Delhi HC agrees to examine constitutionality of 'power to arrest' under CGST Act
Dec 10, 2020
New Delhi [India], December 10 : The Delhi High Court has agreed to examine the constitutional validity of the provisions conferring authorities the power to arrest under the Central Goods and Service Tax (CGST) Act, 2017.
The division bench of Justices Manmohan and Sanjeev Narula on Wednesday issued a notice on the petition and agreed to examine the vires of the constitutionality of Section 69 of the CGST Act, which pertains to the power to arrest conferred to GST authorities under the law.
The High Court was hearing a petition filed by Arun Gupta, who is accused of issuing fake invoices without supplying goods and allegedly committed offences under the CGST Act to the tune of approximately Rs 13 crores, challenging the vires of various sections of the CGST Act.
Advocates Vijay Aggarwal, Yugant Sharma and Nagesh Behl, appearing on behalf of Arun Gupta, showed the court a video clip wherein it was seen that the officials of the Directorate General of Goods and Services Tax Intelligence, New Delhi allegedly slapping and manhandling the employee of the petitioner. An audio recording of a call was also played during the hearing.
The bench asked the department concerned to file a counter-affidavit, replying to the video and audio, played in the court regarding using of violence against the employee of the petitioner.
The High Court further directed that no coercive action be taken against the petitioner in connection with the subject matter till the next date of hearing, and added that the house and the godown of the petitioner shall also be unsealed by the department.
The plea also challenged the investigation on grounds that the same was conducted by the GST officers, in what it said was a gross non-compliance of the procedure established by the law as contemplated under the Code of Criminal Procedure, 1973, claiming the same to be in violation of Article 21 of the Constitution of India.
"The vires of Sections 69 and 132 of the CGST Act were also challenged on the ground that an arrest cannot be made under the said Act, as there is no constitutional backing to the same. Article 246-A was inserted with effect from September 16, 2016, whereby the Union and the State Legislatures were empowered to levy a tax on GST," the plea said.
"Prior thereto, the power to levy different taxes like central excise, service excise duty, service tax, VAT etc, was enumerated in the different entries of Schedule VII read with Article 246," it added.
The lawyers argued that offence under the GST is only punishable with imprisonment for five years and as per the Supreme Court of India, an arrest should not be made for an offence punishable up to seven years.
As the offence is compoundable and appeal can be filed on payment of 10 per cent of the alleged amount therefore in view of the same no one should be arrested, they submitted.
The lawyers said that post-arrest statement of an arrestee will be hit by Article 20(3) of the Constitution of India, right against self-incrimination, so it is in the interest of the department not to arrest people.
Having the 'power to arrest' and "need to arrest" are two different things, they argued.
