2025 INSC 272
SUPREME COURT OF INDIA
(HON’BLE
SANJIV KHANNA, CJI. HON’BLE M.M. SUNDRESH AND HON’BLE BELA M. TRIVEDI, JJ.)
RADHIKA AGARWAL
Petitioner
VERSUS
UNION OF INDIA
Respondent
Writ
Petition (Criminal) No.336 OF 2018 With Criminal Appeal No. Of 2025 (Arising
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2018 Writ Petition (Criminal) No.210 Of
2024 And Writ Petition (Criminal) No.198 Of 2024-Decided on 27-02-2025
Taxation
(A)
Customs Act, 1962, Section 104(4) (post amendments in 2012 and post amendment
2019), Section 104(6) (post amendment 2013 and post amendment 2019) – Customs –
Arrest - Challenge
to vires of aforesaid provisions -
The amendments made to the Customs Act in 2012, 2013 and 2019 are
substantive and were introduced to effectively modify the application
of Om Prakash case, which required a customs officer to obtain prior
approval from a Magistrate before making an arrest - These amendments designated
specified offences as cognizable and non-bailable, while also imposing certain
pre- conditions and stipulations for making arrest - Consequently, the
petitioners’ reliance on Om Prakash case is no longer valid and must
be rejected - However, it remains important to examine the pre-conditions and
safeguards established by the legislature to protect the life and liberty of
arrestees.
(Para 22)
(B)
Customs Act, 1962, Section 104(4) (post amendments in 2012 and post amendment
2019), Section 104(6) (post amendment 2013 and post amendment 2019) – Criminal
Procedure Code, 1973, Section 41-B, 41-D, 50-A – Arrest under Customs Act – Duties
of the officer making the arrest - Amendment of 2009 in Code, 1973, incorporate
Section 41-B which outlines the procedures of arrest and the duties of the
officer making the arrest - Although section 41-B refers to the police officer,
we believe, it equally imposes a duty on the customs officers - Officers making
an arrest are required to bear an accurate, legible, and clear indication of
their names to facilitate ease of identification by the arrestee - Section 41-D
of the Code is applicable for offences under the Customs Act - Accordingly,
a person arrested by a customs officer has the right to meet an advocate of his
choice during interrogation, but not throughout interrogation.
(Para 25 and 26)
(C)
Customs Act, 1962, Section 104(4) (post amendments in 2012 and post amendment
2019), Section 104(6) (post amendment 2013 and post amendment 2019) – Criminal
Procedure Code, 1973, Section 50-A – Arrest under Customs Act – Compliance of
Provisions
- Section 50A of the Code which states that every police officer or other
person making an arrest under the Code shall
forthwith give information regarding such arrest and place where the
arrested person is being held to any of his friends, relatives, or other person
as may be disclosed or nominated by the arrested person for the purpose of
giving such information - The arrested person must be informed of this right –
Held that the details of compliance with this mandate must be entered into the
diary maintained by customs officer - It is the duty of the Magistrate, when an
arrested person is produced, to satisfy himself that the requirements of
Section 50A(2) and (3) have been complied with - These stipulations will apply
in cases of arrests made by the customs officers.
(Para 27)
(D)
Customs Act, 1962, Section 104(4) (post amendments in 2012 and post amendment
2019), Section 104(6) (post amendment 2013 and post amendment 2019) – Criminal
Procedure Code, 1973, Section 41-B, 41-D, 50-A and 55-A - Arrest under Customs
Act - Reasonable care of their health
and safety of accused
- Section 55A of the Code, 1973,
inserted in 2009, states that it
shall be the duty of the person having custody of the accused to take
reasonable care of their health and safety - This provision shall be equally
applicable to arrests under the Customs Act - Provisions of the Section
41-B, 41-D, 50-A and 55-A of the Code, 1973 do not in any way fall foul of or
repudiate the provisions of the Customs Act - They complement the
provisions of the Customs Act and in a way ensure better regulation,
ensuring due compliance with the statutory conditions of making an arrest.
(Para 29 and 29)
(E)
Customs Act, 1962, Section 104(1) - Prevention of Money Laundering Act, 2002,
Section 19 – Customs Act - Power to arrest - Section 104(1) stipulates
that arrests may be made if a customs officer, empowered by general or special
order of the Principal Commissioner of Customs or Commissioner of Customs, has
“reasons to believe” that an offence has been “committed” in terms
of Section 132 or Section 133 or Section
135 or Section135-A or Section 136 of the Customs Act
- Thus, Section 104(1), effectively incorporates safeguards similar to
those outlined in Section 19(1) of the PML Act - The semantical
distinction, however, between Section 19(1) and Section 104(1),
is twofold: first, Section 104(1) does not explicitly stipulate the
requirement of a customs officer having “material in their possession”; and
second, Section 104(1) does not explicitly state that the customs
officer must reasonably believe that the arrestee is “guilty of an offence” -
Instead, Section 104(1) states that the customs officer must have
“reasons to believe” that the arrestee has “committed an offence” – Held that
there is substantively no difference between a person being guilty of an
offence and a person committing an offence - Cambridge Dictionary defines
“guilty party” as “someone who has done something wrong or who has ‘committed’
a crime” - According to the Oxford Dictionary, the etymology of “guilty” also
traces back to the Old English Period (pre-1150), referring in the context of
law to someone who “has ‘committed’ some specified offence” - Thus, when we
apply a plain language interpretation, a person being “guilty” of an offence
and a person “committing” an offence is self-same and identical insofar
as Section 19(1) vis-à-vis Section 104(1) is concerned.
(Para 40 and 41)
(F)
Customs Act, 1962, Section 104(1) – Criminal Procedure Code, 1973, Section 41 –
Customs Act - Power to arrest - Section 104(1) does not explicitly require a
customs officer to have “material in their possession” does not imply that a
customs officer can conclude that an offence has been committed out of thin air
or mere suspicion - The threshold for
arrest under Section 104(1) of the Customs Act is higher than that
under Section 41 of the Code - Section 41 allows the police
to arrest a person without a warrant, if a “reasonable complaint has been
made”, or “credible information has been received”, or “a reasonable suspicion
exists” that the person has committed a cognizable offence - In
contrast, Section 104(1) sets a higher threshold, stipulating that a
customs officers may only arrest a person if they have “reasons to believe”
that a person has committed an offence - A person is said to have a “reason to
believe” a thing, if they have sufficient cause to believe that thing but not
otherwise - [See Section 26 of
the Indian Penal Code, 1860.] - This represents a more stringent standard
than the “mere suspicion” threshold provided under Section 41.
(Para 43)
(G)
Customs Act, 1962, Section 104 - Prevention of Money Laundering Act, 2002,
Section 19 – Customs Act - Power to arrest - Framework of the Customs
Act explicitly classifies offences into bailable and non-bailable, as well as
cognizable and non- cognizable, the “reasons to believe” must reflect these
classifications when justifying an arrest - The reasoning must weigh in why an
arrest is being made in a specific case, particularly given the specific
severity assigned to the offence by the legislature - The reasoning must also
state how the monetary thresholds outlined in the Act are met - Subclauses (b)
to (d) of Section 104(4) provide monetary thresholds for cognizable
offences, while subclauses (a) and (c) to (e) of Section
104(6) provide those for non-bailable offences - The “reasons to believe”
must include a computation and/or an explanation, based on factors such as the
goods seized, from which a conclusion of guilt can be drawn - This level of
detail is crucial, as it facilitates judicial review of the exercise of the
power to arrest - The department’s authority to arrest under Section
104 hinges on satisfying these statutory thresholds – Held that do not
find any inconsistency between Section 19(1) of the PML Act
and Section 104(1) of the Customs Act - We are of the opinion that
principles and ratio developed in the case of Arvind Kejriwal case
are equally applicable to the power of arrest under Section 104 of
the Customs Act - The respondent authorities directed to comply with the
mandate of this judgment and that of Arvind Kejriwal case.
(Para 44 to 46)
(H)
Customs Act, 1962, Section 104(1), Section 104(4) (post amendments in 2012 and
post amendment 2019), Section 104(6) (post amendment 2013 and post amendment
2019) – Customs Act – Grounds of arrest - Section 104(1) requires
that a person arrested as soon as may be is required to be informed of the
grounds of such arrest - The grounds of arrest must be given in writing to the
arrestee before he is produced before the Magistrate in terms of Section
104(2) - This is necessary as it enables the accused to contest and challenge
his arrest and seek bail from the court - To deny and not give the grounds in
writing would be to deprive the accused of his right in terms of Section
104(1) and also to seek right of bail under the provisions of the Code -
This interpretation would be in consonance with Article 22(1) of the
Constitution which states that no person who is arrested shall be detained in
custody without being informed as soon as may be of the grounds of such arrest,
nor shall such arrest be denied the right to consult and to be defended by a
legal practitioner of his choice - Challenge to the amendments as well as
provisions of the Customs Act rejected – Held that reliance placed by the
petitioners on the decision of this Court in Om Prakash case is
misconceived as the statutory provisions have undergone amendments to bring them
in consonance with the law of the land - Moreover, the provisions themselves
provide enough safeguards against arbitrary and wrongful arrests.
(Para 47 and 48)
(I)
Evidence Act, 1872, Section 25 – Customs Officers – Whether police officers - Writ petitioners’
submission that customs officers are police officers held to be unfounded and
flawed – Held that customs officers are not police officers.
(Para 14 to 16)
(J)
Criminal Procedure Code, 1973, Section 167(2) - Customs Act, 1962, Section 104
- Customs Act - Application
of Cr PC Provision - Interplay of Section 167 of the Code and Section 104
of the Act, 1962 - Section 167(2) of the Code allows a police officer to
request police remand/custody of a person arrested for a period not exceeding
15 days when an investigation cannot be completed within 24 hours of the arrest
- Deepak Mahajan case clarifies that Section 167(2) of the Code
applies equally to Section 104 of the Customs Act - Thus, a
Magistrate has the authority under Section 167(2) of the Code to authorise detention
of such person to the custody of a customs officer.
(Para 118)
(K)
Criminal Procedure Code, 1973, Section 438 – Customs Act, 1962 - Anticipatory
bail – Registration of case not necessary - Registration of a case and
entries of a case diary are not compulsory when entertaining an application for
grant of anticipatory bail under Sections 438 and 439 of the Code -
Anticipatory bail can be invoked on the likelihood of arrest based on
reasonable belief of the person having committed a non-bailable offence
- At the same time, Deepak Mahajan case holds that customs
officer must mandatorily maintain case diaries.
(Para 19)
(L)
Central Goods and Services Tax Act, 2017, Section 67 and 69 –Criminal Procedure
Code, 1973, Section 4(2) - Goods and Services Tax Act - Search and seizure – Arrest - Held that the
GST Acts are not a complete code when it comes to the provisions of search and
seizure, and arrest, for the provisions of the Code would equally apply when
they are not expressly or impliedly excluded by provisions of the GST Acts
- There is no specific stipulation or
provision in the GST Acts in respect of facets of investigation, inquiry or
trial - In view of Section 4(2) of the Code, the procedure prescribed
under the Code also applies to the special statutes unless the applicability is
expressly barred or prohibited.
(Para 50 and 51)
(M)
Central Goods and Services Tax Act, 2017, Section 69 and 132 – Goods and
Services Tax Act - Arrest –
Held that to pass an order of arrest in case of cognizable and non-cognizable
offences, the Commissioner must satisfactorily show the reasons to believe recorded by him, that
the person to be arrested has committed a non-bailable offence and that the
pre-conditions of sub-section (5) to Section 132 of the Act are
satisfied - Failure to do so would result in an illegal arrest - The
computation of the tax involved in terms of the monetary limits under clause
(i) of sub-section (1), which make the offence cognizable and non-bailable,
should be supported by referring to relevant and sufficient material - The
aforesaid exercise should be undertaken in right earnest and objectively, and
not on mere ipse dixit without foundational reasoning and material -
The arrest must proceed on the belief supported by reasons relying on
material that the conditions specified in sub-section (5) of Section
132 are satisfied, and not on suspicion alone - An arrest cannot be made
to merely investigate whether the conditions are being met - Findings and the
ratio recorded with reference to the Customs Act would equally apply
insofar as maintenance of records as well as obligations of the arresting
officer and rights of the accused/person arrested are concerned - Compliance in this regard must be made.
(Para 56, 57 and 60)
(N)
Central Goods and Services Tax Act, 2017, Section 74(5) – Goods and Services
Tax Act - Extracting tax by threatening arrest - Submission that the assessees
are compelled to pay tax as a condition for not being arrested – Held that
Sub-section (5) to Section 74 of the GST Acts gives an option to the assessee
and does not confer any right on the tax authorities to compel or extract tax
by threatening arrest - This would be unacceptable and violative of the rule of
law - In case there is a breach of law, and the assessees are put under threat,
force or coercion, the assessees would be entitled to move the courts and seek
a refund of tax deposited by them - The department would also take appropriate
action against the officers in such cases.
(Para 67 and 68)
(O)
Central Goods and Services Tax Act, 2017, Section 70 – Goods and Services Tax Act – Investigation - Held that a person summoned under Section
70 of the GST Acts is not per se an accused protected under Article
20(3) of the Constitution - This is because the prohibitive sweep
of Article 20(3) of the Constitution does not go back to the stage of
interrogation - Investigation must be allowed to proceed in accordance with law
and there should not be any attempt to dictate the investigator and at the same
time, there should not be any misuse of power and authority.
(Para 69)
(P)
Criminal Procedure Code, 1973, Section 438 - Central Goods and Services Tax
Act, 2017, Section 69 and 132 – Anticipatory bail – Power to grant - Held that the power to grant anticipatory bail
arises when there is apprehension of arrest - This power, vested in the courts
under the Code, affirms the right to life and liberty under Article
21 of the Constitution to protect persons from being arrested - It is not
essential that the application for anticipatory bail should be moved only after
an FIR is filed, as long as facts are clear and there is a reasonable basis for
apprehending arrest - Some decisions[State
of Gujarat v. Choodamani Parmeshwaran Iyer and Another, 2023 SCC OnLine SC
1043; Bharat Bhushan v. Director General of GST Intelligence, Nagpur Zonal Unit
Through Its Investigating officer, SLP (Crl.) No. 8525/2024.] of this Court
in the context of GST Acts which are contrary to the aforesaid ratio should not
be treated as binding.
(Para 70)
(Q)
Central Goods and Services Tax Act, 2017,
Section 162(1), 74 – Goods and Services Tax - Compounding of offence - Submitted that till
an assessment order was passed under Section 74 of the GST Acts, the liability
cannot be quantified and hence an assessee cannot move an application for
compounding of offences repelled – Held that there is a difference between the
compounding of offences and the arrest of a person - Already stipulated
sufficient safeguards to ensure that no arrests are made till the Commissioner
is able to show and establish, on the basis of material and evidence, that the
conditions of clauses (a) to (d) as well as clause (i) of sub-section 1 to
Section 132 of the GST Acts are satisfied and therefore the offences are
non-bailable.
(Para 71)
(R)
Central Goods and Services Tax Act, 2017, Section 69 and 70 – Constitution of
India, Article 246-A – Goods and Services Tax - Power to arrest and the power
to summon -
Challenge to the constitutional validity of Sections 69 and 70 - Submitted
that Article 246-A of the Constitution while conferring legislative
powers on Parliament and State Legislatures to levy and collect GST, does not
explicitly authorize the violations thereof to be made criminal offences and
that the power to summon, arrest and prosecute are not ancillary and incidental
to the power of levying GST and therefore, are beyond the legislative
competence of the Parliament under Article 246-A of the Constitution
- Argument rejected - Article 246-A of the Constitution is a special
provision defining the source of power and the field of legislation for the
Parliament and the State Legislature with respect to GST – Held that 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 - Vires challenge to Sections
69 and 70 of the GST Acts must fail and is accordingly rejected.
(Para
72 to 75)
JUDGMENT
Sanjiv Khanna, Cji. :- Leave granted.
2.
The fountainhead of legal controversy regarding the power to arrest under the
Customs Act, 1962[For short, “Customs
Act”.] and the Central Goods and Services Tax Act, 2017, [For short, “GST Act”.] stems from the
decision of a three Judge Bench of this Court in Om Prakash and Another v.
Union of India and Another. [(2011) 14
SCC 1.] Before this decision, offences under the Customs
Act were treated as non-bailable and once arrested, the accused would be
detained for a few months before being released on bail. Om
Prakash (supra) observed that the offences under the Customs Act and
the Central Excise Act, 1944[For short,
“Excise Act”.] were non-cognizable and, therefore, even if the
officers had the power to arrest,
[Pursuant to Sections 132, 133, 135, 135A and 136 of
the Customs Act and Section 13 of the Central Excise Act, 1944.]
they could do so only after obtaining a warrant from the Magistrate in terms
of Section 41[Section 41 of the
Code delineates circumstances when the police may arrest without a warrant.] of
the Code of Criminal Procedure, 1973.
[For short, “Code”.] It was also held that offences under the Customs Act
and the Excise Act were both bailable, bearing a punishment of less than 3
years. [Part II of the First Schedule to
the Code provides that offences which bear an imprisonment term of less than 3
years are both non-cognizable and bailable.]
3.
The reasoning in Om Prakash (supra) proceeds on the interpretation
of Sections 4[“4. Trial of offences
under the Indian Penal Code and other laws.— (1) All offences under
the Indian Penal Code (45 of 1860) shall be investigated, inquired
into, tried, and otherwise dealt with according to the provisions hereinafter
contained. (2) All offences under any other law shall be investigated, inquired
into, tried, and otherwise dealt with according to the same provisions, but
subject to any enactment for the time being in force regulating the manner or
place of investigating, inquiring into, trying or otherwise dealing with such
offences.”] and 5[“5. Saving.—
Nothing contained in this Code shall, in the absence of a specific provision to
the contrary, affect any special or local law for the time being in force, or
any special jurisdiction or power conferred, or any special form of procedure
prescribed, by any other law for the time being in force.”] of the Code and
holds that Section 155 and other provisions of Chapter XII of the
Code are applicable. The principle being that the customs officers and excise
officers, though conferred the power of arrest under the respective enactments,
the offences being non-cognizable, were not vested with powers beyond that of a
police officer in charge of the police station.
4.
Before us, the ratio in Om Prakash (supra) has been questioned on
various grounds. For the following reasons, we are not inclined to go into all
the issues:
• First, the decision
in Om Prakash (supra) was pronounced on 30.09.2011 and held the field
for more than 12 years.
• Secondly, and more
significantly, it is apparent that the legislature has accepted the ratio
of the said decision and made specific amendments to the Customs
Act. The ratio is equally given effect to and incorporated in the GST Act.
• Thirdly, the ratio in Om
Prakash (supra) promotes and protects the life and liberty of citizens and,
corrects earlier prevalent wrongdoings which diminished the constitutional and
statutory rights of citizens. However, we would refer to certain portions
of Om Prakash (supra) in the context of the present litigation to
interpret relevant provisions of the Customs Act and the GST Act.
5.
‘Cognizable offence’, defined in Section 2(c) of the Code, means an
offence for which the police officer may, in accordance with the First Schedule
of the Code or any other law for the time being in force, arrest without a
warrant. ‘Non- cognizable offence’, defined in Section 2(l) of the
Code, means an offence for which a police officer has no authority to arrest
without a warrant.
6. Section
155 of the Code enjoins a duty on the officer in charge of a police
station to enter, or cause to be entered, the substance of any information
received regarding the commission of a non-cognizable offence in a book,
maintained in the prescribed format. The officer must then refer such informant
to the Magistrate. Police officers do not possess the authority to investigate
non- cognizable cases without an order from the Magistrate having the power to
try such a case or committing it for trial.
[Section 155(2) of the Code.] Upon receiving such an order from the
Magistrate, the police officer gains the same investigative powers as those
available for cognizable offences, with the exception of the power to arrest without
a warrant. [Section 155(3) of the
Code.] Therefore, without an order from the Magistrate and a warrant, a
police officer cannot arrest an accused for a non-cognizable offence.
7. Section
104(4) of the Customs Act, post amendments in 2012, [Finance Act, 2012 (23 of 2012), with effect from 28.05.2012; for
short, “2012 Amendment”. ] and 2019,
[Finance Act, 2019 (Act 2 of 2019), with effect from 01.08.2019; for
short, “2019 Amendment”.] reads:
“(4) Notwithstanding
anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),
any offence relating to—
(a) prohibited goods;
or
(b) evasion or
attempted evasion of duty exceeding fifty lakh rupees; or
(c) fraudulently
availing of or attempting to avail drawback or any exemption from duty provided
under this Act, where the amount of drawback or exemption from duty exceeds
fifty lakh rupees; or
(d) fraudulently
obtaining an instrument for the purposes of this Act or the Foreign Trade
(Development and Regulation) Act, 1992 (22 of 1992), and such instrument
is utilised under this Act, where duty relatable to such utilisation of instrument
exceeds fifty lakh rupees, shall be cognizable.” Sub-section (5)
to Section 104 reads:
“Save as otherwise
provided in sub-section (4), all other offences under the Act shall be
non-cognizable.”
8.
After the 2012 Amendment, notwithstanding anything contained in the Code,
offences provided in clauses (a) and (b) above are to be treated as cognizable
offences. The 2019 Amendment added clauses (c) and (d) to Section 104(4),
and these are again cognizable offences. Section 104(5) states that
all offences other than those provided under Section 104(4) are
non-cognizable. Therefore, the net
effect of these amendments is that the offences enumerated in Clauses (a) to
(d) of Section 104(4) are cognizable and residual/unspecified
offences are non-cognizable.
9. Section
104(6) of the Customs Act, post amendments in 2013 [Finance Act, 2013, (Act No. 17 of 2013), with effect from 17.05.2013;
for short “2013 Amendment”.] and
2019[See 2019 Amendment (supra).]
reads:
“(6) Notwithstanding
anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), an
offence punishable under Section 135 relating to—
(a) evasion or
attempted evasion of duty exceeding fifty lakh rupees; or
(b) prohibited goods
notified under Section 11 which are also notified under sub-clause
(c) of clause (i) of sub- section (1) of Section 135; or
(c) import or export
of any goods which have not been declared in accordance with the provisions of
this Act and the market price of which exceeds one crore rupees; or
(d) fraudulently
availing of or attempt to avail of drawback or any exemption from duty provided
under this Act, if the amount of drawback or exemption from duty exceeds fifty
lakh rupees; or
(e) fraudulently
obtaining an instrument for the purposes of this Act or the Foreign Trade
(Development and Regulation) Act, 1992 (22 of 1992), and such instrument
is utilised under this Act, where duty relatable to such utilisation of
instrument exceeds fifty lakh rupees, shall be non-bailable.” Sub-section (7)
to Section 104 reads:
“(7) Save as otherwise
provided in sub-section (6), all other offences under this Act shall be
bailable.”
10.
The net effect is that offences in Clauses (a) to (d) to Section
104(6) above, inserted vide the 2013 Amendment, and Clause (e), inserted
vide the 2019 Amendment, are treated as non-bailable offences. All other
offences under the Customs Act, barring aforementioned Clauses (a) to (e)
in Section 104(6) of the Customs Act, are bailable. [See Section 104(7) of the
Customs Act.]
11.
Therefore, given the amendments enacted after Om Prakash (supra) —
the 2012 Amendment, the 2013 Amendment, and the 2019 Amendment — certain
categories of offences have been carved out and explicitly made cognizable in
terms of Section 104(4). Some of the cognizable offences have been made
non-bailable in terms of Section 104(6). All other offences under
the Customs Act are non-cognizable, unless carved out in Section
104(4), and bailable, as they are excluded in Section 104(6).
12.
In the aforesaid background, we would now refer to Sections
4 and 5 of the Code, which read:
“4. Trial of offences
under the Indian Penal Code and other laws.—(1) All offences under
the Indian Penal Code (45 of 1860) shall be investigated, inquired
into, tried, and otherwise dealt with according to the provisions hereinafter
contained.
(2) All offences under
any other law shall be investigated, inquired into, tried, and otherwise dealt
with according to the same provisions, but subject to any enactment for the
time being in force regulating the manner or place of investigating, inquiring
into, trying or otherwise dealing with such offences.
5. Saving.—Nothing
contained in this Code shall, in the absence of a specific provision to the
contrary, affect any special or local law for the time being in force, or any
special jurisdiction or power conferred, or any special form of procedure
prescribed, by any other law for the time being in force.
(emphasis
supplied)”
13. Section
4(1) stipulates that offences under the Indian Penal Code, 1860, shall
be investigated, inquired into, tried, and otherwise dealt with in accordance
with the Code. For offences under any other local law, Section
4(2) stipulates that they shall be investigated, inquired, tried, or
otherwise dealt with in accordance with the Code, subject to any other
enactment governing the manner or place of investigation, inquiry, trying or
otherwise dealing. Section 5, the savings clause, clarifies that the Code
shall not affect any special or local law, or any special jurisdiction or power
conferred, or any special procedure prescribed, unless there is a specific
provision to the contrary. Thus, the provisions of the Code would be applicable
to the extent that there is no contrary provision in the special act or any
special provision excluding the jurisdiction and applicability of the Code. [See paragraph 128 of Directorate of
Enforcement v. Deepak Mahajan, (1994) 3 SCC 440.] In A.R. Antulay v.
Ramdas Sriniwas Nayak and Another,
[(1984) 2 SCC 500.] a Constitution Bench of this Court has clarified
this position while discussing the applicability of the Code to offences under
the Prevention of Corruption Act, 1988. The relevant portion reads:
“16…In the absence of
a specific provision made in the statute indicating that offences will have to be
investigated, inquired into, tried and otherwise dealt with according to that
statute, the same will have to be investigated, inquired into, tried and
otherwise dealt with according to the Code of Criminal Procedure. In other
words, Code of Criminal is the parent statute which provides for investigation,
inquiring into and trial of cases by criminal courts of various designations.”
14.
Before discussing the provisions of Chapter XII of the Code and determining
which of its provisions apply to offences under the Customs Act, it is
relevant to address the writ petitioners’ submission that customs officers are
police officers. In our opinion, this submission is both unfounded and flawed.
15. In
a line of decisions of this Court — State of Punjab v. Barkat Ram, [(1962) 3 SCR 338.] Ramesh Chandra
Mehta v. State of West Bengal,
[(1969) 2 SCR 461.] and Illias v. Collector of Customs[(1969) 2 SCR 613.] — it has been decisively held that customs
officers are not police officers. Ramesh Chandra Mehta (supra)
and Illias (supra) are both Constitution Bench judgments of this
Court. Recently, this distinction was affirmed by the majority judgment of
this Court in Tofan Singh v. State of Tamil Nadu, [(2021) 4 SCC 1.] which observed:
427. The law which
emerges from the Constitution Bench judgments of the Supreme Court in Badaku
Joti Svant, Ramesh Chandra Mehta and Illias is that, an officer can be deemed
to be a police officer within the meaning of Section 25 of the
Evidence Act:
(i) if the officer has
all the powers of a police officer qua investigation, which includes the power
to file a police report under Section 173 CrPC,
(ii) the power to file
a police report under Section 173 CrPC is an essential ingredient of
the power of a police officer, and
(iii) the power to
file a police report under Section 173 CrPC has to be conferred by
statute.
xxx xxx xxx
429. As per the
well-established norms of judicial discipline and propriety, a Bench of lesser
strength cannot revisit the proposition laid down by at least three
Constitution Benches, that an officer can be deemed to be a police officer
within the meaning of Section 25 of the Evidence Act only if the
officer is empowered to exercise all the powers of a police officer including
the power to file a report under Section 173 CrPC.”
16.
We respectfully agree with the view expressed that the customs officers are not
police officers.
17.
Learned counsel for the writ petitioners have also relied upon Directorate
of Enforcement v. Deepak Mahajan and Another. [(1994) 3 SCC 440.] The submission was that since a customs
officer is not a police officer, anyone arrested under the Customs
Act should be sent to judicial custody. Deepak Mahajan (supra)
answers this conundrum, albeit an entirely different issue – whether persons
arrested under the Customs Act, on being produced before a Magistrate, can
be committed to the custody of a customs officer.
18. Deepak
Mahajan (supra) addresses the interplay of Section 167 of the Code[“167. Procedure when investigation cannot
be completed in twenty-four hours.— (1) Whenever any person is arrested and
detained in custody, and it appears that the investigation cannot be completed
within the period of twenty-four hours fixed by Section 57, and there are
grounds for believing that the accusation or information is well-founded, the
officer in charge of the police station or the police officer making the
investigation, if he is not below the rank of sub-inspector, shall forthwith
transmit to the nearest Judicial Magistrate a copy of the entries in the diary hereinafter
prescribed relating to the case, and shall at the same time forward the accused
to such Magistrate. (2) The Magistrate to whom an accused person is forwarded
under this section may, whether he has or has not jurisdiction to try the case,
from time to time, authorise the detention of the accused in such custody as
such Magistrate thinks fit, for a term not exceeding fifteen days in the whole;
and if he has no jurisdiction to try the case or commit it for trial, and
considers further detention unnecessary, he may order the accused to be
forwarded to a Magistrate having such jurisdiction.”]
and Section 104 of the Customs Act. Section 167(2) of the Code allows
a police officer to request police remand/custody of a person arrested for a
period not exceeding 15 days when an investigation cannot be completed within
24 hours of the arrest. Deepak Mahajan (supra) clarifies that Section
167(2) of the Code applies equally to Section 104 of the Customs Act.
Thus, a Magistrate has the authority under Section 167(2) of the Code to
authorise detention of such person to the custody of a customs officer.
19.
On the issue of anticipatory bail, Deepak Mahajan (supra), referring
to the dictum in Shri Gurbaksh Singh Sibbia and Others v. State of Punjab,
[(1980) 2 SCC 565.] observes that the
registration of a case and entries of a case diary are not compulsory when
entertaining an application for grant of anticipatory bail under Sections 438
and 439 of the Code. Anticipatory bail can be invoked on the likelihood of
arrest based on reasonable belief of the person having committed a non-bailable
offence. At the same time, Deepak Mahajan (supra) holds that
customs officer must mandatorily maintain case diaries:
“112. The expression
‘diary’ referred to in Section 167(1) of the Code is the special diary
mentioned in Section 167(2) which should contain full and unabridged statements
of persons examined by the police so as to give the Magistrates on a perusal of
the said diary, a satisfactory and complete source of information which would
enable him to decide whether or not the accused person should be detained in
custody but it is different from the general diary maintained
under Section 44 of the Police Act.
113. Though an
authorised officer of Enforcement or Customs is not undertaking an
investigation as contemplated under Chapter XII of the Code, yet those officers
are enjoying some analogous powers such as arrest, seizures, interrogation etc.
Besides, a statutory duty is enjoined on them to inform the arrestee of the
grounds for such arrest as contemplated under Article 22(1) of the
Constitution and Section 50 of the Code. Therefore, they have
necessarily to make records of their statutory functions showing the name of
the informant, as well as the name of the person who violated any other
provision of the Code and who has been guilty of an offence punishable under
the Act, nature of information received by them, time of the arrest, seizure of
the contraband if any and the statements
recorded during the course of the detection of the offence/offences.”
20.
We now turn to a recent decision of this Court in Union of India v. Ashok
Kumar Sharma and Others. [(2021) 12 SCC
674.] This decision examines and harmoniously construes provisions of
the Code and the Drugs and Cosmetics Act, 1940, [For short, “Drugs & Cosmetics Act”.] addressing whether the
police could register and investigate the offences under the Drugs and
Cosmetics Act in accordance with the Code. Referring to Section
32 of the Drugs and Cosmetics Act, the Court held that there is an implied
bar on police investigation and prosecution, as Section 32 provides
for taking cognisance of the court only at the instance of four categories: (i)
inspector under the Drugs and Cosmetics Act, (ii) gazetted officer empowered
by the State or Central Government, (iii) aggrieved person, or (iv) voluntary
association. Ashok Kumar Sharma (supra) refers to Om
Prakash (supra) and Deepak Mahajan (supra) to observe:
“148. On a perusal of
the statement of law contained in para 41 of Om Prakash case, we find
that this Court has found that as the provisions under the enactments in
question declared the offences to be non-cognizable, the officer exercising the
power of arrest, could not arrest, except after obtaining a warrant for the
said purpose. That they may not arrest without obtaining a warrant in respect
of the non-cognizable offences, being the view taken by this Court, cannot be
squared with the view taken by the Punjab and Haryana High Court and the
Gujarat High Court, respectively, in Sunil Gupta and also Bhavin Impex (P)
Ltd., which took the view in effecting arrest under the Central Excise
Act, no warrant was required. It is apparently consequent upon the same that
the legislature stepped in with amendments.
xxx xxx xxx
150. The result would
appear to be that acknowledging the effect of making the offences being
non-cognizable to be to limit the power of the authorities under the Act for
effecting arrest under the Act, to require a warrant, certain offences were
declared to be cognizable as noticed in Section 9-A, as amended after the
judgment in Om Prakash. The resultant position after the amendment is, it
became open to the officers to effect the arrest in regard to a cognizable
offence without obtaining a warrant.
151. In regard to
the Customs Act, 1962 in Section 104, under the present avatar,
two changes have been brought about. Firstly, the power to arrest is available
in respect of offences under Sections 132, 133, 135, 135-A and 136.
The offences are
divided into two categories. Under Section 104(4), the offences which fall
within its ambit, are treated as cognizable. The other offences are treated as
non-cognizable under Section 104(5). For instance, if a person is involved
in an offence relating to evasion or attempted evasion of duty exceeding 50
lakh rupees (w.e.f. 1-8-2019), while the offence is cognizable, the power of
arrest is conferred on the officers under Section 104(1). The power to
arrest is conferred and the only condition to be fulfilled is that the officer
has reason to believe that the person has committed the offence concerned. The
position is the same in respect of offence relating to prohibited goods.
152. We have embarked
upon referring to the provisions relating to arrest under the Excise Act and
the Customs Act and the decision of this Court in Om Prakash in taking the view
as it did in para 41, in order to appreciate the contention that, after the
amendment to Section 36-AC, the offences have been declared cognizable. If we
proceed on the basis that the power of arrest can be traced from Section
22(1)(d) of the Act, then, after the amendment in Section 36-AC, by which,
the offences falling under Chapter IV of the Act, which are declared as
cognizable and non-bailable, the decks are cleared for effecting arrest without
a warrant by the Inspector.”
21.
Paragraphs 151 and 152, quoted above, specifically addresses the legal position
following the amendments made to the Customs Act. In 2008, the Drugs
and Cosmetics was amended to insert Section 36-AC, [Drugs and Cosmetics (Amendment) Act, 2008, Act No. 26 of 2008.] which
specifies that the offences enumerated in sub-clause (a) of sub-section (1)
shall be cognizable. Clause (b) of the same sub-section outlines the conditions
for granting bail to a person arrested. Sub-section (2) further clarifies that
these limitations on granting bail were in addition to the limitations under
the Code or any other law for the time being in force. Despite the State's
contrary arguments relying on Section 32(3) – which states that
nothing in the Chapter shall be deemed to prevent any person from being
prosecuted under any other law for any act or commission, which constitutes an
offence under the Chapter of the Drugs and Cosmetics Act and the
provisions of the Code – this Court rejected the contention that the police
could investigate and file a charge-sheet under the provisions of the Code.
There is also a detailed discussion on the power of arrest and its exercise,
including power of search and seizure. While affirming that the power of arrest
under the Drugs and Cosmetics Act does not vest with the officers in
charge of the police station, this Court issued several directions emphasising
the necessity of compliance with the provisions of the Code by the arresting officer.
Additionally, the arresting officer shall follow the guidelines laid down
in D.K. Basu v. State of West Bengal.
[(1997) 1 SCC 416.] Finally, this Court issued a saving order in exercise
of power under Article 142 of the Constitution to fend earlier cases
where FIR had been registered, and cognisance had already been taken.
22.
The amendments made to the Customs Act in 2012, 2013 and 2019 are
substantive and were introduced to effectively modify the application
of Om Prakash (supra), which required a customs officer to obtain
prior approval from a Magistrate before making an arrest. These amendments
designated specified offences as cognizable and non-bailable, while also
imposing certain pre- conditions and stipulations for making arrest. Consequently,
the petitioners’ reliance on Om Prakash (supra) is no longer valid
and must be rejected. However, it remains important to examine the
pre-conditions and safeguards established by the legislature to protect the
life and liberty of arrestees.
23. In
paragraph 19 (supra), we referenced the dictum in Deepak
Mahajan (supra) regarding the term “diary” as mentioned in Section 167(1)
of the Code. Section 172 of the Code, which relates to the diary of proceedings
to be maintained during the investigation, has been amended in 2009. [Act 5 of 2009.] Section 172(1B) now
stipulates that the diary should be a duly paginated volume. In order to
maintain the authenticity and accuracy of the diary, this mandate is required
to be implemented.
24. In
terms of Deepak Mahajan (supra), a statutory duty is enjoined on
customs officers to inform the arrestee about their grounds of arrest. This
duty flows from the rigours imposed by Article 22(1) of the
Constitution of India and Section 50 of the Code. While customs officers
do not undertake an investigation akin to Chapter XII of the Code, they enjoy
analogous powers such as the power to investigate, arrest, seize, interrogate,
etc under the Customs Act. Thus, the obligation to provide grounds of arrest is
incumbent upon them. Customs officers must also maintain records of their
statutory functions including details like the name of the informant, name of
the person who has violated the law, nature of information received by the
officers, time of arrest, seizure details, and statements recorded during the
course of detection of the offence(s).
25.
In 2009, the Parliament amended the Code[Act
5 of 2009.] to incorporate Section 41-B which outlines the procedures of
arrest and the duties of the officer making the arrest. [41-B. Procedure of arrest and duties of officer making arrest.—Every
police officer while making an arrest shall— (a) bear an accurate, visible and
clear identification of his name which will facilitate easy identification; (b)
prepare a memorandum of arrest which shall be— (i) attested by at least one
witness, who is a member of the family of the person arrested or a respectable
member of the locality where the arrest is made; (ii) countersigned by the
person arrested; and (c) inform the person arrested, unless the memorandum is
attested by a member of his family, that he has a right to have a relative or a
friend named by him to be informed of his arrest.] Although this section
refers to the police officer, we believe, it equally imposes a duty on the
customs officers. Officers making an arrest are required to bear an accurate,
legible, and clear indication of their names to facilitate ease of
identification by the arrestee. These provisions are in furtherance of the
dictum of this Court in D.K. Basu (supra). The Central Board of Excise and
Customs, in a Circular dated 20.02.1998 (File No. 591/01/98-CUS(AS)),
referenced the decision in D.K. Basu (supra). [See also Circular dated 17.09.2013 [File No. 394/68/2013-CUS(AS)].]
They have reproduced the relevant portions of the judgment with the intent that
these would be complied with by the customs officers. We trust that customs
officers shall duly comply with this mandate.
26.
We also hold that Section 41-D of the Code is applicable for offences under
the Customs Act. Accordingly, a person arrested by a customs officer has
the right to meet an advocate of his choice during interrogation, but not
throughout interrogation. [In 2009,
Section 41D was inserted in the Code vide Act 4 of 2009, in furtherance of the
principles laid down in D.K. Basu (supra). It reads: “41-D. Right of
arrested person to meet an advocate of his choice during interrogation.— When
any person is arrested and interrogated by the police, he shall be entitled to
meet an advocate of his choice during interrogation, though not throughout
interrogation.”] In Senior
Intelligence Officer, Directorate of Revenue Intelligence v. Jugal Kishore
Samra, [(2011) 12 SCC 362.] this
Court held that an advocate/authorised person may be present within visual
distance during interrogation, but he cannot be within hearing distance of the
proceedings nor can there be any consultations with such advocate/authorised
person during the course of the interrogation. The relevant portion reads:
“29. Taking a cue,
therefore, from the direction made in D.K. Basu and having regard to the
special facts and circumstances of the case, we deem it appropriate to direct
that the interrogation of the respondent may be held within the sight of his
advocate or any other person duly authorised by him. The advocate or the person
authorised by the respondent may watch the proceedings from a distance or from
beyond a glass partition but he will not be within the hearing distance and it
will not be open to the respondent to have consultations with him in the course
of the interrogation.”
27.
Reference can also be made to Section 50A of the Code, [50-A. Obligation of person making arrest to inform about the arrest,
etc., to a nominated person.— (1) Every police officer or other person making any
arrest under this Code shall forthwith give the information regarding such
arrest and place where the arrested person is being held to any of his friends,
relatives or such other persons as may be disclosed or nominated by the
arrested person for the purpose of giving such information.
(2) The police officer
shall inform the arrested person of his rights under sub-section (1) as soon as
he is brought to the police station.
(3) An entry of the
fact as to who has been informed of the arrest of such person shall be made in
a book to be kept in the police station in such form as may be prescribed in
this behalf by the State Government.
(4) It shall be the
duty of the Magistrate before whom such arrested person is produced, to satisfy
himself that the requirements of sub-section (2) and sub-section (3) have been
complied with in respect of such arrested person.] which states that every police
officer or other person making an arrest under the Code shall forthwith give information regarding
such arrest and place where the arrested person is being held to any of his
friends, relatives, or other person as may be disclosed or nominated by the
arrested person for the purpose of giving such information. The arrested person
must be informed of this right. In our opinion, the details of compliance with
this mandate must be entered into the diary maintained by customs officer. It
is the duty of the Magistrate, when an arrested person is produced, to satisfy
himself that the requirements of Section 50A(2) and (3) have been complied
with. Thus, we hold that these stipulations will apply in cases of arrests made
by the customs officers.
28.
Section 55A, inserted in 2009, [Act 5 of
2009.] states that it shall be the duty of the person having custody of the
accused to take reasonable care of their health and safety. This provision
shall be equally applicable to arrests under the Customs Act.
29.
The findings recorded in paragraphs 23 to 28 above, which refer to the
provisions of the Code, do not in any way fall foul of or repudiate the
provisions of the Customs Act. They complement the provisions of
the Customs Act and in a way ensure better regulation, ensuring due
compliance with the statutory conditions of making an arrest.
30. Arvind
Kejriwal v. Directorate of Enforcement,
[(2025) 2 SCC 248.] a recent judgment authored by one of us (Sanjiv
Khanna, J.), is a dictum relating to the Prevention of Money Laundering
Act, 2002. [For short, “PML Act”.]
This Court held that the power of arrest granted to the Directorate of Enforcement[For short, “DoE”.] under Section
19 of the PML Act is fenced with certain pre-conditions. These
pre-conditions act as stringent safeguards to protect the life and liberty of
individuals. The relevant portion reads:
“9. A bare reading of
the section reflects, that while the legislature has given power to the
Director, Deputy Director, Assistant Director, or an authorised officer to
arrest a person, it is fenced with preconditions and requirements, which must
be satisfied prior to the arrest of a person. The conditions are -
⇒ The officer must have
material in his possession. ⇒ On the basis of such material,
the authorised officer should form and record in writing, “reasons to believe”
that the person to be arrested, is guilty of an offence punishable under
the PML Act.
⇒ The person arrested,
as soon as may be, must be informed of the grounds of arrest.
These preconditions
act as stringent safeguards to protect life and liberty of individuals. We
shall subsequently interpret the words “material”, “reason to believe”, and
“guilty of the offence”. Before that, we will refer to some judgments of this
Court on the importance of Section 19(1) and the effect on the
legality of the arrest upon failure to comply with the statutory requirements.”
31. In Arvind
Kejriwal (supra), a combined reading of Pankaj Bansal v. Union of India
and Others, [2023 SCC OnLine SC 1244.]
Prabir Purkayastha v. State of NCT of Delhi,
[(2024) 7 SCC 576.] and Vijay Madanlal Choudhary and Others v. Union of
India and Others[2022 SCC OnLine SC 929.]
was adopted by this Court. It was held that the power to arrest a person
without a warrant and without instituting a criminal case is a drastic and
extreme power.
Therefore,
the legislature had prescribed safeguards in the language of Section
19 itself which act as exacting conditions as to how and when the power is
exercisable. These safeguards include the requirement to have “material” in the
possession of DoE, and on the basis of such “material”, the authorised officer
must form an opinion and record in writing their “reasons to believe” that the
person arrested was “guilty” of an offence punishable under the PML Act.
The “grounds of arrest” are also required to be informed forthwith to the
person arrested.
32.
The contention of the DoE that while “grounds of arrest” were mandatorily
required to be supplied to the arrestee, “reasons to believe”, being an
internal and confidential document, need not be disclosed, was decisively
rejected in Arvind Kejriwal (supra). It was held that “reasons to
believe” are to be furnished to the arrestee such that they can challenge the
legality of their arrest. Exceptions are available in one-off cases where
appropriate redactions of “reasons to believe” are permissible. The relevant
portion reads:
“41. Once we hold that
the accused is entitled to challenge his arrest under Section
19(1) of the PML Act, the court to examine the validity of arrest must
catechise both the existence and soundness of the “reasons to believe”, based
upon the material available with the authorized officer. It is difficult to
accept that the “reasons to believe”, as recorded in writing, are not to be
furnished. As observed above, the requirements in Section 19(1) are
the jurisdictional conditions to be satisfied for arrest, the validity of which
can be challenged by the accused and examined by the court. Consequently, it
would be incongruous, if not wrong, to hold that the accused can be denied and
not furnished a copy of the “reasons to believe”. In reality, this would
effectively prevent the accused from challenging their arrest, questioning the
“reasons to believe”. We are concerned with violation of personal liberty,
and the exercise of the power to arrest in accordance with law. Scrutiny of the
action to arrest, whether in accordance with law, is amenable to judicial
review. It follows that the “reasons to believe” should be furnished to the
arrestee to enable him to exercise his right to challenge the validity of arrest.
42. We would accept
that in a one-off case, it may not be feasible to reveal all material,
including names of witnesses and details of documents, when the investigation
is in progress. This will not be the position in most cases. DoE may claim redaction
and exclusion of specific particulars and details. However, the onus to justify
redaction would be on the DoE. The officers of the DoE are the authors of the
“reasons to believe” and can use appropriate wordings, with details of the
material, as are necessary in a particular case. As there may only be a small
number of cases where redaction is justified for good cause, this reason is not
a good ground to deny the accused's access to a copy of the “reasons to
believe” in most cases. Where the non-disclosure of the “reasons to believe”
with redaction is justified and claimed, the court must be informed. The file,
including the documents, must be produced before the court. Thereupon, the
court should examine the request and if they find justification, a portion of
the “reasons to believe” and the document may be withheld. This requires
consideration and decision by the court. DoE is not the sole judge.
43. Section 173(6) of
the Code, permits the police officer not to furnish statements or make
disclosures to the accused when it is inexpedient in public interest. In such
an event, the police officer is to indicate the specific part of the statement
and append a note requesting the Magistrate to exclude that part from the copy
given to the accused. He has to state the reasons for making such request. The
same principle will apply.”
33. Arvind
Kejriwal (supra) also holds that the courts can judicially review the
legality of arrest. This power of judicial review is inherent in Section
19 as the legislature has prescribed safeguards to prevent misuse. After
all, arrests cannot be made arbitrarily on the whims and fancies of the
authorities. This judicial review is permissible both before and after
criminal proceedings or prosecution complaints are filed.
34.
On the nature of “material” examined by the DoE, Arvind
Kejriwal (supra) states that such “material” must be admissible before a
court of law. This is because the designated officer is required to arrive at a
conclusion of guilt based on the “material” examined and such guilt can only be
based on admissible evidence. The relevant portion reads:
“47. DoE has drawn our
attention to the use of the expression ‘material in possession’ in Section
19(1) of the PML Act instead of ‘evidence in possession’. Though etymologically
correct, this argument overlooks the requirement that the designated officer
should and must, based on the material, reach and form an opinion that the
arrestee is guilty of the offence under the PML Act. Guilt can only be
established on admissible evidence to be led before the court, and cannot be
based on inadmissible evidence. While there is an element of hypothesis, as
oral evidence has not been led and the documents are to be proven, the decision
to arrest should be rational, fair and as per law. Power to arrest
under Section 19(1) is not for the purpose of investigation. Arrest
can and should wait, and the power in terms of Section 19(1) of the
PML Act can be exercised only when the material with the designated officer
enables them to form an opinion, by recording reasons in writing that the
arrestee is guilty.”
35.
The investigating officer is also required to look at the whole material and
cannot ignore material that exonerates the arrestee. A wrong application of law
or arbitrary exercise of duty by the designated officer can lead to illegality
in the process. The court can exercise judicial review to strike down such a
decision. Referring to errors in the decision-making process, Arvind
Kejriwal (supra) records how such errors can vitiate the judgment or
decision of the statutory authority. The relevant portion reads:
“67. Error in decision making process can
vitiate a judgment/decision of a statutory authority. In terms of Section
19(1) of the PML Act, a decision-making error can lead to the arrest and
deprivation of liberty of the arrestee. Though not akin to preventive detention
cases, but given the nature of the order entailing arrest - it requires careful
scrutiny and consideration. Yet, at the same time, the courts should not go
into the correctness of the opinion formed or sufficiency of the material on
which it is based, albeit if a vital ground or fact is not considered or the
ground or reason is found to be non-existent, the order of detention may fail.
68. In Centre
for PIL v. Union of India, this Court observed that in judicial review, it
is permissible to examine the question of illegality in the decision-making
process. A decision which is vitiated by extraneous considerations can be set
aside. Similarly, in Uttamrao Shivdas Jankhar v. Ranjitsinh Vijaysinh Mohite
Patil, elaborating on the expression “decision making process”, this Court held
that judicial interference is warranted when there is no proper application of
mind on the requirements of law. An error in the decision-making process crops
up where the authority fails to consider a relevant factor and considers
irrelevant factors to decide the issue.”
36.
On the extent of judicial review available with the court viz. “reasons to
believe”, it was held that judicial review cannot amount to a merits review.
The exercise is confined to ascertain if, based upon “material” in possession
of the DoE, the DoE had “reasons to believe” that the arrestee is guilty of an
offence under the PML Act. The relevant portion reads:
“44. We now turn to
the scope and ambit of judicial review to be exercised by the court. Judicial
review does not amount to a mini-trial or a merit review. The exercise is
confined to ascertain whether the “reasons to believe” are based upon material
which ‘establish’ that the arrestee is guilty of an offence under the PML
Act. The exercise is to ensure that the DoE has acted in accordance with the
law. The courts scrutinize the validity of the arrest in exercise of power of
judicial review. If adequate and due care is taken by the DoE to ensure that
the “reasons to believe” justify the arrest in terms of Section
19(1) of the PML Act, the exercise of power of judicial review would
not be a cause of concern. Doubts will only arise when the reasons recorded by
the authority are not clear and lucid, and therefore a deeper and in-depth
scrutiny is required. Arrest, after all, cannot be made arbitrarily and on the
whims and fancies of the authorities. It is to be made on the basis of the
valid “reasons to believe”, meeting the parameters prescribed by the law. In
fact, not to undertake judicial scrutiny when justified and necessary, would be
an abdication and failure of constitutional and statutory duty placed on the
court to ensure that the fundamental right to life and liberty is not
violated.”
37.
On the different facets of judicial review available with the Court while
examining the legality of arrests, Arvind Kejriwal (supra) states:
“65. …We have already
referred to the contours of judicial review expounded in Padam Narain Aggarwal
(supra), and Dr. Pratap Singh (supra). We have also referred to the
principles of Wednesbury reasonableness.
66. In Amarendra
Kumar Pandey v. Union of India, this Court elaborated on the different facets
of judicial review regarding subjective opinion or satisfaction. It was held
that the courts should not inquire into correctness or otherwise of the facts
found except where the facts found existing are not supported by any evidence
at all or the finding is so perverse that no reasonable man would say that the
facts and circumstances exist. Secondly, it is permissible to inquire whether
the facts and circumstances so found to exist have a reasonable nexus with the
purpose for which the power is to be exercised. In simple words, the conclusion
has to logically flow from the facts. If it does not, then the courts can
interfere, treating the lack of reasonable nexus as an error of law. Thirdly,
jurisdictional review permits review of errors of law when constitutional or
statutory terms, essential for the exercise of power, are misapplied or
misconstrued. Fourthly, judicial review is permissible to check improper
exercise of power. For instance, it is an improper exercise of power when the
power is not exercised genuinely, but rather to avoid embarrassment or for
wreaking personal vengeance.
Lastly, judicial
review can be exercised when the authorities have not considered grounds which
are relevant or has accounted for grounds which are not relevant.”
38. Arvind
Kejriwal (supra) also refers to the doctrine of proportionality, which has
come to permeate constitutional law when questions of life and liberty are
involved. [The doctrine of
proportionality has been expounded by this Court in a line of decisions,
including the recent judgment of Association of Democratic Reforms and
Another v. Union of India and Others, 2024 INSC 113. It comprises four prongs -
(i) legitimate aim/purpose - The first step is to examine whether the act/measure
restricting the fundamental right has a legitimate aim and/or purpose; (ii)
rational connection -The second step is to examine whether the restriction has
rational connection with the aim; (iii) minimal impairment/necessity test - The
third step is to examine whether there should have been a less restrictive
alternate measure that is equally effective; and (iv) balancing stage - The
last stage is to strike an appropriate balance between the fundamental right
and the pursued public purpose.] Courts may employ this four-part
doctrinal test in their examination of the legality of arrest as arrest often
involves contestation between the fundamental right to life and liberty of
individuals against the public purpose of punishing the guilty.
39.
In the present context, the power of arrest is provided in Section
104(1) of the Customs Act. For ease of reference, we have provided a
tabular comparison between Section 19(1) of the PML Act, envisaging
the DoE’s power of arrest, and Section 104(1) of the Customs Act,
envisaging the customs officer’s power of arrest:
|
Section
19(1) of the PML Act |
Section
104(1) of the Customs Act |
|
19.
Power to arrest.—(1) If the Director,
Deputy Director, Assistant Director or
any other officer authorised in this
behalf by the Central Government by
general or special order, has on the
basis of material in his possession, reason to believe (the reason for such belief tobe
recorded in writing) that any person
has been guilty of an offence punishable
under this Act, he may arrest such
person and shall, as soon as may be,
inform him of the grounds for such arrest. |
104.
Power to arrest.—429[(1) If an officer
of customs empowered in this behalf by
general or special order of the
Principal Commissioner of Customs or
Commissioner of Customs has reason to
believe that any person has committed
an offence punishable under Section 132 or Section 133 or Section 135 or
Section 135-A or Section 136, he may
arrest such person and shall, as soon
as may be, inform him of the grounds
for such arrest. |
40. Section
104(1) stipulates that arrests may be made if a customs officer, empowered
by general or special order of the Principal Commissioner of Customs or
Commissioner of Customs, has “reasons to believe” that an offence has been
“committed” in terms of Section 132 or Section
133 or Section 135 or Section 135-A or Section
136 of the Customs Act. Thus, Section 104(1), effectively incorporates
safeguards similar to those outlined in Section 19(1) of the PML Act.
The semantical distinction, however, between Section
19(1) and Section 104(1), is twofold: first, Section
104(1) does not explicitly stipulate the requirement of a customs officer
having “material in their possession”; and second, Section
104(1) does not explicitly state that the customs officer must reasonably
believe that the arrestee is “guilty of an offence”. Instead, Section
104(1) states that the customs officer must have “reasons to believe” that
the arrestee has “committed an offence”.
41.
We are of the opinion that there is substantively no difference between a
person being guilty of an offence and a person committing an offence. In a
catena of judgments of this Court, it has been held that words of a statute
must be understood in their natural, ordinary or popular sense and construed
according to their grammatical meaning, unless such construction leads to some
absurdity or unless there is something in the context or in the object of
the statute to suggest to the contrary. [See Gurudevdatta
VKSSS Maryadit v. State of Maharashtra, AIR 2001 SC 1980; S. Mehta v.
State of Maharashtra, 2001 (8) SCC 257; Patangrao Kaddam v. Prithviraj Sajirao
Yadav Deshmugh, AIR 2001 SC 1121; and Ku. Sonia Bhatia v. State of Uttar Pradesh
& Ors., (1981) 2 SCC 585.] Applying these principles to the present
case, the Cambridge Dictionary defines “guilty party” as “someone who has done
something wrong or who has ‘committed’ a crime”. According to the Oxford
Dictionary, the etymology of “guilty” also traces back to the Old English
Period (pre-1150), referring in the context of law to someone who “has
‘committed’ some specified offence”. Thus, when we apply a plain language
interpretation, a person being “guilty” of an offence and a person “committing”
an offence is self-same and identical insofar as Section
19(1) vis-à-vis Section 104(1) is concerned.
42.
The Code also uses the terms interchangeably. For instance, Section 173 of the
Code, relating to filing of a chargesheet, stipulates in subsection (2)(i)(d)
that the police officer must state in the chargesheet, “whether any offence
appears to have been ‘committed’ and, if so, by whom”. Would this then mean
that chargesheet, a prosecution document based on which a court takes
cognisance of a matter, does not relate to the guilt of a person? Naturally,
such an interpretation would lead to anomalous circumstances and hence cannot
be sustained.
43.
Secondly, the fact that Section 104(1) does not explicitly require a
customs officer to have “material in their possession” does not imply that a
customs officer can conclude that an offence has been committed out of thin air
or mere suspicion. The threshold for
arrest under Section 104(1) of the Customs Act is higher than that
under Section 41 of the Code. Section 41 allows the police
to arrest a person without a warrant, if a “reasonable complaint has been
made”, or “credible information has been received”, or “a reasonable suspicion
exists” that the person has committed a cognizable offence. In contrast, Section
104(1) sets a higher threshold, stipulating that a customs officers may
only arrest a person if they have “reasons to believe” that a person has
committed an offence. A person is said to have a “reason to believe” a thing,
if they have sufficient cause to believe that thing but not otherwise. [See Section 26 of the Indian
Penal Code, 1860.] This represents a more stringent standard than the “mere
suspicion” threshold provided under Section
41.
44.
Thirdly, given the framework of the Customs Act, which explicitly
classifies offences into bailable and non-bailable, as well as cognizable and
non- cognizable, the “reasons to believe” must reflect these classifications
when justifying an arrest. The reasoning must weigh in why an arrest is being
made in a specific case, particularly given the specific severity assigned to
the offence by the legislature. The reasoning must also state how the monetary
thresholds outlined in the Act are met. Subclauses (b) to (d) of Section
104(4) provide monetary thresholds for cognizable offences, while
subclauses (a) and (c) to (e) of Section 104(6) provide those for
non-bailable offences. The “reasons to believe” must include a computation
and/or an explanation, based on factors such as the goods seized, from which a
conclusion of guilt can be drawn. This level of detail is crucial, as it
facilitates judicial review of the exercise of the power to arrest. The
department’s authority to arrest under Section 104 hinges on
satisfying these statutory thresholds.
45.
Moreover, the framework of the Customs Act clearly reflects the
legislative intent to establish a distinct and unique procedure for the
exercise of arrest powers by a customs officer. For example, Section
104(4), specifies only 4 categories of offences as cognizable, outlined under
sub-sections (a) to (d). Section 104(5) clarifies that all other
offences under the Customs Act are non- cognizable in nature, meaning
that arrests for these offences cannot be made without a warrant. We have
cautioned in Arvind Kejriwal (supra) how the unbridled exercise of
the power to arrest without a warrant can result in arbitrariness and errors in
decision making process. A similar error made by a customs officer can lead to
a frustration of the constitutional and statutory rights of the arrestee.
46.
For the aforesaid reasons, we do not find any inconsistency
between Section 19(1) of the PML Act and Section 104(1) of
the Customs Act. We are of the opinion that principles and ratio developed in
the case of Arvind Kejriwal (supra), and the principles specifically
discussed and delineated in paragraphs 30 to 45 of this judgment, are equally
applicable to the power of arrest under Section 104 of the Customs
Act. The respondent authorities are, therefore, directed to comply with the
mandate of this judgment and that of Arvind Kejriwal (supra).
47.
Lastly, Section 104(1) requires that a person arrested as soon as may
be is required to be informed of the grounds of such arrest. The grounds of
arrest must be given in writing to the arrestee before he is produced before
the Magistrate in terms of Section 104(2). This is necessary as it enables
the accused to contest and challenge his arrest and seek bail from the court.
To deny and not give the grounds in writing would be to deprive the accused of
his right in terms of Section 104(1) and also to seek right of bail
under the provisions of the Code. This interpretation would be in consonance
with Article 22(1) of the Constitution which states that no person
who is arrested shall be detained in custody without being informed as soon as
may be of the grounds of such arrest, nor shall such arrest be denied the right
to consult and to be defended by a legal practitioner of his choice.
48.
In view of the aforesaid discussion, we reject the challenge to the amendments
as well as provisions of the Customs Act. Reliance placed by the
petitioners on the decision of this Court in Om Prakash (supra) is
misconceived as the statutory provisions have undergone amendments to bring
them in consonance with the law of the land. Moreover, the provisions
themselves provide enough safeguards against arbitrary and wrongful arrests.
49.
We shall now draw our attention to the provisions of the GST Acts. [We have collectively referred to the
Central as well as the State GST Acts as “GST Acts”.]
50.
To a large extent, our reasoning and the ratio on the applicability of the Code
to the Customs Act would equally apply to the GST Acts in view of Sections
4 and 5 of the Code. Sub-section (10) to Section 67 of the GST Acts
postulates that the provisions of the Code relating to search and seizure
shall, as far as may be, apply to search and seizure under the GST Acts,
subject to the modification that for the purpose of sub-section (5) to Section
165 of the Code, the word ‘Magistrate’ shall be substituted with the word
‘Commissioner’. Section 69, which deals with the power of arrest, a
provision which we will refer to subsequently, also deals with the provisions
of the Code when the person arrested for any offence under the GST Acts is
produced before a Magistrate. It also deals with the power of the authorised
officers to release an arrested person on bail in case of non-cognizable and
bailable offence, having the same power and subject to the same provisions as
applicable to an officer in charge of a police station. We would, therefore,
agree with the contention that the GST Acts are not a complete code when it
comes to the provisions of search and seizure, and arrest, for the provisions
of the Code would equally apply when they are not expressly or impliedly
excluded by provisions of the GST Acts.
51.
There is no specific stipulation or provision in the GST Acts in respect of
facets of investigation, inquiry or trial. This Court in Ashok Munilal Jain and
Another v. Assistant Director, Directorate of Enforcement[(2018) 16 SCC 158.] has held that in view of Section
4(2) of the Code, the procedure prescribed under the Code also applies to
the special statutes unless the applicability is expressly barred or
prohibited. The provisions of the GST Acts in this regard can be contrasted
with the Railway Property (Unlawful Possession)
Act, 1966. However, in our opinion, this does not help and assist the
petitioners’ contention.
52.
Section 69 of the GST Acts states that where a Commissioner has reasons to
believe that a person has committed any offence specified in clauses (a) to (d)
of sub-section (1) to Section 132, which is punishable under clauses (i)
or (ii) of sub-section (1), or sub-section (2) of the said section, he may authorise
any officer of central or state tax to arrest such person. Sub-section (2)
requires that when a person is arrested for an offence specified in sub-section
(5) to Section 132, the officer authorised to arrest, must inform the
person of the grounds of arrest and produce him before the Magistrate within 24
hours.
53.
Section 132 of the GST Acts deals with punishment of offences and reads as
under:
“132. Punishment for
certain offences.—(1) Whoever commits, or causes to commit and retain the
benefits arising out of, any of the following offences, namely:—
(a) supplies any goods
or services or both without issue of any invoice, in violation of the
provisions of this Act or the rules made there under, with the intention to
evade tax;
(b) issues any invoice
or bill without supply of goods or services or both in violation of the
provisions of this Act, or the rules made there under leading to wrongful
availment or utilisation of input tax credit or refund of tax;
(c) avails input tax
credit using the invoice or bill referred to in clause (b) or fraudulently
avails input tax credit without any invoice or bill;
(d) collects any
amount as tax but fails to pay the same to the Government beyond a period of
three months from the date on which such payment becomes due;
(e) evades tax or fraudulently obtains refund
and where such offence is not covered under clauses (a) to (d);
(f) falsifies or
substitutes financial records or produces fake accounts or documents or
furnishes any false information with an intention to evade payment of tax due
under this Act;
(h) acquires
possession of, or in any way concerns himself in transporting, removing,
depositing, keeping, concealing, supplying, or purchasing or in any other
manner deals with, any goods which he knows or has reasons to believe are
liable to confiscation under this Act or the rules made there under;
(i) receives or is in
any way concerned with the supply of, or in any other manner deals with any
supply of services which he knows or has reasons to believe are in
contravention of any provisions of this Act or the rules made there under;
(l) attempts to
commit, or abets the commission of any of the offences mentioned in clauses (a)
to (f) and clauses (h) and (i) of this section, shall be punishable—
(i) in cases where the
amount of tax evaded or the amount of input tax credit wrongly availed or
utilised or the amount of refund wrongly taken exceeds five hundred lakh
rupees, with imprisonment for a term which may extend to five years and with
fine;
(ii) in cases where
the amount of tax evaded or the amount of input tax credit wrongly availed or
utilised or the amount of refund wrongly taken exceeds two hundred lakh rupees
but does not exceed five hundred lakh rupees, with imprisonment for a term
which may extend to three years and with fine;
(iii) in the case of
an offence specified in clause (b), where the amount of tax evaded or the
amount of input tax credit wrongly availed or utilised or the amount of refund
wrongly taken exceeds one hundred lakh rupees but does not exceed two hundred
lakh rupees, with imprisonment for a term which may extend to one year and with
fine;
(iv) in cases where he
commits or abets the commission of an offence specified in clause (f), he shall
be punishable with imprisonment for a term which may extend to six months or
with fine or with both.
(2) Where any person convicted of an offence
under this section is again convicted of an offence under this section, then,
he shall be punishable for the second and for every subsequent offence with
imprisonment for a term which may extend to five years and with fine.
(3) The imprisonment
referred to in clauses (i), (ii) and (iii) of sub- section (1) and sub-section
(2) shall, in the absence of special and adequate reasons to the contrary to be
recorded in the judgment of the Court, be for a term not less than six months.
(4) Notwithstanding
anything contained in the Code of Criminal Procedure, 1973 (2 of 1974),
all offences under this Act, except the offences referred to in sub-section (5)
shall be non-cognizable and bailable.
(5) The offences
specified in clause (a) or clause (b) or clause (c) or clause (d) of
sub-section (1) and punishable under clause (i) of that sub-section shall be
cognizable and non-bailable.
(6) A person shall not
be prosecuted for any offence under this section except with the previous
sanction of the Commissioner.
Explanation.—For the
purposes of this section, the term “tax” shall include the amount of tax evaded
or the amount of input tax credit wrongly availed or utilised or refund wrongly
taken under the provisions of this Act, the State Goods and Services Tax
Act, the Integrated Goods and Services Tax Act or the Union Territory
Goods and Services Tax Act and cess levied under the Goods and Services
Tax (Compensation to States) Act.”
54.
Sub-section (1) to Section 132 consists of as many as 9 clauses in
the form of clauses (a) to (l). Offences under the said clauses are then graded
in clauses
(i) to (iii) depending
upon the amount of tax evaded, the amount of input tax wrongly availed or
utilised, or the amount of refund wrongly taken. In case of clause (i) where
the amount exceeds Rs.500 lakhs, the punishment may extend to imprisonment for
five years and with fine; where the amount is less than Rs.500 lakhs but
exceeds Rs. 200 lakhs, the punishment may extend to imprisonment for three
years and with fine. Where the amount of tax is less than Rs. 200 lakhs but
exceeds Rs. 100 lakh, the punishment may extend to imprisonment for one year
and with fine. Clause (iv) to Section 132(1) deals with cases where
the accused commits or abets the commission of an offence specified in clause
(f) and provides a punishment which may extend to imprisonment for six months,
with or without fine. Sub-section (2) to Section 132 deals with
repeat offenders. Sub-section (3) to Section 132 requires that the
minimum term of imprisonment for the offences under clauses (i) to (iii) of
sub-section (1) and sub-section (2), in the absence of special and adequate
reasons to the contrary to be recorded by the court, shall not be for less than
six months.
55.
Sub-section (4) to Section 132, an important provision for our
consideration, states that notwithstanding anything in the Code, all offences
under the GST Act, except the offences referred to in sub-section (5), are
non-cognizable and bailable. Thus, non-cognizable offences have been made
bailable. Sub-section (4) to Section 132 has to be read in light of
the dictum of Om Prakash (supra) which decision the legislature was
fully aware and conscious of when they enacted the GST Acts. This is also clear
from sub-section (5) to Section 132 which states that the offences
specified under clauses (a) to (d) of sub-section (1) to Section
132 and punishable under clause (i) of that sub-section are cognizable and
non-bailable. Thus, only when the offence falls under the limited categories
specified in clauses (a) to (d) of sub-section (1) to Section 132, and,
when the amount of tax evaded, amount of input tax credit wrongly availed or utilised,
or the amount of refund wrongly taken exceeds Rs.500 lakhs, that the offence is
non-bailable and cognizable. At this stage, we must note the submission made on
behalf of the Revenue that in cases of bailable and non- cognizable offences,
the central/state officers do not make arrests. Arrests are made only when the
offence is non-bailable and cognizable, satisfying the conditions of
sub-section (5) to Section 132, as specified in clauses (a) to (d) of
sub-section (1) to Section 132 of the GST Acts.
56.
It is clear from the aforesaid provisions that, to pass an order of arrest in
case of cognizable and non-cognizable offences, the Commissioner must
satisfactorily show, vide the reasons to believe recorded by him, that the
person to be arrested has committed a non-bailable offence and that the
pre-conditions of sub-section (5) to Section 132 of the Act are
satisfied. Failure to do so would result in an illegal arrest. With regard to
the submission made on behalf of the Revenue that arrests are not made in case
of bailable offences, in our considered view, the Commissioner, while recording
the reasons to believe should state his satisfaction and refer to the
‘material’ forming the basis of his finding regarding the commission of a
non-bailable offence specified in clauses (a) to (d) of sub-section (1)
to Section 132. The computation of the tax involved in terms of the
monetary limits under clause (i) of sub-section (1), which make the offence
cognizable and non-bailable, should be supported by referring to relevant and
sufficient material.
57.
The aforesaid exercise should be undertaken in right earnest and objectively,
and not on mere ipse dixit without foundational reasoning and material.
The arrest must proceed on the belief supported by reasons relying on
material that the conditions specified in sub-section (5) of Section
132 are satisfied, and not on suspicion alone. An arrest cannot be made to
merely investigate whether the conditions are being met. The arrest is to be
made on the formulation of the opinion by the Commissioner, which is to be duly
recorded in the reasons to believe. The reasons to believe must be based on the
evidence establishing – to the satisfaction of the Commissioner – that the
requirements of sub-section (5) to Section 132 of the GST Act are met.
58.
Our attention was drawn to the judgment of the High Court of Delhi
in Makemytrip (India) Private Limited and Another v. Union of India and
Others, [2016 SCC OnLine Del 4951.] which
is a decision interpreting the power of arrest under the Finance Act,
1994. These provisions are related to service tax. Excise duty, service tax,
and other taxes are subsumed under the GST regime. Accordingly, we are in
agreement with the findings recorded in this decision to the extent that the
power of arrest should be used with great circumspection and not casually.
Further, as in the case of service tax, the power of arrest is not to be used
on mere suspicion or doubt, or for even investigation, when the conditions of
sub- section (5) to Section 132 of the GST Acts are not satisfied.
59.
However, relying upon the judgment in the case of Makemytrip (supra),
it has been submitted on behalf of the petitioners, that the power under
sub-section (5) to Section 132 cannot be exercised unless the
procedure under Section 73 of the GST Act is completed and an assessment order
is passed quantifying the tax evaded or erroneously refunded or input tax
credit wrongly availed.
According
to us, this contention should not be accepted as a general or broad
proposition. We would accept that normally the assessment proceedings would
quantify the amount of tax evaded, etc. and go on to show whether there is any
violation in terms of clauses (a) to (d) to sub-section (1) of Section 132 of
the GST Acts and that clause (i) to sub-section (1) is attracted. But there
could be cases where even without a formal order of assessment, the
department/Revenue is certain that it is a case of offence under clauses (a) to
(d) to sub-section (1) of Section 132 and the amount of tax evaded,
etc. falls within clause (i) of sub-section (1) to Section 132 of the GST Acts
with sufficient degree of certainty. In such cases, the Commissioner may
authorise arrest when he is able to ascertain and record reasons to believe. As
indicated above, the reasons to believe must be explicit and refer to the
material and evidence underlying such opinion. There has to be a degree of
certainty to establish that the offence is committed and that such offence is
non-bailable. The principle of benefit of doubt would equally be applicable and
should not be ignored either by the Commissioner or by the Magistrate when the
accused is produced before the Magistrate.
60.
The findings and the ratio recorded in paragraphs 30 to 47 above with reference
to the Customs Act would equally apply insofar as maintenance of
records as well as obligations of the arresting officer and rights of the
accused/person arrested are concerned. Compliance in this regard must be made.
61.
The Central Board of Indirect Taxes and Customs (GST-Investigation Wing), has
accepted the said position vide circular dated 17.08.2022, the relevant portion
of which reads as under:
“ F.No. GST/INV/Instructions/2021-22
GST-Investigation Unit
17th August 2022
Instruction No.
02/2022-23 [GST – Investigation] Subject: Guidelines for arrest and bail in
relation to offence punishable under the CGST Act, 2017 – reg.
Hon’ble Supreme Court
of India in its judgment dated 16th August, 2021 in Criminal Appeal No. 838 of
2021, arising out of SLP (Crl.) No. 5442/2021, has observed as follows:
“We may note that
personal liberty is an important aspect of our constitutional mandate. The
occasion to arrest an accused during investigation arises when custodial
investigation becomes necessary or it is a heinous crime or where there is a
possibility of influencing the witnesses or accused may abscond. Merely because
an arrest can be made because it is lawful does not mandate that arrest must be
made. A distinction must be made between the existence the existence of the
power to arrest and the justification for exercise of it. If arrest is made
routine, it can cause incalculable harm to the reputation and self-esteem of a
person. If the Investigating Officer has no reason to believe that the accused
will abscond or disobey summons and has, in fact, throughout cooperated with
the investigation we fail to appreciate why there should be a compulsion on the
officer to arrest the accused.” xx xx xx
3. Conditions
precedent to arrest:
3.1 Sub-section (1)
of Section 132 of CGST Act, 2017 deals with the punishment for
offences specified therein. Sub-section (1) of Section 69 gives the
power to the Commissioner to arrest a person where he has reason to believe
that the alleged offender 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 clause (ii) of subsection
(1), or sub- section (2) of the Section 132 of CGST Act, 2017.
Therefore, before placing a person under arrest, the legal requirements must be
fulfilled. The reasons to believe to arrive at a decision to place an alleged
offender under arrest must be unambiguous and amply clear. The reasons to
believe must be based on credible material. 3.2 Since arrest impinges on the
personal liberty of an individual, the power to arrest must be exercised
carefully. The arrest should not be made in routine and mechanical manner. Even
if all the legal conditions precedent to arrest mentioned in Section
132 of the CGST Act, 2017 are fulfilled, that will not, ipso facto, mean
that an arrest must be made. Once the legal ingredients of the offence are made
out, the Commissioner or the competent authority must then determine if the
answer to any or some of the following questions is in the affirmative:
3.2.1 Whether the
person was concerned in the non- bailable offence or credible information has
been received, or a reasonable suspicion exists, of his having been so
concerned?
3.2.2 Whether arrest
is necessary to ensure proper investigation of the offence?
3.2.3 Whether the
person, if not restricted, is likely to tamper the course of further
investigation or is likely to tamper with evidence or intimidate or influence
witnesses?
3.2.4 Whether person
is mastermind or key operator effecting proxy/ benami transaction in the name
of dummy GSTIN or non-existent persons, etc. for passing fraudulent input tax
credit etc.?
3.2.5 As unless such
person is arrested, his presence before investigating officer cannot be
ensured.
3.3 Approval to arrest
should be granted only where the intent to evade tax or commit acts leading to
availment or utilization of wrongful Input Tax Credit or fraudulent refund of
tax or failure to pay amount collected as tax as specified in sub-section (1)
of Section 132 of the CGST Act 2017, is evident and element of mens
rea / guilty mind is palpable.
3.4 Thus, the relevant
factors before deciding to arrest a person, apart from fulfillment of the legal
requirements, must be that the need to ensure proper investigation and prevent
the possibility of tampering with evidence or intimidating or influencing
witnesses exists.
3.5 Arrest should,
however, not be resorted to in cases of technical nature i.e. where the demand
of tax is based on a difference of opinion regarding interpretation of Law. The
prevalent practice of assessment could also be one of the determining factors
while ascribing intention to evade tax to the alleged offender. Other factors
influencing the decision to arrest could be if the alleged offender is
co-operating in the investigation, viz. compliance to summons, furnishing of
documents called for, not giving evasive replies, voluntary payment of tax etc.
xx xx xx”
62.
The circular also refers to the procedure of arrest and that the Principal Commissioner/Commissioner
has to record on the file, after considering the nature of the offence, the
role of the person involved, the evidence available and that he has reason to
believe that the person has committed an offence as mentioned in Section 132 of
the GST Act. The provisions of the Code, read with Section 69(3) of the GST
Acts, relating to arrest and procedure thereof, must be adhered to. Compliance
must also be made with the directions in D.K. Basu (supra). The format of
arrest, as prescribed by the Central Board of Indirect Taxes and Customs in
Circular No. 128/47/2019-GST dated 23.12.2019, has also been referred to in
this Instruction. Therefore, the arrest memo should indicate the relevant
section(s) of the GST Act and other laws. In addition, the grounds of arrest
must be explained to the arrested person and noted in the arrest memo. This
instruction regarding the grounds of arrest came to be amended by the Central
Board of Indirect Taxes and Customs (GST- Investigation Wing) vide Instruction
No. 01/2025-GST dated 13.01.2025 (GST/INV/Instructions/21-22). The circular
dated 13.01.2025 now mandates that the grounds of arrest must be explained
to the arrested person and also be furnished to him in writing as an Annexure
to the arrest memo. The acknowledgement of the same should be taken from the
arrested person at the time of service of the arrest memo. Instruction
02/2022-23 GST (Investigation) dated 17.08.2022 further lays down that a person
nominated or authorised by the arrested person should be informed immediately,
and this fact must be recorded in the arrest memo. The date and time of the
arrest should also be mentioned in the arrest memo. Lastly, a copy of the
arrest memo should be given to the person arrested under proper
acknowledgement. The circular also makes other directions concerning medical
examination, the duty to take reasonable care of the health and safety of the
arrested person, and the procedure of arresting a woman, etc. It also lays down
the post-arrest formalities which have to be complied with. It further states
that efforts should be made to file a prosecution complaint under Section 132
of the GST Acts at the earliest and preferably within 60 days of arrest, where
no bail is granted. Even otherwise, the complaint should be filed within a
definite time frame. A report of arrests made must be maintained and submitted
as provided in paragraph 6.1 of the Instruction. The aforesaid directions in
the Circular/instruction should be read along with the specific directions
outlined in the earlier judgments of this Court and the present judgment.
63.
One of the assertions and allegations made on behalf of the petitioners is that
the parties are compelled and coerced to admit and make payment of tax
in view of the threat of arrest. This is in spite of the fact that there
is no assessment or adjudication as to the alleged demand.
64.
In this regard, we may refer to the circular F.No.GST/INV/Instructions/2022-
2023 (Instruction No. 01/2022-23) dated 25.05.2022 issued by the Central Board
of Indirect Taxes and Customs referring to the taxpayers depositing partial or
full GST liability during the course of search, inspection or investigation.
The relevant extracts of the circular reads:
“ F.No. GST/INV/Instructions/2022-23
GST-Investigation Unit
25th May 2022
Instruction No.
01/2022-23 [GST – Investigation] Subject: Deposit of tax during the course of
search, inspection or investigation – reg.
xx xx xx
3. It is further
observed that recovery of taxes not paid or short paid, can be made under the
provisions of Section 79 of CGST Act, 2017 only after following due
legal process of issuance of notice and subsequent confirmation of demand by
issuance of adjudication order. No recovery can be made unless the amount
becomes payable in pursuance of an order passed by the adjudicating authority
or otherwise becomes payable under the provisions of CGST Act and
rules made therein. Therefore, there may not arise any situation where
“recovery” of the tax dues has to be made by the tax officer from the taxpayer
during the course of search, inspection or investigation, on account of any
issue detected during such proceedings. However, the law does not bar the
taxpayer from voluntarily making payment of any tax liability ascertained by him
or the tax officer in respect of such issues, either during the course of such
proceedings or subsequently.
4. Therefore, it is
clarified that there may not be any circumstance necessitating ‘recovery’ of
tax dues during the course of search or inspection or investigation
proceedings. However, there is also no bar on the taxpayers for voluntarily
making the payments on the basis of ascertainment of their liability on
non-payment/short payment of taxes before or at any stage of such proceedings.
The tax officer should however inform the taxpayers regarding the provisions of
voluntary tax payments through DRC-03.
xx xx xx”
65.
The circular notes that instances have been noticed where allegations of force
and coercion were made by the officers for making recovery during the course of
search, inspection and investigation. Some of the taxpayers had accordingly
approached the High Courts. Reference is made to Section 79 of the GST Acts to
state that recovery can be made only after following the due process of issuance
of notice and subsequent confirmation of demand by issuance of an adjudicating
order. On the last aspect, reference is made to Sections 73(5) and 74(5) of the
GST Acts, which help the taxpayers in discharging their admitted liability,
self-ascertained or as ascertained by the tax officer, without having to bear
the burden of interest under Section 50 of the GST Acts. The statement in the
circular that an assessee may voluntarily deposit tax as noticed was a cause of
discussion before us. In this regard, our attention was drawn to Section 74(5)
of the GST Acts, which states that a person chargeable with tax may, before
service of notice under sub-section (1), pay the amount of tax along with
interest payable under Section 50 and a penalty equivalent to 15% of
such tax on the basis of his own ascertainment of such tax or the tax as
ascertained by the proper officer, and inform the proper officer in writing of
such payment. Sub- section (5) to Section 74 relates to voluntary
payment, and does not postulate payment under force, coercion or threat of
arrest. The aforesaid circulars are binding and should be adhered to in
letter and spirit. The authorities must exercise due care and caution as
coercion and threat to arrest would amount to a violation of fundamental rights
and the law of the land. It is desirable that the Central Board of Indirect
Taxes and Customs promptly formulate clear guidelines to ensure that no
taxpayer is threatened with the power of arrest for recovery of tax in the garb
of self-payment. Way back in the year 1978, a three Judges Bench of this Court
in Nandini Satpati v. P.L. Dani and Another[(1978) 2 SCC 424.] had observed as under:
“57. (…) We are
disposed to read “compelled testimony” as evidence procured not merely by
physical threats or violence but by psychic torture, atmospheric pressure,
environmental coercion, tiring interrogative prolixity, overbearing and
intimidatory methods and the like — not legal penalty for violation. (…)”
66.
We called upon the Revenue to submit data in this regard. A chart has been
filed before us and the same is reproduced below:
|
Total Number of GST Offence Cases |
||||||||||
|
Period: July 2017 to
March 2024 |
||||||||||
|
Period |
Formation |
No.
of Cases |
Detection |
Recovery |
No.
of Arrest |
|||||
|
(In
Rs. Cr.) |
(In
Rs. Cr.) |
|||||||||
|
2017-18
w.e.f July
2017 |
CGST
Zones |
273 |
384 |
224 |
3 |
|||||
|
DGGI |
151 |
832 |
171 |
0 |
||||||
|
Total |
424 |
1216 |
394 |
3 |
||||||
|
2018-19 |
CGST
Zones |
5894 |
18658 |
10338 |
115 |
|||||
|
DGGI |
1474 |
19288 |
8878 |
76 |
||||||
|
Total |
7368 |
37946 |
19216 |
191 |
||||||
|
2019-20 |
CGST
Zones |
8367 |
19482 |
6956 |
123 |
|||||
|
DGGI |
2290 |
21371 |
11508 |
108 |
||||||
|
Total |
10657 |
40853 |
18464 |
231 |
||||||
|
2020-21 |
CGST
Zones |
8756 |
18247 |
3380 |
224 |
|||||
|
DGGI |
3840 |
31137 |
8855 |
236 |
||||||
|
Total |
12596 |
49384 |
12235 |
460 |
||||||
|
2021-22 |
CGST
Zones |
8770 |
24757 |
5393 |
191 |
|||||
|
DGGI |
3804 |
48481 |
19764 |
151 |
||||||
|
Total |
12574 |
73238 |
25157 |
342 |
||||||
|
2022-23 |
CGST
Zones |
10500 |
31053 |
12509 |
93 |
|||||
|
DGGI |
5062 |
100560 |
20717 |
97 |
||||||
|
Total |
15562 |
131613 |
33226 |
190 |
||||||
|
2023-24
(upto March
2024) |
CGST
Zones |
14492 |
35377 |
7742 |
84 |
|||||
|
DGGI |
6090 |
194955 |
24016 |
139 |
||||||
|
Total |
20582 |
230332 |
31758 |
223 |
||||||
|
Total Number of ITC Fraud Cases |
||||||||||
|
Period: July 2017 to March 2024 |
||||||||||
|
Period |
Formation |
No. of Cases |
Detection |
Recovery |
No. of Arrest |
|||||
|
(In Rs. Cr.) |
(In Rs. Cr.) |
|||||||||
|
2017-18 w.e.f July 2017 |
|
|
|
|
|
|||||
67.
Analysing the aforesaid data indicates that the number of people arrested is
normally in hundreds or more.52 However, it is to be noted that the figures
with regard to the tax demand and the tax collected would, in fact, indicate
some force in the petitioners’ submission that the assessees are compelled to
pay tax as a condition for not being arrested. Sub-section (5) to Section 74 of
the GST Acts gives an option to the assessee and does not confer any right on
the tax authorities to compel or extract tax by threatening arrest. This would
be unacceptable and violative of the rule of law.
68.
We would observe that in case there is a breach of law, and the assessees are
put under threat, force or coercion, the assessees would be entitled to move
the courts and seek a refund of tax deposited by them. The department would
also take appropriate action against the officers in such cases.
69.
However, we may clarify that a person summoned under Section 70 of the GST Acts
is not per se an accused protected under Article 20(3) of the
Constitution, as has been held in the case of Deepak Mahajan (supra).
This is because the prohibitive sweep of Article 20(3) of the
Constitution does not go back to the stage of interrogation. Reference in
this regard has been placed on Poolpandi and Others v. Superintendent, Central
Excise and Others[(1992) 3 SCC 259.]
and Dukhishyam Benupani, Asst. Director, Enforcement Directorate (FERA) v. 52
The data reflects that the number of arrests is inversely proportional to the
percentage of amount recovered against the amount detected. i.e., when payments
are made, the power of arrest is not being exercised. Further, the amount
classified as the ‘detection’ amount is not the amount ascertained through
assessment/adjudication, but an amount quantified by the department/authority
conducting search and seizure. Arun
Kumar Bajoria. [(1998) 1 SCC 52.]It
is obvious that the investigation must be allowed to proceed in accordance with
law and there should not be any attempt to dictate the investigator and at the
same time, there should not be any misuse of power and authority.
70.
We also wish to clarify that the power to grant anticipatory bail arises when
there is apprehension of arrest. This power, vested in the courts under the
Code, affirms the right to life and liberty under Article 21 of the
Constitution to protect persons from being arrested. Thus, in Gurbaksh
Singh Sibbia (supra), this Court had held that when a person complains of
apprehension of arrest and approaches for an order of protection, such
application when based upon facts which are not vague or general allegations,
should be considered by the court to evaluate the threat of apprehension and
its gravity or seriousness. In appropriate cases, application for anticipatory
bail can be allowed, which may also be conditional. It is not essential that
the application for anticipatory bail should be moved only after an FIR is
filed, as long as facts are clear and there is a reasonable basis for
apprehending arrest. This principle was confirmed recently by a
Constitution Bench of Five Judges of this Court in Sushila Aggarwal and
others v. State (NCT of Delhi) and Another.
[(2020) 5 SCC 1.] Some decisions[State
of Gujarat v. Choodamani Parmeshwaran Iyer and Another, 2023 SCC OnLine SC
1043; Bharat Bhushan v. Director General of GST Intelligence, Nagpur Zonal Unit
Through Its Investigating officer, SLP (Crl.) No. 8525/2024.]of this Court
in the context of GST Acts which are contrary to the aforesaid ratio should not
be treated as binding.
71.
The petitioners contend that Section 162(1) of the GST Acts permits compounding
of offences and therefore, the ratio in Makemytrip (supra) should be
applied to the GST Acts. The decision in Makemytrip (supra), we
would observe, itself carves out an exception when an assessment order under
the Finance Act may not be required, namely cases where a person who
is shown to be a habitual evader as one who has not filed service tax returns
for a continuous period of time, who has a history of repeated defaults for
which there have been fines, penalties imposed, and prosecutions launched, etc.
It is possible to ascertain these facts from past records. Thereafter, it is
observed that it might be possible for the department to justify resorting to
coercive provisions but the notes on the file must offer convincing
justification for resorting to such an extreme measure. It is this latter
aspect which according to us is of relevance. The petitioners further submitted
that till an assessment order was passed under Section 74 of the GST Acts, the
liability cannot be quantified and hence an assessee cannot move an application
for compounding of offences. We would reject the said submission because there
is a difference between the compounding of offences and the arrest of a person.
We have already stipulated sufficient safeguards to ensure that no arrests are
made till the Commissioner is able to show and establish, on the basis of
material and evidence, that the conditions of clauses (a) to (d) as well as
clause (i) of sub-section 1 to Section 132 of the GST Acts are satisfied
and therefore the offences are non-bailable.
72.
The last issue for our determination concerns the constitutional validity
of Sections 69 and 70 of the GST Acts which provide for the power to
arrest and the power to summon. The petitioners assail the vires of these
provisions on the grounds of legislative competence. It is submitted
that Article 246-A of the Constitution while conferring legislative
powers on Parliament and State Legislatures to levy and collect GST, does not explicitly
authorize the violations thereof to be made criminal offences. Our attention
was drawn to Lists I and II of the Seventh Schedule to the Constitution which
demarcate the legislative fields for the Union and the States to enact laws and
make violations of the enactments as offences. Referring to Entry 93 of List I
to the Seventh Schedule, it is submitted that the Parliament can enact criminal
provisions only for the matters in List I. It is further submitted that the
power to summon, arrest and prosecute are not ancillary and incidental to the
power of levying GST and therefore, are beyond the legislative competence of
the Parliament under Article 246-A of the Constitution.
73.
This argument, in our opinion, must be rejected. Article 246-A of the
Constitution is a special provision defining the source of power and the field
of legislation for the Parliament and the State Legislature with respect to
GST:
“246-A. Special
provisions with respect to goods and services tax.—(1) Notwithstanding anything
contained in Articles 246 and 254, Parliament, and, subject to
clause (2), the legislature of every State, have power to make laws with
respect to goods and services tax imposed by the Union or by such State.
(2) Parliament has
exclusive power to make laws with respect to goods and services tax where the
supply of goods, or of services, or both takes place in the course of
inter-State trade or commerce.
Explanation.—The provisions of this article,
shall, in respect of goods and services tax referred to in clause (5) of Article
279- A, take effect from the date recommended by the Goods and Services Tax
Council.”
74.
This Court in Union of India and Others v. VKC Footsteps (India) Private
Ltd., [(2022) 2 SCC 603.] took
note of the change brought about by Article 246-A of the Constitution
and observed:
“52.1.
Firstly, Article 246-A defines the source of power as well as the
field of legislation (with respect to goods and services tax) obviating the
need to travel to the Seventh Schedule.
52.2. Secondly, the
provisions of Article 246-A are available both to Parliament and the
State Legislatures, save and except for the exclusive power of Parliament to
enact GST legislation where the supply of goods or services takes place in the
course of inter-State trade or commerce. (…)”
75.
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 of the Constitution 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 the issue of legislative competence, entries should
not be read in a narrow or pedantic sense but given their broadest meaning and
the widest amplitude because they are intrinsic to a machinery of government. [Mineral Area Development Authority and
Another v. Steel Authority of India and Another, (2024) 10 SCC 1; Hans
Muller of Nurenburg v. Superintendent, Presidency Jail, Calcutta and Others,
(1955) 1 SCR 1284; Elel Hotels & Investments Ltd. and Others v. Union
of India, (1989) 3 SCC 698; State of Rajasthan v. G. Chawla and Another,
1958 SCC OnLine SC 33.] The ambit of an entry or article laying down the
legislative field extends to all ancillary and subsidiary matters which fairly
and reasonably can be said to be comprehended in it. [The United Provinces v. Mst. Atiqa Begum and Others, AIR 1941 FC
16 : 1940 SCC OnLine FC 11; Mineral Area Development
Authority (supra); Express Hotels (P) Ltd. v. State of Gujarat and
Another, (1989) 3 SCC 677; Sardar Baldev Singh v. Commissioner of Income
Tax Delhi and Ajmer, 1960 SCC OnLine SC 147.] This settled dictum regarding
the interpretation of legislative entries equally applies to the special
provision of Article 246-A of the Constitution. In the context
of the legislative power to levy and collect tax, a Constitution Bench of Seven
Judges in R.S. Joshi, Sales Tax Officer, Gujarat and Others v. Ajit Mills
Limited and Another, [(1977) 4 SCC 98.] held:
“47. The principle in
construing words conferring legislative power is that the most liberal
construction should be put on the words so that they may have effect in their
widest amplitude. None of the items in the List is to be read in a narrow
restricted sense. Each general word should be held to extend to all ancillary
or subsidiary matters which can fairly and reasonably be said to be
comprehended in it. All powers necessary for the levy and collection of the tax
concerned and for seeing that the tax is not evaded are comprised within the
legislative ambit of the Entry as ancillary or incidental. It is also
permissible to levy penalties for attempted evasion of taxes or default in the
payment of taxes properly levied.”
Thus,
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.
76.
In some of the cases, Section 135 of the GST Acts which relates to culpable
mental intent has been challenged. We are not examining the said aspect as
prosecution has not been initiated in any of these cases. If any person is
aggrieved and is advised to challenge the said Section, he/she may do so before
the High Court.
77.
In view of the aforesaid discussion the challenge to the constitutional
validity as also the right of the authorised officers under the Customs
Act and the GST Acts to arrest are rejected and dismissed with elucidation
and clarification on the pre-conditions and when and how the power of arrest is
to be exercised.
78.
We, accordingly, answer the question in the aforesaid terms. The matters are
directed to be listed before an appropriate Bench in the week commencing
17.03.2025 for final hearing and disposal.
Bela M. Trivedi, J. :- While completely
agreeing with the well-considered opinion expressed by the Hon’ble Chief
Justice, on when and how the power of arrest should be exercised by the
authorized officers, I have thought it expedient to pen down my views on the
jurisdictionary powers of judicial review under Article
32 and Article 226 of the Constitution of India, when the arrest
of a person is challenged.
80.
At the outset, it may be noted that as
well settled, though the powers of judicial review under Article
32 and 226 of the Constitution of India are very wide and
untrammeled and are vested in the superior courts to protect the legal and
fundamental rights of the citizens and even non-citizens, the courts over the
years have evolved certain self-restraints for exercising these powers. They
have done so in the interest of the administration of justice and for better
and more efficient and informed exercise of the said powers. The
self-restraints or limitations are imposed as a matter of prudence, propriety,
policy and practice. The extra- ordinary jurisdiction under Article
32 and 226, by its very nature is used sparingly and in the
extraordinary circumstances.
81.
It may further be noted that again as well settled, the Fundamental Rights
under Part-III of the Constitution are part of the integrated scheme of the
Constitution. They are not exclusive of each other but operate, and are,
subject to each other. The action complained of must satisfy the tests of all
the said rights so far as they are applicable to the individual cases.
Though Article 21 grants a person right to life and personal liberty,
it permits the State to deprive a person of his life and personal liberty,
provided it is done strictly according to the procedure established by law.
This permission is expressly controlled by Article 22 in cases both
of arrest and detention. Therefore, reading the Articles
21 and 22 together, it is very clear that the Constitution
permits both punitive and preventive detention provided it is according to the
procedure established by law made for the purpose, and if both the law and the
procedure laid down by the law, are valid.
82.
Whenever the jurisdiction of the High Court or the Supreme Court is invoked
under Article 226 or Article 32 as the case may be,
challenging the punitive or preventive detention, the Court is expected to take
into consideration the nature of right infringed, the scope and object of the
legislation under which such arrest or detention is made, the need to balance
the rights and interests of the individual as against those of the society, the
circumstances under which and the persons by whom the jurisdiction is invoked
etc. In exercise of their discretionary jurisdiction, the High Courts and the
Supreme Court do not, as courts of appeal or revision, correct errors of law or
of facts. The judicial intervention is warranted only in
exceptional circumstances when the arrest is prima facie found to be
malafide; or is prompted by extraneous circumstances, or is made in
contravention of or in breach of provisions of the concerned statute; or when
the authority acting under the concerned statute does not have the requisite
authority etc.
83. In
this regard, a beneficial reference of the very apt observations made
in Additional Secretary to the Government of India and Others vs. Smt.
Alka Subhash Gadia and Another[(1992)
Supp (1) SCC 496], deserves to be made. The three judge bench in the said
case while discussing the Law on Preventive Detention, observed as under:-
“11. The provisions
of Articles 21 and 22 read together, therefore, make it
clear that a person can be deprived of his life or personal liberty according
to procedure established by law, and if the law made for the purpose is valid,
the person who is deprived of his life or liberty has to challenge his arrest or
detention, as the case may be, according to the provisions of the law under
which he is arrested or detained. This proposition is valid both for punitive
and preventive detention. The difference between them is made by the
limitations placed by sub- clauses (1) and (2) on the one hand and sub-clauses
(4) to (7) on the other of Article 22, to which we have
already referred above. What is necessary to remember for our purpose is
that the Constitution permits both punitive and preventive detention provided it
is according to procedure established by law made for the purpose and if
both the law and the procedure laid down by it, are valid.
12. This is not to say
that the jurisdiction of the High Court and the Supreme Court
under Articles 226 and 32 respectively has no role to play
once the detention — punitive or preventive — is shown to have been made under
the law so made for the purpose. This is to point out the limitations which the
High Court and the Supreme Court have to observe while exercising their respective
jurisdiction in such cases. These limitations are normal and well known, and
are self-imposed as a matter of prudence, propriety, policy and practice and
are observed while dealing with cases under all laws. Though the Constitution
does not place any restriction on these powers, the judicial decisions have
evolved them over a period of years taking into consideration the nature of the
right infringed or threatened to be infringed, the scope and object of the
legislation or of the order or decision complained of, the need to balance the
rights and interests of the individual as against those of the society, the
circumstances under which and the persons by whom the jurisdiction is invoked,
the nature of relief sought etc.”
84.
The safeguards provided in the Special Acts against the arrest of a person, are
provided keeping in view the fundamental rights of life and personal Liberty of
a person enshrined in the Constitution of India. It cannot be gainsaid that
such safeguards provided against the arrest of a person under the Special Acts
or the Code of Criminal Procedure, must be observed not only to protect
his fundamental right of personal liberty but also to prevent a potential
misuse of the power to arrest a person at the instance of the authorized
officer. The safeguards are - the requirement to have “material” in possession
of the authorized officer, to form an opinion and record in writing the
“reasons to believe” that the person arrested is guilty of an offence or has
committed an offence as the case may be, under the provisions of the concerned
Act, and the requirement to inform the person arrested, as soon as may be, of
the grounds of arrest. As per Article 21 of the Constitution, no
person could be deprived of his life or personal liberty except according to
procedure established by law. Since, the personal liberty of a person is
deprived, when he is arrested, the procedure laid down in the Statute
while depriving his personal liberty, has to be followed. Similarly, as
per Article 22(1) of the Constitution, no person who is arrested,
could be detained in custody without being informed, as soon as may be, of the
grounds for such arrest.
Thus,
the grounds for such arrest have to be communicated to him as soon as may be
after the arrest is made. Tersely put, there has to be due compliance of the
Constitutional and Statutory mandates, whenever an arrest is made of a person
under the Special Acts.
85.
So far as the arrest made under the Customs Act, 1962 is concerned,
in Union of India Vs. Padam Narain Aggarwal and Others[2008 (13) SCC 305], it has been observed that the power to arrest
a person by a Custom officer is statutory in character and cannot be interfered
with. Such power of arrest can be exercised only in those cases where the
Customs officer has a reason to believe that the person is guilty of an offence
punishable under the said Act. Thus, the power must be exercised on objective
facts of commission of an offence enumerated, and when the customs officer has
a reason to believe that the person sought to be arrested has been guilty of
commission of such offences. It has been further observed that the law on one
hand allows a customs officer to exercise power to arrest a person who has
committed certain offences, and on the other hand takes due care to ensure
individual freedom and liberty, by laying down norms and providing safeguards
so that the power of arrest is not abused or misused by the authorities.
86.
So far as the arrest is made under the Prevention of Money Laundering Act,
2002 is concerned, in Vijay Madanlal Choudhary and Others Vs. Union
of India and Others[2022 SCC OnLine SC
929], also the three Judge Bench of this Court has held inter alia that the
safeguards provided in the PMLA and the pre-conditions to be fulfilled by the
authorized officer before effecting arrest as contained in Section
19 of the said Act are stringent and of higher standard. Those safeguards
ensure that the authorized officers do not act arbitrary, but make them
accountable for their judgment about the necessity to arrest any person as
being involved in the commission of offence of money laundering even before
filing of the complaint before the Special Court under the Act.
87.
However, when the legality of such an arrest made under the Special Acts like
PMLA, UAPA, Foreign Exchange, Customs Act, GST Acts, etc. is challenged, the
Court should be extremely loath in exercising its power of judicial review. In
such cases, the exercise of the power should be confined only to see whether
the statutory and constitutional safeguards are properly complied with or not,
namely to ascertain whether the officer was an authorized officer under the
Act, whether the reason to believe that the person was guilty of the
offence under the Act, was based on the “material” in possession of the
authorized officer or not, and whether the arrestee was informed about the
grounds of arrest as soon as may be after the arrest was made. Sufficiency or
adequacy of material on the basis of which the belief is formed by the officer,
or the correctness of the facts on the basis of which such belief is formed to
arrest the person, could not be a matter of judicial review.
88.
It hardly needs to be reiterated that the power of judicial review over the
subjective satisfaction or opinion of the statutory authority would have
different facets depending on the facts and circumstances of each case. The
criteria or parameters of judicial review over the subjective satisfaction
applicable in Service related cases, cannot be made applicable to the cases of
arrest made under the Special Acts. The scrutiny on the subjective opinion or
satisfaction of the authorized officer to arrest the person could not be a
matter of judicial review, in as much as when the arrest is made by the
authorized officer on he having been satisfied about the alleged commission of
the offences under the special Act, the matter would be at a very
nascent stage of the investigation or inquiry. The very use of the phrase
“reasons to believe” implies that the officer should have formed a prima facie
opinion or belief on the basis of the material in his possession that the
person is guilty or has committed the offence under the relevant special Act.
Sufficiency or adequacy of the material on the basis of which such belief is
formed by the authorized officer, would not be a matter of scrutiny by the
Courts at such a nascent stage of inquiry or investigation.
89.
As held in Adri Dharan Das vs. State of W.B. [(2005) 4 SCC 303], ordinarily arrest is a part of the process of
investigation intended to secure several purposes. The accused may have to be
questioned in detail regarding various facets of motive, preparation,
commission and aftermath of crime and the connection of other persons, if any,
in the crime. There may be circumstances in which the accused may provide
information leading to discovery of material facts. It may be necessary to
curtail his freedom in order to enable the investigation to proceed without
hindrance and to protect witnesses and persons connected with the victim of the
crime, to prevent his disappearance, to maintain law and order in the
society etc. For these or such other reasons, arrest may become an inevitable
part of the process of investigation.
90.
It is pertinent to note that the Special Acts are enacted to achieve specific
purposes and objectives. The power of judicial review in cases of arrest under
such Special Acts should be exercised very cautiously and in rare circumstances
to balance individual liberty with the interest of justice and of the society
at large. Any liberal approach in construing the stringent provisions of the
Special Acts may frustrate the very purpose and objective of the Acts. It
hardly needs to be stated that the offences under the PMLA or the Customs
Act or FERA are the offences of very serious nature affecting the
financial systems and in turn the sovereignty and integrity of the nation. The
provisions contained in the said Acts therefore must be construed in the manner
which would enhance the objectives of the Acts, and not frustrate the same.
Frequent or casual interference of the courts in the functioning of the
authorized officers who have been specially conferred with the powers to combat
the serious crimes, may embolden the unscrupulous elements to commit such
crimes and may not do justice to the victims, who in such cases would be
the society at large and the nation itself. With the advancement in Technology,
the very nature of crimes has become more and more intricate and complicated.
Hence, minor procedural lapse on the part of authorized officers may not be
seen with magnifying glass by the courts in exercise of the powers of judicial
review, which may ultimately end up granting undue advantage or benefit to the
person accused of very serious offences under the special Acts. Such offences
are against the society and against the nation at large, and cannot be compared
with the ordinary offences committed against an individual, nor the accused in
such cases be compared with the accused of ordinary crimes.
91.
Though, the power of judicial review keeps a check and balance on the
functioning of the public authorities and is exercised for better and more
efficient and informed exercise of their powers, such power has to be exercised
very cautiously keeping in mind that such exercise of power of judicial review
may not lead to judicial overreach, undermining the powers of the statutory
authorities. To sum up, the powers of judicial review may not be exercised
unless there is manifest arbitrariness or gross violation or non-compliance
of the statutory safeguards provided under the special Acts, required to
be followed by the authorized officers when an arrest is made of a person prima
facie guilty of or having committed offence under the special Act.
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