• Notification Date: 29-08-2023
• Notification No: N/A

SC Issues Notice Regarding Requests to Challenge the Power of GST Officials to Arrest and Summon Individuals

On 25th August, the Supreme Court issued the notice for the two identical writ petitions that have been filed under Article 32 of the Constitution of India, contesting the constitutional validity of multiple provisions of the Central Goods and Services Tax Act, 2017 (CGST Act) including Section 69 (i.e., power to arrest), 70(1) (i.e., power to summon individuals to furnish proofs and produce documents). The court has stayed any coercive process against the applicant. The Bench comprised Justices Sanjay Kishan Kaul and Sudhanshu Dhulia. 

In accordance with the petitions above, Sections 69 and 70 of the CGST Act are unconstitutional since they include criminal provisions and were unable to be passed under Article 246A of the Constitution of India, 1950. The authority to assess and collect the Goods and Services Tax (GST) is not ancillary or incidental to the authority to make arrests and bring legal proceedings. 

In order to clarify this, the petitioners claimed that Entry 93 of List 1 of the Seventh Schedule of the Indian Constitution grants the Parliament the authority to pass legislation exclusively pertaining to cases in List 1, not CGST. As a result, the Parliament lacks the authority to pass Sections 69 and 70 of the CGST Act. 

Furthermore, it was argued that although CGST officials are granted civil court and police authority when looking into crimes, the procedures are still referred to as “inquiries” and the individual who was summoned is not an “accused.” Additionally, the summoned individuals are not protected by Article 20(3) of the Indian Constitution because the aforementioned officials are not police personnel, which greatly prejudices the petitioners. 

The petitions have also mentioned the cases that are now pending before the Supreme Court in relation to the need that the CGST Act of 2017’s special law’s investigation of a crime to follow the rules set out in the Code of Criminal Procedure, 1973 (CrPC). 

The Respondent No. 2’s office began an inquiry into the claims of GST evasion and non-payment in the current petitions. 

Based on these facts, the Petitioners have filed the present petitions, suspecting coercive action by the Respondents, and have asked that the proceedings against them under the CGST Act, in connection with an alleged non-cognizable offence, be quashed without adhering to the legal process as set forth in Chapter XII of the CrPC, specifically Sections 154 to 157 and Section 172 thereof.