SC introduces Criminal Law Safeguards against Arrest under GST and Customs Act [Read Judgement]:

SC introduces Criminal Law Safeguards against Arrest under GST and Customs Act [Read Judgement] The Supreme Court on Thursday added essential safeguards against coercive actions, including arrests, under the Central Goods and Services Tax (CGST) Act and the Customs Act, stating that authorities must prove "reasons to believe" before beginning proceedings. A three-judge bench led by Chief Justice of India Sanjiv Khanna ruled that individuals have the right to approach courts for pre-arrest bail, even if no first information report (FIR) has been registered, and that provisions of the criminal procedure code would apply in cases under the GST and Customs laws. The court also ruled that enforcement officials who used "threat and coercion" during GST-related search and seizure operations should face departmental proceedings. The bench, which included justices MM Sundresh and Bela M Trivedi, delivered the verdict and reached numerous crucial determinations, including an authoritative proclamation that customs personnel do not have the status of police officers and thus cannot exercise unrestricted policing powers. The court ruled out that safeguards formerly applied to arrests under other legislation, such as the Prevention of Money Laundering Act (PMLA), will now apply to GST and Customs arrests. This means that before adopting coercive action, there must be clear evidence that an offence has been committed. Recognising concerns that "threats and coercion" may be used for recovery under the GST Act, the Supreme Court unambiguously stated that such tactics are prohibited, ordering that personnel who engage in them be dealt with departmentally. The judgement follows the Supreme Court's lengthy review of the scope of arrest powers afforded under the central and state GST laws, as well as the Customs Act. The petitioners had challenged provisions that allowed tax officials to arrest individuals for accused tax evasion and fraud, claiming that such powers exceeded the legislative intent and violated constitutional rights under Articles 20(3) (right against self-incrimination) and 21 (liberty). Furthermore, the proceedings before the Directorate of Revenue Intelligence (DRI) under the Customs Act were challenged on the grounds that they violates the Criminal Procedure Code (CrPC) and previous Supreme Court rulings that regulatory statutes cannot grant policing powers to enforcement officers. The petitioners claimed that the Customs Act's enforcement measures violated principles of natural justice and due process. The government had defended the rules, claiming that arrests under the CGST Act were made based on an officer's determination of "more than suspicion but less than grave suspicion." However, the court rejected any justification for arbitrary arrests, underlining that the right to arrest is not synonymous with the laying of charges and should be used carefully. The Supreme Court's decision is expected to have a substantial impact on the implementation of GST and customs legislation. The verdict intends to avoid harassment of firms and traders while ensuring that tax enforcement adheres to constitutional and procedural restrictions. For Official Judgement Download PDF Given Below: