In a landmark ruling, the Supreme Court of India has overruled its previous judgments that barred the maintainability of anticipatory bail applications for offences under the Goods and Services Tax (GST) Act. A three-judge bench, comprising Chief Justice of India Sanjiv Khanna, Justice MM Sundresh, and Justice Bela Trivedi, has overturned the decisions in State of Gujarat v. Choodamani Parmeshwaran Iyer and Bharat Bhushan v. Director General of GST Intelligence, Nagpur Zonal Unit, which held that individuals summoned under the GST Act could not seek anticipatory bail and were limited to filing writ petitions under Article 226 of the Constitution.
RECOGNITION OF ANTICIPATORY BAIL UNDER GST AND CUSTOMS LAWS
The Supreme Court on Thursday (February 27) delivered a significant ruling on the powers of arrest under the Goods and Services Tax Act and the Customs Act. The Court held that the provisions of the Code of Criminal Procedure (now Bharatiya Nagarik Suraksha Sanhita) on the rights of accused persons are equally applicable to the arrests made under both the Customs Act and the GST Act.
The ruling in Radhika Agarwal v. Union of India (2025 LiveLaw (SC) 255) addresses crucial issues surrounding the arrest procedures under both the GST Act and the Customs Act. Chief Justice Khanna, in the judgment, emphasized that the power to grant anticipatory bail arises when there is an apprehension of arrest, reinforcing the fundamental right to life and liberty under Article 21 of the Constitution.
The dictum in the Arvind Kejriwal case that arrest under the Prevention of Money Laundering Act must be made only if there are “reasons to believe” has been applied in the context of GST and Customs arrests as well. The Court noted that Section 19(1) of the PMLA and Section 104 of the Customs Act are virtually the same, both dealing with the power of arrest, and extended the same principles to arrests under the GST Act.
Additionally, the Court extended the applicability of anticipatory bail to offences under the Customs Act, clarifying that the registration of a case or the maintenance of a case diary is not a prerequisite for entertaining an application under Sections 438 and 439 of the Criminal Procedure Code. The ruling drew support from Directorate of Enforcement v. Deepak Mahajan (1994 SCC (3) 440), reinforcing the broad scope of anticipatory bail.
CONSTITUTIONAL VALIDITY OF SECTIONS 69 AND 70 OF THE GST ACT:
The Legal provisions are extracted here for your reference;
SECTION 69 – POWER TO ARREST
(1) Where the Commissioner has reasons to believe that a person has committed any offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of section 132 which is punishable under clause (i) or (ii) of sub-section (1), or sub-section (2) of the said section, he may, by order, authorise any officer of central tax to arrest such person.
(2) Where a person is arrested under sub-section (1) for an offence specified under sub-section (5) of section 132, the officer authorised to arrest the person shall inform such person of the grounds of arrest and produce him before a Magistrate within twenty-four hours.
(3) Subject to the provisions of the Code of Criminal Procedure, 1973(2 of 1974),
(a) where a person is arrested under sub-section (1) for any offence specified under sub-section (4) of section 132, he shall be admitted to bail or in default of bail, forwarded to the custody of the Magistrate;
(b) in the case of a non-cognizable and bailable offence, the Deputy Commissioner or the Assistant Commissioner shall, for the purpose of releasing an arrested person on bail or otherwise, have the same powers and be subject to the same provisions as an officer-in-charge of a police station.
SECTION 70 – POWER TO SUMMON PERSONS TO GIVE EVIDENCE AND PRODUCE DOCUMENTS
(1) The proper officer under this Act shall have power to summon any person whose attendance he considers necessary either to give evidence or to produce a document or any other thing in any inquiry in the same manner, as provided in the case of a civil court under the provisions of the Code of Civil Procedure, 1908 (5 of 1908).
(2) Every such inquiry referred to in sub-section (1) shall be deemed to be a “judicial proceedings” within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860).
The Court also held that the circulars issued by the GST department regarding arrest must be strictly adhered to. It rejected the argument that customs officers are police officers and reiterated that anticipatory bail is applicable to GST and Customs Acts. The parties can approach the Court for relief if there is an apprehension of arrest, even without an FIR being registered. The Court also observed that there was some merit in allegations of coercion and harassment by tax officials, emphasizing that officers acting in contravention of the law must be dealt with departmentally.
The Supreme Court upheld the constitutional validity of Sections 69 and 70 of the GST Act, which grant authorities the power to arrest and summon individuals suspected of GST violations. Petitioners had challenged these provisions, arguing that Article 246-A of the Constitution, which empowers the Parliament and State Legislatures to levy and collect GST, does not explicitly permit criminal penalties for violations. They contended that Parliament’s authority to legislate on criminal matters is confined to Entry 93 of List I under the Seventh Schedule and that provisions related to summons, arrest, and prosecution exceeded the legislative competence of Parliament.
Rejecting these arguments, the bench ruled that Article 246-A is a special provision that encompasses both the power to levy GST and the authority to enact enforcement measures to ensure compliance.
“The Parliament, under Article 246-A of the Constitution, has the power to make laws regarding GST and, as a necessary corollary, enact provisions against tax evasion. Article 246-A is a comprehensive provision, and the doctrine of pith and substance applies. The impugned provisions lay down the power to summon and arrest, powers necessary for the effective levy and collection of GST. Time and again, this Court has held that while deciding legislative competence, entries should not be read in a narrow or pedantic sense but given their broadest meaning and widest amplitude, as they are intrinsic to the machinery of government,” the judgment stated.
Chief Justice Khanna further observed: “A penalty or prosecution mechanism for the levy and collection of GST and for checking its evasion is a permissible exercise of legislative power. The GST Acts, in pith and substance, pertain to Article 246-A of the Constitution, and the powers to summon, arrest, and prosecute are ancillary and incidental to the power to levy and collect goods and services tax. In view of the aforesaid, the vires challenge to Sections 69 and 70 of the GST Acts must fail and is accordingly rejected.”
COMPLIANCE WITH CRPC PROVISIONS IN GST AND CUSTOMS ARRESTS
The Court also clarified that the provisions of the CrPC (now Bharatiya Nagarik Suraksha Sanhita) related to the rights of arrestees apply to arrests under GST and Customs Acts. It referenced Sections 41-B, 41-D, and 50A of the CrPC, which mandate proper identification of arresting officers, the right of an arrested person to meet an advocate, and the duty of authorities to inform the arrestee’s nominated persons about their detention. The Court affirmed that these provisions must be followed by Customs and GST officers to ensure fairness and transparency in enforcement actions.
CONCLUSION
This ruling marks a significant development in tax law jurisprudence, reinforcing the fundamental right to anticipatory bail while affirming the legislative authority of Parliament to enact provisions ensuring GST compliance. The Supreme Court’s decision enhances the legal protections available to individuals facing allegations under the GST and Customs Acts while upholding the validity of enforcement provisions aimed at preventing tax evasion. This judgment is expected to have a far-reaching impact on tax administration and the rights of taxpayers in India.
*This article represents the author’s personal views and is for informational purposes only. It does not constitute legal or tax advice. Readers should seek professional guidance for their specific situations. The author and publisher bear no responsibility for actions taken based on this content.
