cognizable as noticed in Section 9-A, as amended after the judgment in Om Prakash. The resultant position after the amendment is, it became open to the officers to effect the arrest in regard to a cognizable offence without obtaining a warrant. 151. In regard to the Customs Act, 1962 in Section 104, under the present avatar, two changes have been brought about. Firstly, the power to arrest is available in respect of offences under Sections 132, 133, 135, 135-A and 136. The offences are divided into two categories. Under Section 104(4), the offences which fall within its ambit, are treated as cognizable. The other offences are trea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Drugs and Cosmetics Act does not vest with the officers in charge of the police station, this Court issued several directions emphasising the necessity of compliance with the provisions of the Code by the arresting officer. Additionally, the arresting officer shall follow the guidelines laid down in D.K. Basu v. State of West Bengal. (1997) 1 SCC 416 Finally, this Court issued a saving order in exercise of power under Article 142 of the Constitution to fend earlier cases where FIR had been registered, and cognisance had already been taken. 22. The amendments made to the Customs Act in 2012, 2013 and 2019 are substantive and were introduced to effectively modify the application of Om Prakash (supra), which required a customs officer to obtain prior approval from a Magistrate before making an arrest. These amendments designated specified offences as cognizable and non-bailable, while also imposing certain preconditions and stipulations for making arrest. Consequently, the petitioners' reliance on Om Prakash (supra) is no longer valid and must be rejected. However, it remains important to examine the pre-conditions and safeguards established by the legislature to protect the li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has the right to meet an advocate of his choice during interrogation, but not throughout interrogation.35 In Senior Intelligence Officer, Directorate of Revenue Intelligence v. Jugal Kishore Samra, (2011) 12 SCC 362. this Court held that an advocate/authorised person may be present within visual distance during interrogation, but he cannot be within hearing distance of the proceedings nor can there be any consultations with such advocate/authorised person during the course of the interrogation. The relevant portion reads: "29. Taking a cue, therefore, from the direction made in D.K. Basu and having regard to the special facts and circumstances of the case, we deem it appropriate to direct that the interrogation of the respondent may be held within the sight of his advocate or any other person duly authorised by him. The advocate or the person authorised by the respondent may watch the proceedings from a distance or from beyond a glass partition but he will not be within the hearing distance and it will not be open to the respondent to have consultations with him in the course of the interrogation." 27. Reference can also be made to Section 50A of the Code,37 which states that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he PML Act. ⇒ The person arrested, as soon as may be, must be informed of the grounds of arrest. These preconditions act as stringent safeguards to protect life and liberty of individuals. We shall subsequently interpret the words "material", "reason to believe", and "guilty of the offence". Before that, we will refer to some judgments of this Court on the importance of Section 19(1) and the effect on the legality of the arrest upon failure to comply with the statutory requirements." 31. In Arvind Kejriwal (supra), a combined reading of Pankaj Bansal v. Union of India and Others, 2023 SCC OnLine SC 1244 Prabir Purkayastha v. State of NCT of Delhi, (2024) 7 SCC 576 and Vijay Madanlal Choudhary and Others v. Union of India and Others 2022 SCC OnLine SC 929 was adopted by this Court. It was held that the power to arrest a person without a warrant and without instituting a criminal case is a drastic and extreme power. Therefore, the legislature had prescribed safeguards in the language of Section 19 itself which act as exacting conditions as to how and when the power is exercisable. These safeguards include the requirement to have "material" in the possession of DoE, and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecific particulars and details. However, the onus to justify redaction would be on the DoE. The officers of the DoE are the authors of the "reasons to believe" and can use appropriate wordings, with details of the material, as are necessary in a particular case. As there may only be a small number of cases where redaction is justified for good cause, this reason is not a good ground to deny the accused's access to a copy of the "reasons to believe" in most cases. Where the nondisclosure of the "reasons to believe" with redaction is justified and claimed, the court must be informed. The file, including the documents, must be produced before the court. Thereupon, the court should examine the request and if they find justification, a portion of the "reasons to believe" and the document may be withheld. This requires consideration and decision by the court. DoE is not the sole judge. 43. Section 173(6) of the Code, permits the police officer not to furnish statements or make disclosures to the accused when it is inexpedient in public interest. In such an event, the police officer is to indicate the specific part of the statement and append a note requesting the Magistrate to exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory authority. The relevant portion reads: "67. Error in decision making process can vitiate a judgment/decision of a statutory authority. In terms of Section 19(1) of the PML Act, a decision-making error can lead to the arrest and deprivation of liberty of the arrestee. Though not akin to preventive detention cases, but given the nature of the order entailing arrest - it requires careful scrutiny and consideration. Yet, at the same time, the courts should not go into the correctness of the opinion formed or sufficiency of the material on which it is based, albeit if a vital ground or fact is not considered or the ground or reason is found to be non-existent, the order of detention may fail. 68. In Centre for PIL v. Union of India, this Court observed that in judicial review, it is permissible to examine the question of illegality in the decision-making process. A decision which is vitiated by extraneous considerations can be set aside. Similarly, in Uttamrao Shivdas Jankhar v. Ranjitsinh Vijaysinh Mohite Patil, elaborating on the expression "decision making process", this Court held that judicial interference is warranted when there is no proper application of mind on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the courts should not inquire into correctness or otherwise of the facts found except where the facts found existing are not supported by any evidence at all or the finding is so perverse that no reasonable man would say that the facts and circumstances exist. Secondly, it is permissible to inquire whether the facts and circumstances so found to exist have a reasonable nexus with the purpose for which the power is to be exercised. In simple words, the conclusion has to logically flow from the facts. If it does not, then the courts can interfere, treating the lack of reasonable nexus as an error of law. Thirdly, jurisdictional review permits review of errors of law when constitutional or statutory terms, essential for the exercise of power, are misapplied or misconstrued. Fourthly, judicial review is permissible to check improper exercise of power. For instance, it is an improper exercise of power when the power is not exercised genuinely, but rather to avoid embarrassment or for wreaking personal vengeance. Lastly, judicial review can be exercised when the authorities have not considered grounds which are relevant or has accounted for grounds which are not relevant." 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their possession"; and second, Section 104(1) does not explicitly state that the customs officer must reasonably believe that the arrestee is "guilty of an offence". Instead, Section 104(1) states that the customs officer must have "reasons to believe" that the arrestee has "committed an offence". 41. We are of the opinion that there is substantively no difference between a person being guilty of an offence and a person committing an offence. In a catena of judgments of this Court, it has been held that words of a statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning, unless such construction leads to some absurdity or unless there is something in the context or in the object of the statute to suggest to the contrary. See Gurudevdatta VKSSS Maryadit v. State of Maharashtra, AIR 2001 SC 1980; S. Mehta v. State of Maharashtra, 2001 (8) SCC 257; Patangrao Kaddam v. Prithviraj Sajirao Yadav Deshmugh, AIR 2001 SC 1121; and Ku. Sonia Bhatia v. State of Uttar Pradesh & Ors., (1981) 2 SCC 585 Applying these principles to the present case, the Cambridge Dictionary defines "guilty party" as "someone who has done something ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the specific severity assigned to the offence by the legislature. The reasoning must also state how the monetary thresholds outlined in the Act are met. Subclauses (b) to (d) of Section 104(4) provide monetary thresholds for cognizable offences, while subclauses (a) and (c) to (e) of Section 104(6) provide those for non-bailable offences. The "reasons to believe" must include a computation and/or an explanation, based on factors such as the goods seized, from which a conclusion of guilt can be drawn. This level of detail is crucial, as it facilitates judicial review of the exercise of the power to arrest. The department's authority to arrest under Section 104 hinges on satisfying these statutory thresholds. 45. Moreover, the framework of the Customs Act clearly reflects the legislative intent to establish a distinct and unique procedure for the exercise of arrest powers by a customs officer. For example, Section 104(4), specifies only 4 categories of offences as cognizable, outlined under sub-sections (a) to (d). Section 104(5) clarifies that all other offences under the Customs Act are noncognizable in nature, meaning that arrests for these offences cannot be made without a warra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply to the GST Acts in view of Sections 4 and 5 of the Code. Sub-section (10) to Section 67 of the GST Acts postulates that the provisions of the Code relating to search and seizure shall, as far as may be, apply to search and seizure under the GST Acts, subject to the modification that for the purpose of sub-section (5) to Section 165 of the Code, the word 'Magistrate' shall be substituted with the word 'Commissioner'. Section 69, which deals with the power of arrest, a provision which we will refer to subsequently, also deals with the provisions of the Code when the person arrested for any offence under the GST Acts is produced before a Magistrate. It also deals with the power of the authorised officers to release an arrested person on bail in case of non-cognizable and bailable offence, having the same power and subject to the same provisions as applicable to an officer in charge of a police station. We would, therefore, agree with the contention that the GST Acts are not a complete code when it comes to the provisions of search and seizure, and arrest, for the provisions of the Code would equally apply when they are not expressly or impliedly excluded by provisions of the GST A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cords or produces fake accounts or documents or furnishes any false information with an intention to evade payment of tax due 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 believe are in contravention of any provisions of this Act or the rules made thereunder; (l) attempts to commit, or abets the commission of any of the offences mentioned in clauses (a) to (f) and clauses (h) and (i) of this section, shall be punishable- (i) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five years and with fine; (ii) 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 ..... lauses are then graded in clauses (i) to (iii) depending upon the amount of tax evaded, the amount of input tax wrongly availed or utilised, or the amount of refund wrongly taken. In case of clause (i) where the amount exceeds Rs.500 lakhs, the punishment may extend to imprisonment for five years and with fine; where the amount is less than Rs.500 lakhs but exceeds Rs. 200 lakhs, the punishment may extend to imprisonment for three years and with fine. Where the amount of tax is less than Rs. 200 lakhs but exceeds Rs. 100 lakh, the punishment may extend to imprisonment for one year and with fine. Clause (iv) to Section 132(1) deals with cases where the accused commits or abets the commission of an offence specified in clause (f) and provides a punishment which may extend to imprisonment for six months, with or without fine. Sub-section (2) to Section 132 deals with repeat offenders. Sub-section (3) to Section 132 requires that the minimum term of imprisonment for the offences under clauses (i) to (iii) of sub-section (1) and sub-section (2), in the absence of special and adequate reasons to the contrary to be recorded by the court, shall not be for less than six months. 55. Sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence cognizable and non-bailable, should be supported by referring to relevant and sufficient material. 57. The aforesaid exercise should be undertaken in right earnest and objectively, and not on mere ipse dixit without foundational reasoning and material. The arrest must proceed on the belief supported by reasons relying on material that the conditions specified in sub-section (5) of Section 132 are satisfied, and not on suspicion alone. An arrest cannot be made to merely investigate whether the conditions are being met. The arrest is to be made on the formulation of the opinion by the Commissioner, which is to be duly recorded in the reasons to believe. The reasons to believe must be based on the evidence establishing - to the satisfaction of the Commissioner - that the requirements of sub-section (5) to Section 132 of the GST Act are met. 58. Our attention was drawn to the judgment of the High Court of Delhi in Makemytrip (India) Private Limited and Another v. Union of India and Others, 2016 SCC OnLine Del 4951 which is a decision interpreting the power of arrest under the Finance Act, 1994. These provisions are related to service tax. Excise duty, service tax, and other taxe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Board of Indirect Taxes and Customs (GST-Investigation Wing), has accepted the said position vide circular dated 17.08.2022, the relevant portion of which reads as under: " F.No. GST/INV/Instructions/2021-22 GST-Investigation Unit 17th August 2022 Instruction No. 02/2022-23 [GST - Investigation] Subject: Guidelines for arrest and bail in relation to offence punishable under the CGST Act, 2017 - reg. Hon'ble Supreme Court of India in its judgment dated 16th August, 2021 in Criminal Appeal No. 838 of 2021, arising out of SLP (Crl.) No. 5442/2021, has observed as follows: "We may note that personal liberty is an important aspect of our constitutional mandate. The occasion to arrest an accused during investigation arises when custodial investigation becomes necessary or it is a heinous crime or where there is a possibility of influencing the witnesses or accused may abscond. Merely because an arrest can be made because it is lawful does not mandate that arrest must be made. A distinction must be made between the existence the existence of the power to arrest and the justification for exercise of it. If arrest is made routine, it can cause incalculable harm to the rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing officer cannot be ensured. 3.3 Approval to arrest should be granted only where the intent to evade tax or commit acts leading to availment or utilization of wrongful Input Tax Credit or fraudulent refund of tax or failure to pay amount collected as tax as specified in sub-section (1) of Section 132 of the CGST Act 2017, is evident and element of mens rea / guilty mind is palpable. 3.4 Thus, the relevant factors before deciding to arrest a person, apart from fulfillment of the legal requirements, must be that the need to ensure proper investigation and prevent the possibility of tampering with evidence or intimidating or influencing witnesses exists. 3.5 Arrest should, however, not be resorted to in cases of technical nature i.e. where the demand of tax is based on a difference of opinion regarding interpretation of Law. The prevalent practice of assessment could also be one of the determining factors while ascribing intention to evade tax to the alleged offender. Other factors influencing the decision to arrest could be if the alleged offender is co-operating in the investigation, viz. compliance to summons, furnishing of documents called for, not giving evasive replie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wise, the complaint should be filed within a definite time frame. A report of arrests made must be maintained and submitted as provided in paragraph 6.1 of the Instruction. The aforesaid directions in the Circular/instruction should be read along with the specific directions outlined in the earlier judgments of this Court and the present judgment. 63. One of the assertions and allegations made on behalf of the petitioners is that the parties are compelled and coerced to admit and make payment of tax in view of the threat of arrest. This is in spite of the fact that there is no assessment or adjudication as to the alleged demand. 64. In this regard, we may refer to the circular F.No.GST/INV/Instructions/2022- 2023 (Instruction No. 01/2022-23) dated 25.05.2022 issued by the Central Board of Indirect Taxes and Customs referring to the taxpayers depositing partial or full GST liability during the course of search, inspection or investigation. The relevant extracts of the circular reads: " F.No. GST/INV/Instructions/2022-23 GST-Investigation Unit 25th May 2022 Instruction No. 01/2022-23 [GST - Investigation] Subject: Deposit of tax during the course of search, inspection or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us. In this regard, our attention was drawn to Section 74(5) of the GST Acts, which states that a person chargeable with tax may, before service of notice under sub-section (1), pay the amount of tax along with interest payable under Section 50 and a penalty equivalent to 15% of such tax on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer, and inform the proper officer in writing of such payment. Subsection (5) to Section 74 relates to voluntary payment, and does not postulate payment under force, coercion or threat of arrest. The aforesaid circulars are binding and should be adhered to in letter and spirit. The authorities must 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. Way back in the year 1978, a three Judges Bench of this Court in Nandini Satpati v. P.L. Dani and Another (1978) 2 SCC 424 had observed as under: "57. (...) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 CGST Zones 5291 10965 887 85 DGGI 1940 13175 1597 68 Total 7231 24140 2484 153 2023-24 (upto March 2024) CGST Zones 6993 15374 836 69 DGGI 2197 21000 2577 113 Total 9190 36374 3413 182 67. Analysing the aforesaid data indicates that the number of people arrested is normally in hundreds or more.52 However, it is to be noted that the figures with regard to the tax demand and the tax collected would, in fact, indicate some force in the petitioners' submission that the assessees are compelled to pay tax as a condition for not being arrested. Sub-section (5) to Section 74 of the GST Acts gives an option to the assessee and does not confer any right on the tax authorities to compel or extract tax by threatening arrest. This would be unacceptable and violative of the rule of law. 68. We would observe that in case there is a breach of law, and the assessees are put under threat, force or coercion, the assessees would be entitled to move the courts and seek a refund of tax deposited by them. The department would also take appropriate action against the officers in such cases. 69. However, we may clarify that a person summone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emytrip (supra), we would observe, itself carves out an exception when an assessment order under the Finance Act may not be required, namely cases where a person who is shown to be a habitual evader as one who has not filed service tax returns for a continuous period of time, who has a history of repeated defaults for which there have been fines, penalties imposed, and prosecutions launched, etc. It is possible to ascertain these facts from past records. Thereafter, it is observed that it might be possible for the department to justify resorting to coercive provisions but the notes on the file must offer convincing justification for resorting to such an extreme measure. It is this latter aspect which according to us is of relevance. The petitioners further submitted that till an assessment order was passed under Section 74 of the GST Acts, the liability cannot be quantified and hence an assessee cannot move an application for compounding of offences. We would reject the said submission because there is a difference between the compounding of offences and the arrest of a person. We have already stipulated sufficient safeguards to ensure that no arrests are made till the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Union of India and Others v. VKC Footsteps (India) Private Ltd., (2022) 2 SCC 603 took note of the change brought about by Article 246-A of the Constitution and observed: "52.1. Firstly, Article 246-A defines the source of power as well as the field of legislation (with respect to goods and services tax) obviating the need to travel to the Seventh Schedule. 52.2. Secondly, the provisions of Article 246-A are available both to Parliament and the State Legislatures, save and except for the exclusive power of Parliament to enact GST legislation where the supply of goods or services takes place in the course of inter-State trade or commerce. (...)" 75. The Parliament, under Article 246-A of the Constitution, has the power to make laws regarding GST and, as a necessary corollary, enact provisions against tax evasion. Article 246-A of the Constitution is a comprehensive provision and the doctrine of pith and substance applies. The impugned provisions lay down the power to summon and arrest, powers necessary for the effective levy and collection of GST. Time and again this Court has held that while deciding the issue of legislative competence, entries should not be read i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower to levy and collect goods and services tax. In view of the aforesaid, the vires challenge to Sections 69 and 70 of the GST Acts must fail and is accordingly rejected. 76. In some of the cases, Section 135 of the GST Acts which relates to culpable mental intent has been challenged. We are not examining the said aspect as prosecution has not been initiated in any of these cases. If any person is aggrieved and is advised to challenge the said Section, he/she may do so before the High Court. 77. In view of the aforesaid discussion the challenge to the constitutional validity as also the right of the authorised officers under the Customs Act and the GST Acts to arrest are rejected and dismissed with elucidation and clarification on the pre-conditions and when and how the power of arrest is to be exercised. 78. We, accordingly, answer the question in the aforesaid terms. The matters are directed to be listed before an appropriate Bench in the week commencing 17.03.2025 for final hearing and disposal. ......................................CJI. (SANJIV KHANNA) ........................................J. (M.M. SUNDRESH) JUDGMENT BELA M. TRIVEDI, J. 1. While completely agreeing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the legislation under which such arrest or detention is made, the need to balance the rights and interests of the individual as against those of the society, the circumstances under which and the persons by whom the jurisdiction is invoked etc. In exercise of their discretionary jurisdiction, the High Courts and the Supreme Court do not, as courts of appeal or revision, correct errors of law or of facts. The judicial intervention is warranted only in exceptional circumstances when the arrest is prima facie found to be malafide; or is prompted by extraneous circumstances, or is made in contravention of or in breach of provisions of the concerned statute; or when the authority acting under the concerned statute does not have the requisite authority etc. 5. In this regard, a beneficial reference of the very apt observations made in Additional Secretary to the Government of India and Others vs. Smt. Alka Subhash Gadia and Another (1992) Supp (1) SCC 496, deserves to be made. The three judge bench in the said case while discussing the Law on Preventive Detention, observed as under:- "11. The provisions of Articles 21 and 22 read together, therefore, make it clear that a person can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l liberty but also to prevent a potential misuse of the power to arrest a person at the instance of the authorized officer. The safeguards are - the requirement to have "material" in possession of the authorized officer, to form an opinion and record in writing the "reasons to believe" that the person arrested is guilty of an offence or has committed an offence as the case may be, under the provisions of the concerned Act, and the requirement to inform the person arrested, as soon as may be, of the grounds of arrest. As per Article 21 of the Constitution, no person could be deprived of his life or personal liberty except according to procedure established by law. Since, the personal liberty of a person is deprived, when he is arrested, the procedure laid down in the Statute while depriving his personal liberty, has to be followed. Similarly, as per Article 22(1) of the Constitution, no person who is arrested, could be detained in custody without being informed, as soon as may be, of the grounds for such arrest. Thus, the grounds for such arrest have to be communicated to him as soon as may be after the arrest is made. Tersely put, there has to be due compliance of the Constitutiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the person was guilty of the offence under the Act, was based on the "material" in possession of the authorized officer or not, and whether the arrestee was informed about the grounds of arrest as soon as may be after the arrest was made. Sufficiency or adequacy of material on the basis of which the belief is formed by the officer, or the correctness of the facts on the basis of which such belief is formed to arrest the person, could not be a matter of judicial review. 10. It hardly needs to be reiterated that the power of judicial review over the subjective satisfaction or opinion of the statutory authority would have different facets depending on the facts and circumstances of each case. The criteria or parameters of judicial review over the subjective satisfaction applicable in Service related cases, cannot be made applicable to the cases of arrest made under the Special Acts. The scrutiny on the subjective opinion or satisfaction of the authorized officer to arrest the person could not be a matter of judicial review, in as much as when the arrest is made by the authorized officer on he having been satisfied about the alleged commission of the offences under the special Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may embolden the unscrupulous elements to commit such crimes and may not do justice to the victims, who in such cases would be the society at large and the nation itself. With the advancement in Technology, the very nature of crimes has become more and more intricate and complicated. Hence, minor procedural lapse on the part of authorized officers may not be seen with magnifying glass by the courts in exercise of the powers of judicial review, which may ultimately end up granting undue advantage or benefit to the person accused of very serious offences under the special Acts. Such offences are against the society and against the nation at large, and cannot be compared with the ordinary offences committed against an individual, nor the accused in such cases be compared with the accused of ordinary crimes. 13. Though, the power of judicial review keeps a check and balance on the functioning of the public authorities and is exercised for better and more efficient and informed exercise of their powers, such power has to be exercised very cautiously keeping in mind that such exercise of power of judicial review may not lead to judicial overreach, undermining the powers of the statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of twenty-four hours fixed by Section 57, and there are grounds for believing that the accusation or information is well-founded, the officer in charge of the police station or the police officer making the investigation, if he is not below the rank of sub-inspector, shall forthwith transmit to the nearest Judicial Magistrate a copy of the entries in the diary hereinafter prescribed relating to the case, and shall at the same time forward the accused to such Magistrate. (2) The Magistrate to whom an accused person is forwarded under this section may, whether he has or has not jurisdiction to try the case, from time to time, authorise the detention of the accused in such custody as such Magistrate thinks fit, for a term not exceeding fifteen days in the whole; and if he has no jurisdiction to try the case or commit it for trial, and considers further detention unnecessary, he may order the accused to be forwarded to a Magistrate having such jurisdiction." 28 For short, "Drugs & Cosmetics Act". 29 Drugs and Cosmetics (Amendment) Act, 2008, Act No. 26 of 2008. 31 Act 5 of 2009. 32 Act 5 of 2009. 33 41-B. Procedure of arrest and duties of officer making arrest.-Every police ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our prongs - (i) legitimate aim/purpose - The first step is to examine whether the act/measure restricting the fundamental right has a legitimate aim and/or purpose; (ii) rational connection -The second step is to examine whether the restriction has rational connection with the aim;
(iii) minimal impairment/necessity test - The third step is to examine whether there should have been a less restrictive alternate measure that is equally effective; and (iv) balancing stage - The last stage is to strike an appropriate balance between the fundamental right and the pursued public purpose.
47 See Section 26 of the Indian Penal Code, 1860.
48 We have collectively referred to the Central as well as the State GST Acts as "GST Acts".
52 The data reflects that the number of arrests is inversely proportional to the percentage of amount recovered against the amount detected. i.e., when payments are made, the power of arrest is not being exercised. Further, the amount classified as the 'detection' amount is not the amount ascertained through assessment/adjudication, but an amount quantified by the department/authority conducting search and seizure. X X X X Extracts X X X X X X X X Extracts X X X X
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