SC upholds validity of powers of Customs, GST officers to make arrests

New Delhi [India], February 27 : The Supreme Court on Thursday upheld the constitutional validity of the powers granted to authorised officers under the Customs laws, and the Central Goods and Services Tax (CGST) Act to make arrests.
After considering the issue by discussing the ratio in various judgments, a bench of the Chief Justice of India Sanjiv Khanna and Justices Bela M Trivedi and MM Sundresh rejected the challenge to the constitutional validity and the right of the authorised officers under the Customs Act and the CGST Acts to make arrests.
It pertinently held that such powers to make arrests under the laws are in consonance with the provisions of the Constitution and that the competence of the legislature to make such laws should be viewed in the widest sense.
"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," the apex court said in its judgment.
In its judgement, the Court further said, "Thus, a penalty or prosecution mechanism for the levy and collection of GST, and for checking its evasion, is a permissible exercise of legislative power. The GST Acts, in pith and substance, pertain to Article 246-A of the Constitution and the powers to summon, arrest and prosecute are ancillary and incidental to the power to levy and collect goods and services tax. Given the aforesaid, the vires challenge to Sections 69 and 70 of the GST Acts must fail and is accordingly rejected."
The Court was hearing a batch of pleas challenging the constitutional validity of the powers of arrest under the Customs laws and CGST Act.
The petitioners challenged the constitutionality of Sections 69 and 70 of the CGST Act, which grant powers to arrest and summon.
They argued that Article 246-A of the Constitution, which empowers Parliament and State Legislatures to levy and collect GST, does not authorize the State to treat violations as criminal offences.
The petitioners referred to the Seventh Schedule, which outlines the legislative powers of the Union and States, and contended that criminal provisions can only be enacted under matters listed in the Union List (Entry 93).
They further argued that the powers to summon, arrest, and prosecute are not directly related to the power of levying GST and thus fall outside Parliament's legislative competence under Article 246-A.
As regards the powers of arrest under the Customs Act, the petitioners had challenged such powers by relying on the decision pronounced by the Supreme Court in the case of Om Prakash, which provided various safeguards to the offenders against arbitrary arrests.
However, the court rejected the argument and stated that the reliance placed by the petitioners on the decision of this Court in Om Prakash was misconceived, as the statutory provisions have undergone amendments to bring them in consonance with the law of the land.
"Moreover, the provisions themselves provide enough safeguards against arbitrary and wrongful arrests", the Court added in the judgment.
Moreover, the Court largely relied on its judgment in the Arvind Kejriwal case, along with the judgments in various other cases.
Drawing parallels between the provisions relating to powers of arrest in the Prevention of Money Laundering Act in connection with the Arvind Kejriwal case and those in the Customs Act in the present case, the Court held that there was no inconsistency between the two.
"We are of the opinion that principles and ratio developed in the case of Arvind Kejriwal (supra), 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 Court said.
Thus, the Court dismissed the petition and upheld the validity of powers of arrest under the aforesaid laws.