Introduction
The Hon’ble Supreme Court of India (‘Court’), in the case of the State of Gujarat v. Choodamani Parmeshwaran Iyer[i], overturned the orders passed by the High Court of Gujarat (‘HC’) and held that if a person is summoned under s. 69 of the Central Goods and Services Tax Act, 2017 (‘CGST Act’), then the provisions of s. 438 of the Criminal Procedure Code (‘CrPC’) cannot be invoked.
Brief Facts
Multiple summons were issued to Choodamani Parmeshwaran Iyer (‘Respondent’), requiring the presence of the Respondent for interrogation concerning an inquiry into M/s. Iyer Enterprise Mundra Kutch.
The relevant authority sought to question the Respondent regarding the alleged evasion of GST liability and violations of the provisions of the Finance Act, 1994, and the CGST Act.
Upon receipt of the summons, the Respondent apprehended arrest and filed writ petitions before the HC due to concern about the possibility of arrest.
The HC disposed of the writ petitions and issued an order considering the voluntary nature of the pleadings; where the petitioners sought assistance from the adjudicatory process, they were to present their case before the concerned authority. The authority was instructed to complete this process within 8 weeks. If any issues arose after the adjudicatory process was completed and the petitioners were not prepared to meet their obligations, they would be given an additional two weeks to take necessary actions.
The department, dissatisfied with the Order of the HC, filed an appeal before the Court.
Held
The Court observed that if a person is summoned under s. 69 of the CGST Act for the purpose of recording their statement, the provisions of s. 438 of the CrPC, essentially for anticipatory bail, cannot be invoked because FIR is not registered before invoking the power of arrest under s. 69(1) of the CGST Act.
The Court opined that the power of officers under the CGST Act to arrest a person is statutory in character, and a writ court should not ordinarily interfere with the exercise of such power.
The Court relied on the judgment of Union of India v. Padam Narain Aggarwal and Ors.[ii] where the Court observed that normally, the court should not impose any conditions before effecting an arrest. Imposing conditions, such as giving prior intimation to the person concerned, would render the statutory provisions ineffective and meaningless.
The Court also opined that the only way for the summoned person to seek protection against pre-trial arrest is by invoking the jurisdiction of the HC under a. 226 of the Constitution of India.
Therefore, the Court held that the Respondent should be afforded an additional opportunity to present themselves before the authority for the purpose of recording their statements, failing to which the authority concerned can proceed further in accordance with the law.
Conclusion
The Court rightly held that individuals summoned under s. 69 of the CGST Act cannot seek anticipatory bail under s. 438 of the CrPC, reinforcing the statutory framework governing the powers of arrest under the CGST Act. The reliance on the precedent set by Union of India v. Padam Narain Aggarwal and Ors. (supra) further solidifies the Court’s position. By invoking this precedent, the Court affirms the idea that statutory provisions should be allowed to function as intended by the legislature. The Court’s indication that the only recourse for individuals apprehensive of pre-trial arrest is to seek protection under Article 226 of the Constitution is a noteworthy aspect of this ruling.
End Notes
[i] (Arising out of SLP(Crl.) No. 4212-4213 of 2019).
[ii] (2008) 13 SCC 305.
Authored by Nitish Solanki, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinion.