Supreme Court asks Centre to furnish details on notices, arrests done under GST Act [3.5.2024]

The Supreme Court has asked the Centre to furnish details of issuance of notices and arrests done under the provisions of the Goods and Services Tax, saying it may interpret the law and lay down appropriate guidelines to avoid any harassment of citizens by depriving their liberty.

A special bench of Justices Sanjeev Khanna, MM Sundresh and Bela M Trivedi, which is hearing a batch of 281 petitions challenging various provisions of the GST Act, Customs Act and the provisions of PMLA, voiced concern over the ambiguity in section 69 of the GST Act that deals with the powers of arrest.

The bench said it would interpret the law to "strengthen" the liberty, if need be, but not allow citizens to be harassed.

"You furnish the data on notices issued and arrests made under the GST Act for alleged defaults of Rs 1 crore to Rs 5 crore respectively for the past three years. There can be harassment of people and we won't permit that. If we find there is ambiguity in the provision, we will set it right. Second, people can't be sent behind bars in all the cases," the bench told Additional Solicitor General SV Raju, appearing for the Centre.

The bench sought the data after senior advocate Siddharth Luthra, appearing for some of the petitioners flagged the alleged misuse of the powers of the authorities under the GST regime, saying it is curtailing the liberty of individuals.

During the hearing on Thursday, Luthra pointed out that sometimes arrests are not made, but people are "harassed" by issuing notices to them, threatening arrest.

He highlighted that arrest under the GST Act is to be preceded by adjudication of the amount considered due and payable on the part of a taxpayer.

Luthra said the question which needs to be considered is whether the liberty of an individual can be curtailed under section 69 until the assessment is made and amount is quantified.

Raju said he will gather data regarding notices and arrests made under the central GST Act but such information relating to states would be difficult to collate.

The bench said, "We want all the data. The GST Council will have those data. If the data is available, we want it before us," the bench told Raju, adding there has to be a distinction between cases of fraud and inadvertent or innocuous lapses.

The bench also said it would look into the issue of supplying grounds of arrest to a person in writing, noting merely informing the reasons may not be sufficient compliance with the principles of natural justice.

"In the PMLA case, this court has made it mandatory to provide grounds of arrest to the accused in writing. A similar arrangement can be made under the GST as well," the bench said, asking how would an arrested person challenge his detention or a plea for remand unless he has the grounds of arrest in writing?

The ASG told the bench on May 9, he would try to answer the court's queries, when the matter will be heard next.

03 May 2024