No GST arrests without communicating order, ‘reasons to believe’: Supreme Court

Supreme Court mandates GST authorities to communicate arrest orders, asserting it is essential for anticipatory bail applications.

The GST authorities cannot arrest a person without first communicating the order authorising the arrest and the “reasons to believe” recorded by the commissioner, the Supreme Court ruled on Wednesday, stressing that withholding such reasons could have “drastic consequences” for an accused’s right to liberty.

The court held that disclosing the reasons behind the arrest authorisation was crucial (HT_PRINT)

A bench of justices Dipankar Datta and Sheel Nagu said an arrest order under Section 69 of the Central Goods and Services Tax (CGST) Act must be communicated to the affected individual because the order is a “sine qua non” (an essential condition) for seeking anticipatory bail. The court said such communication would not impede an ongoing GST investigation and, instead, would reinforce an accused’s right to seek legal protection.

“The order under Section 69 of the CGST Act, as held, being a sine qua non to seek anticipatory bail, it would be an anomaly to hold that the order need not be communicated at all,” it said.

The court held that disclosing the reasons behind the arrest authorisation was crucial as such an order is open to judicial review by constitutional courts. The accused must be in a position to challenge both the order and the “reasons to believe” recorded by the commissioner.

“If Section 69 were read as it is, without there being any requirement of disclosure of the ‘reasons to believe’, withholding of reasons could have drastic consequences on the right to liberty of the accused,” it noted.

Arrest order must be shared before arrest, court says

The judgment also clarified that communication of the arrest order need not wait until after the person is arrested. “Without such communication, question of arrest would not arise,” it said.

The judgment came even as the bench set aside a Bombay high court order granting Future Group non-executive director Sunil Biyani one week’s protection from arrest in a GST probe, holding that the high court could not have granted such relief after concluding that his anticipatory bail plea was premature.

The top court found this course of action impermissible, but at the same time directed the GST commissioner to communicate the Section 69 order to Biyani, after which he could pursue whatever legal remedy was available to him. It said that the order could be communicated electronically, including through email, in addition to the modes permitted under the Bharatiya Nagarik Suraksha Sanhita and other permissible methods.

Referring to Rule 8 of the CGST Rules, the bench noted that a person seeking GST registration is required to provide an email address and mobile number. “This would enable an accused to seek remedy that the law provides to him, if so advised,” it said.