Rights of taxpayer at the time arrest – 4 important questions answered by court(PDF attached)
Table of Contents
Case Covered:
very important case for the arrest of the taxpayer. Many important issues were covered in this judgment.The observation of Gujarat high court in case of PV Ramanna Reddy were
Vimal Yashwantgiri Goswami
Versus
State of Gujarat
Citations:
- P.V. Ramana Reddy v. Union of India
- Desai Brothers v. DCIT
- Sheth Brothers v JCIT
- GKN Driveshafts (India) Ltd. v. ITO
- Jaychandran Alloys Private Limited v. Superintended of GST and Central Excise
- Akhil Krishan Magu v. Deputy Director, Directorate General of GST Intelligence
- Sukhdeep Singh Bhoday v. Joint Director General of Foreign Trade and others
- Make My Trip (India) Pvt. Ltd. v. Union of India
- V.M. Salgacoar & Bros.(P.) Ltd. v. CIT
- D.K. Basu v. State of West Bengal
- G.L. Didvania and another v. Income Tax Officer and another
- Mahadev Enterprise v. State of Gujarat
- Hema Mishra Vs. State of Uttar Pradesh
- Devchand Kalyan Tandel v. State of Gujarat and another
- Union of India v/s Sapna Jain
- CIT v. Vatika Township (P) Ltd.
- Barium Chemicals Ltd. vs. Company Law Board
- Income-tax Officer, Calcutta and Ors. vs. Lakhmani Mewal Das
- Radheshyam Kejriwal v. State of West Bengal and another
- Sundeep Mahendrakumar Sangahavi Versus Union Of India
Facts of the Case:
Many petitions were decided in this case. The court took up a batch of petitions having the same plea. A search was conducted and some material was taken over by the authorities.
The respondent asked for time to respond the allegations. Later on the appellant was arrested.
The learned Senior Advocate Mr. Tushar Hemani assisted by the learned advocate Ms. Vaibhavi K. Parikh appearing in the Special Civil Applications No. 4456/2020 and 4468/2020 submitted on behalf of the petitioners that the petitioners strongly apprehend their arrest when the petitioners would appear before the respondent no.2 pursuant to the summons issued under section 70 the CGST Act.
Observations:
The various issues were answered by the honorable court as follows
(1) Q. whether the power to arrest as provided under section 69 read with section 132 of the CGST Act can be invoked by the Commissioner only upon completion of the adjudication process of finalizing the assessment and determination of the liability as per the provisions of the CGST Act?
Ans 1- No,
we are of the opinion that the power to arrest as provided under section 69 of the CGST Act can be invoked if the Commissioner has reason to believe that the person has committed offences as provided under the clauses (a), (b), (c) or (d) of sub-section(1) of section 132 of the CGST Act, which are punishable under the clause (i) or clause (ii) of sub-section (1) or sub-section (2) of the section 132 of the CGST Act withoutthere being any adjudication for the assessment as provided under the provisions of the Chapter VIII of the CGST Act.
(2) Q. whether the provisions of section 69 of the CGST Act envisages that the Commissioner is obliged to record his reasons of belief and furnish the same to the person who is sought to be arrested?
Ans – (i) Sub-section (2) and sub-section (3) of section 69 with reference to the provisions of subsection(4) and sub-section (5) of section 132 of the CGST Act, differentiates between the cognizable and non cognizable offences. The sub section (2) of section 69 provides for informing such a person about grounds of arrest if he is alleged to have committed a cognizable and non bailable offence.
Therefore, it is not necessary for the Commissioner to provide a copy of the reasons recorded by him for his belief if he has reason to believe that any person has committed offences which are cognizable and non bailable.
(ii) Sub-section (2) of section 69 of the CGST Act provides statutory duty upon the officer authorised to arrest to inform such person about grounds of his arrest and in case if the person is ordered to be arrested for offences which are noncognizable and bailable , he would be released on bail as per provision of sub-section (3) of section 69 of the CGST Act.
(3) Q. (i) Whether the provisions of sections 154, 155(1), 155(2), 155(3), 157, 172 of the Code of Criminal Procedure, 1973 are applicable or should be made applicable for the purpose of invoking the power to arrest under section 69 of the CGST Act? In other words, whether the authorised officer can arrest a person alleged to have committed non cognizable and bailable offences without a warrant of arrest issued by the Magistrate under the provisions of the Code of Criminal Procedure, 1973?
Ans- (i) Any person can be arrested for any offence under the section 69 of the CGST Act, 1962, by the authorised officer to whom authority to arrest is given by the Commissioner if the Commissioner has reasons to believe that such person has committed an offence punishable underthe clauses (a) to (d) of the subsection (1) which is punishable under the clause(i) or Clause (ii) of the subsection (1) or sub-section(2) of the Section 132 of CGST Act and in such circumstances, the authorised Officer is not obliged to follow the dictum of the Supreme Court as laid in the case of Lalitha Kumari (supra)
(4) Q. Whether the constitutional safeguards laid out by the Supreme Court in D.K. Basu’s case [1997 (1) SCC 416] in the context of the powers of the police officers under the Code of Criminal Procedure, 1973 and of officers of the Central Excise, Customs and Enforcement Directorate are applicable to the exercise of powers under the provisions of section 69 of the GST Act in equal measure?
Ans- We may now address ourselves on the last question as regards the applicability of the safeguards pertaining to arrest as explained by the Supreme Court in case of D.K. Basu (supra), referred to above. It is significant to note that in D.K. Basu(supra), the Supreme Court did not confine itself to the actions of police officers taken in terms of powers vested in them under the Code but also of the officers of the Enforcement Directorate including the Directorate of Revenue Intelligence (‘DRI’). However, in context of D.K.Basu(supra), we would like to clarify that the law laid down by the Supreme Court in case of Poolpandi and others v. Superintendent, Central Excise and others reported in (1992) 3 SCC 259 has either been set aside or has been deviated from. It appears in paragraph no. 38 of the said judgment itself, it has been stated that the requirements referred to above (i.e. in paragraph no. 33) are for Articles 21 and 22 respectively of the Constitution of India and not to be strictly followed. We may give a simple illustration. Take a case in which writ application is filed seeking direction for giving an opportunity to the person who is sought to be interrogated by the police officer for any offence punishable under the Indian Penal Code to consult his lawyer.Such a direction may perhaps be issued in case of an accused because of hisright under Article 22 of the Constitution of India but the same cannot be made applicable to a person who is interrogated under section 70 of the GST Act or section 108 of the Customs Act where no right under Article 22 of the Constitution is affected as held by the Supreme Court in case of Poolpandi(supra). This Court, however, is quite conscious of the fact that pronouncement of Supreme Court in case of Poolpandi(supra) as also in another case, pointing out that the right of investigating authority should not be interfered with, as given to them under the provisions of the Act, does not give them an uncharted liberty to proceed in whatsoever manner they like in the matter of such inquiry or to extract
Order:
Let Notice be issued to the respondents returnable on 18th September 2019.
In the meantime, no coercive steps of arrest shall be taken against the writ applicant. Direct service is permitted.
On the returnable date, notify this matter on top of the Board.
We propose to take up this matter for a final hearing as far as possible on the returnable date. The State is requested to be ready with the matter having regard to the important issues which have been raised in the writ application.
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CA Shafaly Girdharwal
CA
New Delhi, India
CA Shaifaly Girdharwal is a GST consultant, Author, Trainer and a famous You tuber. She has taken many seminars on various topics of GST. She is Partner at Ashu Dalmia & Associates and heading the Indirect Tax department. She has authored a book on GST published by Taxmann.
