Supreme Court upholds validity of arrests under Customs, GST laws but provides checks and balances

On Thursday, the Supreme Court confirmed the constitutional validity of arrest and prosecution provisions under the law on goods and services and the Customs Act, but attended guarantees against coercive actions, including arrest. Experts point out that decision is an important development in the application of taxes and will help to slow down tax terrorism.
The decision, by a special bench including chief judge Sanjiv Khanna, judge Bela Mr. Trivedi, and judge MM Suendreresh, judged that civil servants are not police and rights will be available for those arrested under TPS and customs laws.
The court also specified that these arrests cannot be used for recovery purposes, specifying that the arrests cannot be used for recovery and that the accused can access the appeals under article 226 in such cases.
A total of 279 petitions were taken by the bench calling into question the criminal provisions under the Customs Act and the State Act and the Central GST. The decision also canceled the case of Makemytrip on quantification before arrest. The case is scheduled for the final provision next month on March 17.
Sudipta Bhattacharjee, partner, Khaitan & Co, said that the Supreme Court confirming the constitutional validity of such arrests was not completely unexpected, but it provided for critical verifications and sales, which should, hope it, bypass the cases of tax terrorism and ensure a certain level of protection against taxpayers.
For example, the court underlined the requirement for the authorities to document their “reasons to believe” before launching an arrest, in accordance with the principles established in the case of Arvind Kejriwal. The Supreme Court has also judged that persons confronted with an arrest under TPS or the Customs Act will be entitled to guarantees available under the Code of Criminal Procedure and that the anticipation surety can be authorized in the event of an imminent arrest under TPS law, after a contrary judgment, he stressed.
Abhishek A Rastogi, founder of Rastogi Chambers, said: “In an alleged taxes of tax evasion, any arrest before the conclusion of the procedure and the finalization of the tax request is manifestly arbitrary. The arrests should only be undertaken when the procedure is completed and the tax evasion has been proven. »»
Amit Maheshwari, tax partner, AKM Global, said that the decision allows the authorities to take strict measures against serious tax fraud, it also guarantees legal guarantees for companies and individuals, including the right to early deposit even before the filing of a FIR.
“The decision highlights the need for companies to strengthen compliance with GST, as arrests can occur even if the exact tax liability is not entirely determined. This decision establishes a balance between the prevention of tax evasion and the protection of taxpayers’ rights, which makes it crucial for industry stakeholders to adopt a proactive approach to regulatory compliance, “he said.