2025 (7) TMI 1616 - HC - GST

Challenge to vires of Sections 69 and 132 of Goods and Services Tax Act 2017 - Power to Arrest and Punishment - lack of legislative competence and being violative of Articles 14 20 and 21 of Constitution of India - HELD THAT - The parties are ad idem that present writ petitions be disposed of in accordance with judgment of Hon ble the Supreme Court in Radhika Agarwal s case 2025 (2) TMI 1162 - SUPREME COURT (LB) . It is to be noted that petitioners in some of the writ petitions are still unrepresented today despite present petitions being adjourned from 15.07.2025 on account of absence of learned counsel. Similar writ petitions were disposed of in terms of Radhika Agarwal s case on 15.07.2025 and present petitions were adjourned in the interest of justice to await appearance of learned counsel. In the given factual matrix it is not deemed appropriate to further adjourn the matters where learned counsel for petitioners are not present. Petition disposed off.

Summary

ISSUES:

Whether Sections 69 and 132 of the Goods and Services Tax Act, 2017 are constitutionally valid and within legislative competence.Whether Sections 69 and 132 violate Articles 14, 20, and 21 of the Constitution of India.Whether the power of arrest under Section 132 of the GST Act can be exercised without completion of assessment proceedings under Section 73.The procedural safeguards and pre-conditions required for passing an order of arrest under Section 132 of the GST Act.The applicability of principles governing legislative entries and the doctrine of pith and substance in relation to Article 246A of the Constitution.

RULINGS / HOLDINGS:

The constitutional validity of Sections 69 and 132 of the GST Act is upheld; these provisions are within legislative competence under Article 246A of the Constitution, which is a "special provision" defining the source of power and field of legislation for GST.The provisions do not violate Articles 14, 20, or 21 of the Constitution as the powers to summon, arrest, and prosecute are "ancillary and incidental" to the power to levy and collect GST.The power under sub-section (5) to Section 132 can be exercised even without completion of assessment under Section 73, provided the Commissioner has "reasons to believe" supported by "relevant and sufficient material" that a non-bailable offence has been committed and the tax evaded falls within specified monetary limits.An order of arrest must be based on a "formulation of the opinion" by the Commissioner, recorded with "foundational reasoning and material," and not on mere suspicion or ipse dixit.The doctrine of liberal construction applies to legislative entries under Article 246A, extending to all "ancillary and subsidiary matters" necessary for effective levy and collection of GST, including penal provisions for tax evasion.

RATIONALE:

The Court applied the constitutional framework under Article 246A, which specifically empowers Parliament and State Legislatures to legislate on GST, including measures to prevent tax evasion.The doctrine of pith and substance was employed to interpret the GST Act provisions as valid exercises of legislative power ancillary to the levy and collection of tax.Precedents emphasizing broad and liberal construction of legislative entries were relied upon, including the principle that entries should not be read narrowly or pedantically but given their "broadest meaning and widest amplitude."The Court clarified procedural safeguards for arrest under Section 132, referencing the necessity of "reasons to believe" supported by material evidence, and rejected the argument that arrest powers are contingent upon completion of assessment proceedings.The judgment reaffirmed existing principles from prior rulings on tax legislation and arrest powers, with no dissent or doctrinal shift indicated.