Can arrests be made under CGST? Centre moves SC seeking clarification

The central government has moved the Supreme Court (SC) seeking clarification on its powers to arrest a person without filing a first information report (FIR) under the central goods and services tax (CGST), claiming that the law “provides the power to the commissioner on the basis of reasons to believe that a person has committed the offence”. The case is likely to be heard on Wednesday.

The petition has been moved by the central government challenging interim orders passed by the Bombay High Court (HC), which directed that the accused cannot be arrested by the authorities “without following the procedure prescribed under the Criminal Procedure Code, and specifically registration of an FIR”. The accused person, who was being probed by the Serious Fraud Investigation Office (SFIO), had moved the HC seeking anticipatory bail and was provided the same.

A similar case listed was before a division Bench of the Telangana High Court. The two-judge Bench, however, refused to provide any interim relief to the petitioner and upheld the powers of the commissioner of CGST to arrest.

“Therefore, it is clear that there is a difference of opinion between various HCs in the country and it is imperative for this court to hear the present matter,” the central government has said in its plea.

If such differing orders continued to be passed by the HCs, it would render the CGST completely “unworkable” and “would create havoc in the due taxation process in the country,” the central government has said in its plea before the top court.

The central government has also claimed to have noticed a trend of “short circuiting the procedure established by law by individuals being investigated for economic offences by filing writ petitions, challenging the constitutional validity of every provision”.

The interim orders by the Bombay HC granting anticipatory bail to the accused were passed in matters wherein authorities of the CGST had found evidence of fraudulent practice of “issuance of invoices without any goods by number of registered taxpayers of GST for passing input tax credit”.

Apart from the interim orders, the central government has also challenged before the SC certain observations made by the HC. One such observation made by the HC is that the CGST officers are not police officers and thus, must first file the FIR before arresting the person. The central government, however, pleads that CGST Officers acting under the CGST Act, 2017, are not required and cannot be compelled to register an FIR.

Granting of interim ex-parte protection by the HC to people being probed by the SFIO or the central government under CGST is also impermissible in law, the central government has pleaded.

“There is a presumption of constitutionality of all laws validly enacted by the Parliament. It is submitted that, granting ad-interim relief, without any final finding on the constitutional validity of the provisions, is impermissible in law,” the central government has said.