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On April 18,2019 a division bench of the Telangana High Court upheld the authority and power to arrest assigned to designated officers under the Goods and Service Tax Act (GST) while rejecting any interim relief to those who were accused of violating the provisions of the said act.

On the other hand, Bombay High Court under the same circumstances and facts had allowed pre-arrest bail in number of cases where provisions of GST Act were violated but no FIR was registered by the officers of GST citing the provisions of CrPC under which recording of FIR is mandatory before the arrest.

Reacting to the above situation the Central Government filed number of appeals before the supreme court against the various orders of Bombay high court granting pre-arrest bail to those who had violated the provisions of GST Act on the plea that the GST officers had not registered FIR as is mandatory under CrPC.

While rejecting the special leave petition a vacation bench of Chief Justice Ranjan Gogoi and Justice Aniruddha Bose said, “As different high courts of the country have taken divergent views in the matter, we are of the view that the position in law should be clarified by this court. Hence the notice”

"As the accused-respondents have been granted the privilege of pre-arrest bail by high courts by the impugned orders, at this stage, we are not inclined to interfere with the same. However, we make it clear that the high courts, while entertaining such requests in future, will keep in mind that the Supreme Court by order dated May 27 had dismissed the special leave petition filed against the judgement and order of Telangana high court in a similar matter, wherein the high court of Telangana had taken a view contrary to what has been held by the high court (of Bombay) in the present case. Beyond the above, we do not consider it necessary to observe anything further," it said.

Again, a request was made by the defence counsel that reference to the decision to the apex be deleted from the judgement as it will close all doors in future for those accused under GST Act to seek relief. The bench refused to oblige and said, “That is the whole idea”.

From the decision and the observations of the supreme court a clear message was give that the state administration and the judiciary at the highest level does not want to create unnecessary legal hurdles to safeguard the interest of those who violate the provisions of the GST Act. This will help in curbing violations and realising the revenue which otherwise get stuck in unnecessary litigations. This will also reduce time and cost of collection of tax under GST Act.

In its plea Central Government explained the procedure under GST Act clarifying that GST law has been empowered to consider violation as a cognisable offence and the specified GST officers have been given powers to arrest a person based on “reason to believe” that a person has committed the offence under section 132 of the CGST Act. Further “Under special criminal enactments, it is settled law that there is no prior need to register a FIR before starting investigation or arresting a person,”.

For ready reference section 69 of CGST Act, 2017 is reproduced hereunder.

69. Power to arrest.

Where the Commissioner has reasons to believe that a person has committed any offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of section 132 which is punishable under clause (i) or (ii) of sub-section (1), or sub-section (2) of the said section, he may, by order, authorise any officer of central tax to arrest such person.

Where a person is arrested under sub-section (1) for an offence specified under subsection (5) of section 132, the officer authorised to arrest the person shall inform such person of the grounds of arrest and produce him before a Magistrate within twenty-four hours.

Subject to the provisions of the Code of Criminal Procedure, 1973, -

where a person is arrested under sub-section (1) for any offence specified under sub-section (4) of section 132, he shall be admitted to bail or in default of bail, forwarded to the custody of the Magistrate;

in the case of a non-cognizable and bailable offence, the Deputy Commissioner or the Assistant Commissioner shall, for the purpose of releasing an arrested person on bail or otherwise, have the same powers and be subject to the same provisions as an officer-in-charge of a police station.

The author is a B. Com; FCA (ICAI); PGDFM; PGDCA; DBM; Cert. IFRS (ICAEW); NCFM Capital Market (Dealers Module); Microsoft Certified IT Professional: Application for Microsoft Dynamics NAV (ERP) & AXAPTA (ERP): LL.B.

Source: Supreme court Judgement, new paper reports and GST Act 2017


Published by

Dilip K Raina
Category GST   Report

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