Supreme Court Limits Arrest Powers Under GST and Customs Acts

Why in the News?

The Supreme Court ruled that Customs and GST officers cannot arrest arbitrarily and must follow CrPC safeguards. It emphasized written reasons, evidence-based arrests, and due process, preventing coercion of taxpayers to pay dues under the threat of detention.

Supreme Court Limits Arrest Powers Under GST and Customs Acts

Key Supreme Court Rulings:

  • The Supreme Court has restricted the unfettered power of arrest under the Customs Act, 1962 and the Goods and Services Tax (GST) Act, 2017.
  • It ruled that Customs and GST officers’ arrest powers must follow procedural safeguards similar to those applied to the police under the Criminal Procedure Code (CrPC), 1973.
  • In Arvind Kejriwal v. Directorate of Enforcement (2024) and Radhika Agarwal v. Union of India, the court emphasized that arrests should not be arbitrary.

Procedural Safeguards Mandated

  • The court directed that officers must record in writing the “reasons to believe” before making an arrest.
  • Officials must have material evidence linking the accused to the alleged offense.
  • Grounds of arrest must be provided to the arrestee so they can challenge the detention in court.
  • The court reiterated that an arrested person must be produced before a magistrate within 24 hours and allowed to inform a relative or lawyer.

Preventing Misuse of Arrest Powers

  • The court cautioned against the coercion of taxpayers to pay dues under the threat of arrest.
  • It ruled that forcing payments as a condition for avoiding arrest is illegal.
  • Directed the Central Board of Indirect Taxes and Customs (CBIC) to establish guidelines preventing arbitrary arrests.
  • Reinforced that arrests must not be based on mere suspicion but on concrete evidence.

Background of the Case

  • The case arose from multiple petitions challenging the constitutional validity of arrest powers granted to Customs and GST officers under the Customs Act, 1962, and CGST Act, 2017.

Customs Act, 1962 (Section 104):

  • Cognizable offenses (e.g., evasion of customs duty over ₹50 lakh, dealing in prohibited goods) allow warrantless arrests.
  • Non-cognizable offenses require a magistrate’s warrant for arrest.

CGST Act, 2017:

  • Section 132 classifies offenses as cognizable or non-cognizable based on severity.
  • Section 69 grants arrest powers to authorized officers for tax evasion and related offenses.