Safiya Malik

The Supreme Court of India has upheld the constitutional validity of the arrest provisions under the Customs Act and the Goods and Services Tax (GST) Acts while outlining the procedural safeguards that must be adhered to in such cases. The Court examined the constitutional validity of the relevant provisions and stated that these provisions operate within the legislative framework governing taxation. The Court observed that the power of arrest under these statutes is "ancillary and incidental to the enforcement of tax laws." It further recorded that "statutory safeguards exist to prevent arbitrary arrests."

The petitions challenged the validity of Sections 69 and 70 of the Central and State GST Acts, along with provisions in the Customs Act that empower enforcement officers to summon, arrest, and initiate criminal prosecution. The petitioners contended that these provisions contravened Articles 14, 19, and 21 of the Constitution of India by lacking adequate procedural safeguards.

The government defended these provisions, arguing that they are necessary for tax enforcement and deterrence against evasion. It asserted that similar powers exist under other financial statutes, including the Prevention of Money Laundering Act (PMLA) and the Income Tax Act. The respondents submitted that financial laws require strong enforcement mechanisms to ensure compliance and prevent revenue loss.

The petitioners relied on the Supreme Court's judgment in Tofan Singh v. State of Tamil Nadu, which held that officers under the Narcotic Drugs and Psychotropic Substances Act (NDPS Act) are not police officers, and their statements are not admissible as confessions. They argued that similar reasoning should apply to GST and Customs officers, limiting their power to arrest without prior judicial approval.

The respondents relied the decision in Vijay Madanlal Choudhary v. Union of India, where the Supreme Court upheld stringent arrest provisions under the PMLA. It argued that special statutes dealing with economic offenses require a distinct enforcement framework, including the power to arrest individuals involved in tax evasion without prior court sanction.

The Supreme Court observed that the provisions of the GST and Customs Acts do not violate constitutional guarantees, provided they are exercised in accordance with statutory safeguards. The bench stated, "The safeguards provided in the Special Acts against the arrest of a person are designed to balance individual liberty with the state’s interest in enforcement and compliance".

Addressing the scope of judicial review, the court stated that its role is limited to ensuring compliance with statutory and constitutional safeguards, rather than reassessing the sufficiency of evidence. It recorded:

"Whenever the jurisdiction of the High Court or the Supreme Court is invoked under Article 226 or Article 32, the Court is expected to take into consideration the nature of the right infringed, the scope and object of the legislation under which such arrest is made, the need to balance the rights and interests of the individual as against those of the society".

On procedural safeguards, the court cited the requirement that the reasons for arrest must be recorded in writing and conveyed to the arrested person as soon as possible. It referred to judicial precedents emphasizing that arrest powers must be exercised with caution and only when justified. It stated:

"Arrest cannot be made arbitrarily and on the whims and fancies of the authorities. It is to be made on the basis of the valid 'reasons to believe,' meeting the parameters prescribed by the law".

Regarding the classification of offenses, the court referred to Section 104(5) of the Customs Act, which distinguishes between cognizable and non-cognizable offenses. It observed that "all other offenses under the Customs Act are non-cognizable in nature, meaning that arrests for these offenses cannot be made without a warrant".

The court further noted that safeguards under the Customs Act require that "a person arrested as soon as may be is required to be informed of the grounds of such arrest. The grounds of arrest must be given in writing to the arrestee before he is produced before the Magistrate in terms of Section 104(2)".

The Supreme Court upheld the enforcement mechanisms under the GST and Customs Acts and dismissed the petitions. The court issued the following directives:

1. Arrests under these statutes must be carried out in accordance with statutory safeguards, including the requirement that reasons be recorded in writing.

2. Judicial review will be limited to assessing whether statutory and constitutional safeguards are followed, rather than evaluating the sufficiency of evidence.

The matters are to be listed before an appropriate bench in the week commencing March 17, 2025, for final hearing and disposal.

Case Title: Radhika Agarwal v. Union of India & Others
Case Number: W.P. (Crl.) No. 336 of 2018 & Connected Matters
Bench: Chief Justice Sanjiv Khanna, Justice M.M. Sundresh, Justice Bela M. Trivedi

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