TMI Blog2020 (11) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... es the term reason to believe . It means a person is said to have reason to believe a thing, if he has sufficient cause to believe that thing but not otherwise. Reason to believe is a very subjective phrase and may vary in circumstances of each case. Section 147 of the Income Tax Act, 1961 also provides that reassessment can be made, if there is reason to believe by the Assessing Officer that there is escapement of income and failure on part of the assessee of true and full disclosures. Reason to believe consists of two words reason and to believe . The word reason means cause or justification and the word believe means to accept as true or to have faith in it. Therefore, there must be justification for it and belief is the result of the mental exercise based on information received. The words reason to believe' contemplate an objective determination based on intelligence, care and deliberation involving judicial review as distinguished from a purely subjective consideration. Therefore, reason to believe must have a rational connection or a relevant bearing to the formation of the belief and not extraneous or irrelevant to the purpose of the section. Therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e clause (i) or clause (ii) of sub-section (1) or sub-section (2) of the section 132 of the CGST Act without there being any adjudication for the assessment as provided under the provisions of the Chapter VIII of the CGST Act. The reference to section 132 in section 69 of the CGST Act is only for the purpose of indicating the nature of the offences on the basis of the same the reasonable belief is formed and recorded by the Commissioner for the purpose of passing an order of arrest. Whether the provisions of section 69 of the CGST Act envisages that the Commissioner is obliged to record his reasons of belief and furnish the same to the person who is sought to be arrested? - HELD THAT:- The existence of the power to arrest is one thing. The justification for the exercise of it is quite another. The Commissioner must be able to justify the arrest apart from his power to do so. Arrest and detention in police lock-up of a person can cause incalculable harm to the reputation and self-esteem of a person. No arrest can be made in a routine manner on a mere allegation of commission of an offence made against a person. It would be prudent for the authority in the interest of protection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u. It is significant to note that in D.K. Basu (supra), the Supreme Court did not confine itself to the actions of police officers taken in terms of powers vested in them under the Code but also of the officers of the Enforcement Directorate including the Directorate of Revenue Intelligence ('DRI'). This also included officers exercising powers under the Customs Act, 1962 the Central Excise Act, 1944 and the Foreign Exchange Regulation Act, 1973 (FERA') now replaced by the Foreign Exchange Management Act, 1999 as well. There is no doubt that the arrest memo is a key safeguard against illegal arrest and a crucial component of the legal procedure of arrest. Full and consistent compliance is a responsibility of both, the officers of the GST as well as the Magistrate. It is high time that the GST department prescribes a standardized format for the arrest memo. The format must contain all the mandatory requirements and necessary additions. The gist of the offence alleged to have been committed must be incorporated in the arrest memo. It would be the duty of the concerned Magistrate to check that an arrest memo has been prepared and duly filled. In a given case, if the Mag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017 and Gujarat Goods and Service Tax Act, 2017 and Chapter VIII of Central Goods and Service Tax Rules, 2017 and Gujarat Goods and Service Tax Rules, 2017 in connection with File No. ACST/UNIT-9/2019-20/B registered with State Tax (2), Unit-9, Ahmedabad. 2. Mr. Chetan K. Pandya, the learned counsel appearing for the writ applicant has placed strong reliance on the decision of the Delhi High Court in the case of MAKEMYTRIP (INDIA) PVT. LTD. vs. UNION OF INDIA, reported in 2016 (44) S.T.R. 481 (Del.) as well as on the decision of the Madras High Court in the case of M/s. Jayachandran Alloys (P) Ltd. vs. The Superintendent of GST and Central Excise and Others in the Writ Petition No.5501 of 2019 decided on 4th April, 2019. 3. We take notice of the fact that the Delhi High Court decision referred to above has been affirmed by the Supreme Court. The ratio as laid in the Delhi High Court decision is as under : (i) The scheme of the provisions of the Finance Act 1994 (FA), do not permit the DGCEI or for that matter the Service Tax Department (ST Department) to bypass the procedure as set out in Section 73A (3) and (4) of the FA before going ahead with the arrest of a person un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his matter on top of the Board. 4.3 We propose to take up this matter for final hearing as far as possible on the returnable date. The State is requested to be ready with the matter having regard to the important issues which have been raised in the writ application. 5.Following the above order, the other allied petitions were tagged and protection was granted to the respective petitioners against taking coercive steps of arrest. 6.As the discussion is under various heads of topics and the judgment is running in more than 150 pages, for the sake of convenience, we provide this index : Sr. No. Particulars Para Nos. 1. Facts 7 - 8 2. Submissions on behalf of the petitioners 9 - 26 3. Submissions of the Respondents 27 - 41 4. Rejoinder on behalf of the petitioners 42 - 46 5. Analysis (a) Issues/questions 47 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, 2019 to the petitioner to appear on 25th July, 2019 to give the statement. It is the case of the petitioner that since the petitioner was unable to remain present along with the documents and the provisional balance sheet, the petitioner through his advocate addressed a letter dated 25th July, 2019 to the respondent no.2 and requested to give one week time to appear before the respondent no.2 along with the requisite documents. 7.5) The Respondent no.2 again visited the residential premises of the petitioner on 26th July, 2019 and completed the search and seized the purchase and sales files along with the mobile and the laptop and removed the seal applied on the drawer. 7.6) It is the case of the petitioner that though the petitioner had requested for one week time, the respondent no.2 had issued the summons dated 27th July, 2019 to appear on the same day i.e. 27th July, 2019 to give the statement. It is the case of the petitioner that since the petitioner was unable to remain present along with the documents and the provisional balance sheet, the petitioner again through his advocate addressed a letter dated 29th July, 2019 to the respondent no.2 and requested to give tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the concerned person has committed an offence which has to be necessarily the post-determination of the demand by following the due process of law. 12. With respect to the first condition that the Commissioner must have reasons to believe' that a person has committed any of the specified offences, it was submitted by Mr. Hemani that in order to invoke the power to arrest as envisaged under the section 69 of the CGST Act, the Commissioner must have reasons to believe that the concerned person has committed any offence specified in the clause (a) or clause (b) or clause (c) or clause (d) of the sub-section(1) of the section 132 which is punishable under the clauses (i) or (ii) of the sub-section(1) or sub-section(2) of the said section. Reliance was placed on the decision of this Court in the case of Desai Brothers v. DCIT reported in 204 ITR 121 (Gujarat) to submit that the words reason to believe suggest that the belief must be that of an honest and reasonable person based upon reasonable ground; not a mere ipse dixit, suspicion, guess work, conjecture or surmises, gossip or rumor and such belief must lead to a conclusion that the offence has been committed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5, 66, 73 and 74 of the CGST Act and submitted that the powers under the section 69 of the CGST Act can be invoked only on the completion of the assessment as envisaged in the said provision so as to form a reason to believe by the Commissioner that the person has committed the offences as specified in the clause (a) or clause (b) or clause (c) or clause (d) of the sub-section(1) of the section 132 of the CGST Act. 16. Mr. Hemani thereafter submitted that the parliament has not used the words reasons to believe in the section 132 of the CGST Act which implies that the provisions of the section 132 can be invoked only when it is established that the offence is committed. Therefore, an analogy was drawn by the learned Senior Advocate that the section 132 cannot be invoked merely on the basis of the reason to believe that the specified offence has been committed inasmuch as the factum of a person having committed any of the specified offence needs to be established by following the due process of law. It was therefore, submitted that the conjoint reading of the section 69 and the section 132 of the CGST Act would lead to a conclusion that unless it is established that the of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case may be is a pre- requisite for the recovery thereof. Sections 73 and 74 deal with assessments and as such it is clear and unambiguous that such recovery can only be initiated once the amount of excess credit has been quantified and determined in an assessment. When recovery is made subject to determination in an assessment, the argument of the department that punishment for the offence alleged can be imposed even prior to such assessment, is clearly incorrect and amounts to putting the cart before the horse. 39. The exceptions to this rule of assessment are only those cases where the assessee is a habitual offender, that/who has been visited consistently and often with penalties and fines for contraventions of statutory provisions. It is only in such cases that the authorities might be justified in proceedings to pre-empt the assessment and initiate action against the assessee in terms of section 132, for reasons to be recorded in writing. There is no allegation, either oral or in writing in this case that the petitioner is an offender, let alone a habitual one. 40. In the present case, the Department does not dispute that action was intended or envisaged in the li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in mind Section 69 and 132 of CGST Act which empower Proper Officer to arrest a person who has committed any offence involving evasion of tax more than ₹ 5 Crore and prescribed maximum sentence of 5 years which falls within purview of Section 41A of Cr. P.C., we are of the opinion that power of arrest should not be exercised at the whims and caprices of any officer or for the sake of recovery or terrorising any businessman or create an atmosphere of fear, whereas it should be exercised in exceptional circumstances during investigation, which illustratively may be: (i) a person is involved in evasion of huge amount of tax and is having no permanent place of business, (ii) a person is not appearing inspite of repeated summons and is involved in huge amount of evasion of tax, (iii) a person is a habitual offender and he has been prosecuted or convicted on earlier occasion, (iv) a person is likely to flee from country, (v) a person is originator of fake invoices i.e. invoices without payment of tax, (vi) when direct documentary or otherwise concrete evidence is available on file/record of active involvement of a person in tax evasion. 10.1. The persons who a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of Foreign Trade and others rendered on 8th August, 2007 in the C.W.P. No. 208/2007 to submit that the power to arrest cannot be invoked before filing of FIR and prosecution can be said have been launched when the magistrate cognizance of the report made by the police and not when the FIR is registered. It was therefore submitted that without intervention of the Magistrate, provision of section 69 of the CGST Act cannot be invoked. 21. It was therefore, submitted that since the presumption under section 135 of the CGST Act is not available at the stage of arrest, the respondent authorities must follow the due process of adjudication and determination of the demand prior to invoking the power to arrest under section 69 of the CGST Act. 22. Mr. Hemani thereafter submitted that the decision of the Delhi High Court in case of Make My Trip (India) Pvt. Ltd. v. Union of India reported in 73 taxmann.com 31, rendered under the provisions of the Service Tax still holds the field. It was pointed out that the appeal preferred by the department against the decision of the Delhi High Court is dismissed by the Supreme Court as per the decision in case of Union of India v. Make My Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Delhi High Court in the case of Make My Trip (India) Pvt. Ltd (supra) is applicable to the facts of the case. He placed reliance upon the paragraph nos. 68 to 83 of the said decision to submit that the power to arrest under the section 69 of the CGST Act is required to be exercised with lot of care and circumspection and such powers can be exercised only after the adjudication is completed by determining the liability to pay the tax and the penalty and till such point of time, the power of arrest cannot be invoked on the basis of apprehension of evasion of tax by the assessee. He referred to the provisions of the section 132 of the CGST Act to submit that the entire objective of the CGST Act would be frustrated, if the power to arrest can be permitted to be invoked prior to the adjudication of the liability of the assessee. He also relied upon the decision in the case of Jaychandran Alloys Private Ltd. (supra) of the Madras High Court to submit that if the respondents are permitted to exercise the power to arrest without there being any adjudication as provided under the Scheme of the CGST Act, the safeguards as enshrined under the Constitution of India and more part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CGST Act and not otherwise. 26. The learned advocate Mr. Uchit Sheth relied upon the following decisions in support of his submissions: i) In the case of G.L. Didvania and another v. Income Tax Officer and another reported in 1995 Supplement 2 SCC 724 wherein the Supreme Court held that the whole question was whether the appellant made a false statement regarding the income which according to the Assessing Officer has escaped assessment and apropos the same it was held that the findings of the appellate Tribunal was conclusive and therefore, the prosecution cannot be sustained. Relying upon the decision, it was pointed out that in order to invoke the powers of arrest; the adjudication is sine qua non. ii) Mr. Sheth further relied upon the decision of this Court in the case of Mahadev Enterprise v. State of Gujarat reported in 2016 SCC OnLine Gujarat 8893 to point out that as per the scheme of the CGST Act, this Court has held that even in order to exercise revisional jurisdiction, the authority has to complete the adjudication on the basis of the material on record to arrive at a conclusion that there is evasion of the tax. iii) Further reliance was also pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed respondent authority under the provisions of the Section 69 of the CGST Act have not yet been exercised and therefore, the captioned petitions filed by the respective petitioners are pre-mature and hence, not maintainable, as no cause of any action of the respondent authorities has arisen so far. 29. It was further submitted that even otherwise, the captioned petitions are not maintainable as the same are filed seeking the writ in the nature of prohibition from this Court against the respondent authorities from arresting the petitioners herein under the powers conferred upon the concerned respondent authority under the Section 69 of the CGST Act. Apropos this, it was submitted that it is nobody s case that the respondent authorities have no jurisdiction to arrest a person under the CGST Act. In fact, the provision of Section 69(1) of the CGST Act categorically empowers the concerned respondent authority to arrest any person if there is reason to believe that such person commits any offence specified under the said section read with the section 132 of the CGST Act. 30. It was submitted that on bare reading of the section 69 of the CGST Act, it is clearly discernible that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred to in the Section 132 of the CGST Act. In fact, the provisions of the Section 69(1) of the CGST Act can be read along with the Section 135 of the CGST Act, which is similar to the Section 138A of the Customs Act, 1962, which enables an authority to presume the culpable mental state on the part of the alleged offender. Reliance was placed on the decision of the Apex Court in the case of Devchand Kalyan Tandel v. State of Gujarat and another reported in (1996) 6 Supreme Court Cases 255 in support of above submissions. 34. It was further submitted that on a careful reading of the Section 69(1) of the CGST Act, it is discernible that the said sub-section merely refers the offences specified in the clauses (a), (b), (c) and (d) of the Section 132(1) which are punishable under the clauses (i) and (ii) of the Section 132(1) or 132(2) of the CGST Act, for which the power to arrest can be exercised by the concerned authority. However, the Section 69(1) of the CGST Act does not refer/acknowledge the entire Section 132(1) including its opening line i.e. whoever commits any of the following offences . Thus, it is submitted that for interpreting the provisions of Section 69(1) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of holding an enquiry under the provisions of the CGST/GGST Act for finding any evasion of the GST and ultimately adjudicating the assessment and to punish the assessee for the offences committed by imposing penalties and initiating the proceedings for the prosecution as per the provisions of the Section 132 of the CGST Act. The concerned authority at the stage of invoking the power to arrest under the section 69 of the CGST Act, only forms an opinion that the concerned authority has the reason to believe the person has committed the specific offence as per the provisions of the section 132 of the CGST Act. It was further submitted that it may happen that after completion of the adjudication process for the assessment and the adjudging penalty and / or the confiscation of goods, as the case may be, the concerned authority may or may not proceed further with the prosecution. Thus, the provisions of the Section 69 of the CGST Act are independent and distinct of the provisions of the Section 132 of the CGST Act. 38. It was lastly submitted by the learned Advocate General that the reliance placed by the petitioners on the judgments rendered by the Madras High Court in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and not 73A of the Service Tax Act and secondly, the assessment as envisaged under the provisions of Section 74 of the CGST Act would only be undertaken after getting the necessary information from the concerned person and after completion of the investigation. (d) In fact, the Division Bench of Telangana High Court in its aforesaid judgment dated 18.04.2019, has categorically held that the list of offences specified in Section 132(1) of the CGST Act have no correlation with assessment, and that therefore, prosecution can be launched even before the completion of the assessment. (e) Against the said case, the Apex Court vide its order dated 27.05.2019, while dismissing the Special Leave Petition, has confirmed the aforesaid views of the Telangana High Court and in addition thereto, the Apex Court, in its order dated 29.05.2019 passed in the case of Union of India v/s Sapna Jain has observed as under: However, we make it clear that the High Courts while entertaining such request in future, will keep in mind that this Court by order dated 27.5.2019 passed in SLP(Crl.) No.4430/2019 had dismissed the special leave petition filed against the judgment and order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the captioned writ petitions may be dismissed with exemplary costs. REJOINDER ON BEHALF OF THE PETITIONERS : 42. In rejoinder, the learned Senior Advocate Mr. Tushar Hemani submitted that the contention made on behalf of the respondents that the decision in the case of Make My Trip India Pvt. Ltd. (supra) would not be applicable in relation to the proceedings under the CGST Act since the said judgment was delivered in context of the provisions of the Service Tax which did not contain any clause as to presumption of culpable mental state as provided under the section 135 of the CGST Act, is not correct. It was submitted that the section 83 of the Service Tax Act makes certain sections of the Central Excise Act, 1944 applicable to the Service Tax and one such section is the section 9C of the Central Excise Act, 1944 which provides for presumption of culpable mental state . It was therefore, submitted by Mr. Hemani that there was existence of similar provision even under the service tax regime. Mr. Hemani further reiterated that the provisions of the section 135 of the CGST Act cannot be pressed into service at the time of invoking provisions of the section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. 45. The learned advocate Mr. Pandya submitted that the decision of Make My Trip India Pvt. Ltd (supra) is squarely applicable to the facts of the present case as the provisions of service tax are pari materia with that of the CGST Act. He relied upon the following paragraphs of the said judgment: 74. The Customs Act, 1962, has a different approach to the question of offences. Chapter XVI thereof describes with specificity the types of offences and the procedure adopted in prosecuting such offences. Section 138A enables the court to draw a presumption, which is rebuttable, of the culpable mental state of the person charged with an offence under the Customs Act, 1962 which requires such culpable mental state. Even for the purposes of confiscation of smuggled goods, Section 123 of the Customs Act, 1962 shifts the burden of proof in the case of 'smuggling', to the person from whom the goods are seized to show that they are not smuggled goods. Powers are given to the Customs Officer under Section 108 to record statements which are admissible in law. The point to be noted is that coercive powers under taxing statutes are hedged in by limits W.P. (C) 525/2016 1283/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Commissioner is obliged to record his reasons to believe and furnish the same to the person who is sought to be arrested? (ii) Whether the provisions of sections 154, 155(1), 155(2), 155(3), 157, 172 of the Code of Criminal Procedure, 1973 are applicable or should be made applicable for the purpose of invoking the power to arrest under section 69 of the CGST Act? In other words, whether the authorised officer can arrest a person alleged to have committed non cognizable and bailable offences without a warrant of arrest issued by the Magistrate under the provisions of the Code of Criminal Procedure, 1973? (iii) For the purpose of section 69(3) of the CGST Act, whether the officers of the GST department could be said to be a police officer in charge of a police station as defined under section 2(o) of the Code of Criminal Procedure, 1973? (iv) Whether the constitutional safeguards laid out by the Supreme Court in D.K. Basu's case [1997 (1) SCC 416] in the context of the powers of the police officers under the Code of Criminal Procedure, 1973 and of officers of the Central Excise, Customs and Enforcement Directorate are applicable to the exercise of powers under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts 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, fraudulently avails input tax credit 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; (g) obstructs or prevents any officer in the discharge of his duties 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 thereunder; (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 thereunder; (j) tampers with or destroys any material evidence or documents; (k) fails ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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. Section 135 of the CGST Act reads thus : Section 135. Presumption of culpable mental state- In any prosecution for an offence under this Act which requires a culpable mental state on the part of the accused, the court shall presume the existence of such mental state but it shall be a defence for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution. Explanation.-For the purposes of this section,- (i) the expression culpable mental state includes intention, motive, knowledge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accountant or for any material and sufficient reason, extend the said period by a further period of ninety days. (3) The provisions of sub-section (1) shall have effect notwithstanding that the accounts of the registered person have been audited under any other provisions of this Act or any other law for the time being in force. (4) The registered person shall be given an opportunity of being heard in respect of any material gathered on the basis of special audit under sub-section (1) which is proposed to be used in any proceedings against him under this Act or the rules made thereunder. (5) The expenses of the examination and audit of records under sub-section (1), including the remuneration of such chartered accountant or cost accountant, shall be determined and paid by the Commissioner and such determination shall be final. (6) Where the special audit conducted under sub-section (1) results in detection of tax not paid or short paid or erroneously refunded, or input tax credit wrongly availed or utilised, the proper officer may initiate action under section 73 or section 74. Section 73 - Determination of tax not paid or short paid or erroneously refunded or i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt paid under subsection (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable. (8) Where any person chargeable with tax under sub-section (1) or sub-section (3) pays the said tax along with interest payable under section 50 within thirty days of issue of show cause notice, no penalty shall be payable and all proceedings in respect of the said notice shall be deemed to be concluded. (9) The proper officer shall, after considering the representation, if any, made by person chargeable with tax, determine the amount of tax, interest and a penalty equivalent to ten per cent. of tax or ten thousand rupees, whichever is higher, due from such person and issue an order. (10) The proper officer shall issue the order under sub-section (9) within three years from the due date for furnishing of annual return for the financial year to which the tax not paid or short paid or input tax credit wrongly availed or utilised relates to or within three years from the date of erroneous refund. (11) Notwithstanding anything contained in sub-section (6) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such payment. (6) The proper officer, on receipt of such information, shall not serve any notice under sub-section (1), in respect of the tax so paid or any penalty payable under the provisions of this Act or the rules made thereunder. (7) Where the proper officer is of the opinion that the amount paid under subsection (5) falls short of the amount actually payable, he shall proceed to issue the notice as provided for in sub-section (1) in respect of such amount which falls short of the amount actually payable. (8) Where any person chargeable with tax under sub-section (1) pays the said tax along with interest payable under section 50 and a penalty equivalent to twenty-five per cent. of such tax within thirty days of issue of the notice, all proceedings in respect of the said notice shall be deemed to be concluded. (9) The proper officer shall, after considering the representation, if any, made by the person chargeable with tax, determine the amount of tax, interest and penalty due from such person and issue an order. (10) The proper officer shall issue the order under sub-section (9) within a period of five years from the due date for furnishing of annual return for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of his duty, or who has escaped, or attempts to escape, from lawful custody; or (f) who is reasonably suspected of being a deserter from any of the Armed Forces of the Union; or (g) who has been concerned in, or against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists, of his having been concerned in, any act committed at any place out of India which, if committed in India, would have been punishable as an offence, and for which he is, under any law relating to extradition, or otherwise, liable to be apprehended or detained in custody in India; or (h) who, being a released convict, commits a breach of any rule made under sub- section (5) of section 356; or (i) for whose arrest any requisition, whether written or oral, has been received from another police officer, provided that the requisition specifies the person to be arrested and the offence or other cause for which the arrest is to be made and it appears therefrom that the person might lawfully be arrested without a warrant by the officer who issued the requisition. (2) Any officer in charge of a police station may, in like manner, arrest or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o him, in the manner provided by this Code, and such officer shall have all the powers of an officer in charge of the police station in relation to that offence. Section 155. Information as to noncognizable cases and investigation of such cases. (1) When information is given to an officer in charge of a police station of the commission within the limits of such station of a non- cognizable offence, he shall enter or cause to be entered the substance of the information in a book to be kept by such officer in such form as the State Government may prescribe in this behalf, and refer the informant to the Magistrate. (2) No police officer shall investigate a non- cognizable case without the order of a Magistrate having power to try such case or commit the case for trial. (3) Any police officer receiving such order may exercise the same powers in respect of the investigation (except the power to arrest without warrant) as an officer in charge of a police station may exercise in a cognizable case. (4) Where a case relates to two or more offences of which at least one is cognizable, the case shall be deemed to be a cognizable case, notwithstanding that the other offence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he accused nor his agents shall be entitled to call for such diaries, nor shall he or they be entitled to see them merely because they are referred to by the Court; but, if they are used by the police officer who made them to refresh his memory, or if the Court uses them for the purpose of contradicting such police officer, the provisions of section 161 or section 145, as the case may be, of the Indian Evidence Act, 1872 (1 of 1872 ), shall apply, Section 83 of the Finance Act 1994 read s thus: 83. Application of certain provisions of Act 1 of 1944. The provisions of the following sections of the Central Excise and Salt Act, 1944, as in force from time to time. shall apply, so far as may be, in relation to service tax as they apply in relation to a duty of excise:- M1 M1. In This Principal act, for the figures and letters 9C, 9D,11B, 11BB, 11C, 12, 12A, 12B, 12C, 12D, 12E, 14, 14AA, 15, 33A, 34A, 35F , the figures and letters 9A, 9AA, 9B, 9C, 9D, 9E,11B,11C,12,12A,12B,12C,12D,12E,14,14AA,15 ,33A,34A,35F shall be substituted BY FINANC ACT, 1994, [Gaz. of India, Exty., Pt. IISec. 1, No.10, dt.8.4.2011, p.1.] [9AA, 9B, 9C, 9D, 9E, 11B, 11BB, 11C, 12, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h respect to the reasonable belief of the Commissioner for the purpose of exercising the power to arrest. Section 69 talks about the opinion which is necessary to be formed for the purpose of effecting arrest of a person suspected of having committed any offence under section 132 of the Act. Any opinion of the authority to be formed is not subject to objective test. The language leaves no room for the relevance of an official examination as to the sufficiency of the ground on which the authority may act in forming its opinion. But at the same time, there must be material based on which alone, the authority could form its opinion that a person has committed any offence as specified under clause (a) to (d) of the section 132 of the CGST Act and it is necessary to arrest such person for the alleged offence. The existence of relevant material is a precondition to the formation of opinion. The use of word may indicates not only the discretion, but an obligation to consider that a necessity has arisen to arrest the person concerned alleged to have committed any offence as specified under section 132 of the Act. Therefore, the opinion to be formed by the Commissioner cannot be on imagin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subjective opinion of the government or the Board. Since the legislature enacted S. 637 (i) (a) it knew that government would entrust to the Board its power under S. 237 (b). Could the legislature have left without any restraints or limitations the entire power of ordering an investigation to the subjective decision of the Government or the Board? There is no doubt that the formation of opinion by the Central Government is a purely subjective process. There can also be no doubt that since the legislature has provided for the opinion of the government and not of the court such an opinion is not subject to a challenge on the ground of propriety, reasonableness or sufficiency. But the Authority is required to arrive at such an opinion from circumstances suggesting what is set out in sub clauses (i), (ii) or (iii). If these circumstances were not to exist, can the government still say that in its opinion they exist or can the Government say the same thing where the circumstances relevant to the clause do not exist? The legislature no doubt has used the expression circumstances suggesting . But that expression means that the circumstances need not be such as would conclusively establi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason to believe or in the opinion of do not always lead to the construction that the process of entertaining reason to believe or the opinion is an altogether subjective to process not lending itself even to a limited scrutiny by the court that such a reason to believe or opinion was not formed on relevant facts or within the limits or as Lord Radcliffe and Lord Reid called the restraints of the statute as an alternative safeguard to rules of natural justice where the function is administrative. 54. In the Income-tax Officer, Calcutta and Ors. vs. Lakhmani Mewal Das [AIR 1976 SC 1753], the Supreme Court construed the expression reason to believe employed in Section 147 of the Income-Tax Act, 1961 and observed: the reasons for the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully or trul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s he may wish. He may act out of malice or a spirit of revenge, but in law this does not affect his exercise of his power. In the same way a private person has an absolute power to allow whom he likes to use his land, to release a debtor, or, where the law permits, to evict a tenant, regardless of his motives. This is unfettered discretion. But a public authority may do none of these things it acts reasonably and in good faith and upon lawful and relevant grounds of public interest. The whole conception of unfettered discretion is inappropriate to a public authority, which possesses powers solely in order that it may use them for the public good. There is nothing paradoxical in the imposition of such legal limits. It would indeed be paradoxical if they were not imposed. The Court is entitled to examine whether there has been any material available with the State Government and the reasons recorded, if any, in the formation of opinion and whether they have any rational connection with or relevant bearing on the formation of the opinion. The Court is entitled particularly, in the event, when the formation of the opinion is challenged to determine whether the formation of opinion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re to disclose fully and truly all material facts. It is no doubt true that the Court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the I.T.O. on the point as to whether action should be initiated for reopening the assessment. At the same time we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and far-fetched, which would warrant the formation of the belief relating to escapement of the income of the assessee from assessment. The reason for the formation of the belief must be held in good faith and should not be a mere pretence. 57. The stipulation of the Commissioner to have reason to believe is of utmost importance in section 69(1) of the CGST Act. Section 26 of the Indian Penal Code defines the term reason to believe . It means a person is said to have reason to believe a thing, if he has sufficient cause to believe that thing but not otherwise. Reason to believe is a very subjective phrase and may vary in circumstances of each case. Section 147 of the Income Tax Act, 1961 also provides that reassessment can be made, if there is reason to believe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of the assessee. iv) The above are merely the incidents of personal liberty guaranteed under the Constitution of India. No arrest can be made because it is lawful for the police officer to do so. The existence of the power to arrest is one thing. The justification for the exercise of it is quite another. The Commissioner must be able to justify the arrest apart from his power to do so. Arrest and detention in police lock-up of a person can cause incalculable harm to the reputation and self-esteem of a person. No arrest can be made in a routine manner on a mere allegation of commission of an offence made against a person. It would be prudent for the authority in the interest of protection of the constitutional rights of a citizen and perhaps in his own interest that no arrest should be made without a reasonable satisfaction reached after some investigation as to the genuineness and bona fides of a complaint and a reasonable belief both as to the person's complicity and even so as to the need to effect arrest. Denying a person of his liberty is a serious matter. A person is not liable to arrest merely on the suspicion of complicity in an offence. There must be some r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erusal of section 132 of the CGST Act indicates that it only provides punishment for certain offences. In this context the subsection( 2) of section 69 of the CGST Act is also relevant as it provides that where a person is arrested under the sub-section (1) of section 69, for an offence specified under the sub-section(5) of the section 132 of the CGST Act which provides that the offences specified in the clauses (a), (b), (c) and (d) of the sub-section(1)of the section 132 and punishable under the clause (i) of the sub-section(1)of the section 132, shall be cognizable and non bailable, then the officer authorised to arrest the person shall inform such person of the grounds of arrest and produce him before a Magistrate within twenty-four hours. In other words, when a person is arrested pursuant to the order passed by the Commissioner who has reason to believe that such person has committed any offence specified in the clauses (a), (b), (c) or (d) of sub-section(1) of section 132 of the CGST Act which is punishable under the clause(i) of that sub-section, then such offence being cognizable and non bailable as per sub-section (5) of the CGST Act, the officer authorised to arrest such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus the provisions of section 69 of the CGST Act are absolutely clear and unambiguous which provides that during the course of inspection, search and seizure when the Commissioner has reason to believe that the person has committed any offence as per the clauses (a), (b), (c) or (d) of the sub-section(1) of section 132 of the CGST Act, which is punishable under the clause(i) or clause (ii) of the sub-section (1) or the sub-section (2) of the section 132 of the CGST Act, then he may pass an order authorising an officer of the department to arrest such person. Thereafter, if the offence falls under the category of cognizable and non bailable offence as per the sub-section (5) of the section 132, then sub-section (2) of section 69 casts duty upon the officer authorised to arrest such person to inform such person of the grounds of arrest and produce him before the Magistrate within twenty-four hours; whereas if the offence is non-cognizable bailable as per the sub-section(4) of the section 132 then subject to provisions of the Code, the clauses (a) and (b) of the subsection (3) of section 69 provides for enlarging such person on bail by the concerned officer i.e. Deputy Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication proceedings is not binding on the proceeding for criminal prosecution; (v) Adjudication proceedings by the Enforcement Directorate is not prosecution by a competent court of law to attract the provisions of Article 20(2) of the Constitution or Section 300 of the Code of Criminal Procedure; (vi) The finding in the adjudication proceedings in favour of the person facing trial for identical violation will depend upon the nature of finding. If the exoneration in adjudication proceedings is on technical ground and not on merit, prosecution may continue; and (vii) In case of exoneration, however, on merits where the allegation is found to be not sustainable at all and the person held innocent, criminal prosecution on the same set of facts and circumstances cannot be allowed to continue, the underlying principle being the higher standard of proof in criminal cases. 67. Thus, what is discernible from the above referred judgment of the Supreme Court and also other precedence is as under: 1) On the same violation alleged against a person, if adjudication proceedings as well as criminal proceedings are permissible, both can be initiated simultaneously. For initiating cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that ex-facie there is no such violation. The yardstick would, therefore, be to see as to whether charges in the departmental proceedings as well as criminal complaint are identical and the exoneration of the concerned person in the departmental proceedings is on merits holding that there is no contravention of the provisions of any Act. 68. We may now refer to and rely upon the decision of the Telangana High Court in case of P.V. Ramana Reddy (supra) wherein elaborate discussion of this issue is made as under : 30. It can be seen from the language employed in sub-Sections (1), (2) and (3) of Section 69, that there are some incongruities. Under sub-Section (1) of Section 69, the power to order arrest is available only in cases where the Commissioner has reasons to believe that a person has committed any offence specified in clauses (a) to (d) of sub- Section (1) of Section 132 CGST Act, 2017. The offences specified in clauses (a) to (d) of sub-Section (1) of Section 132 CGST Act, 2017 are made cognizable and non- bailable under Section 132(5) of the CGST Act, 2017. 31. Therefore, it is clear from sub- Section (1) of Section 69 of the CGST Act that the power of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Officer carrying out the arrest, to inform the arrested person of the grounds of arrest and to produce him before a Magistrate within 24 hours, is co-relatable under sub- Section (2) of Section 69 of the CGST Act, 2017 to Section 132(5) of the CGST Act, 2017 that deals only with cognizable and non-bailable offences. 36. But, interestingly, clauses (a) and (b) of sub-Section (3) of Section 69 of the CGST Act, 2017 deal in entirety only with cases of persons arrested for the offences which are indicated as noncognizable and bailable. The phrase subject to the provisions of the Code of Criminal Procedure is used only in sub-Section (3), which deals in entirety only with the procedure to be followed after the arrest of a person who is believed to have committed a noncognizable and bailable offence. While clause (a) of sub-Section (3) gives two options to the Officer carrying out the arrest, namely, to grant bail by himself or to forward the arrested person to the custody of the Magistrate, clause (b) confers the powers of an Officer in charge of a police station, upon the Deputy Commissioner or the Assistant Commissioner (GST), for the purpose of releasing an arrested per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1973, the contention of the Additional Solicitor General that the petitioners cannot take umbrage under Sections41 and 41A of Cr.P.C. may not be correct. 41. Though for the purpose of summoning of witnesses and for summoning the production of documents, the Proper Officer holding the enquiry under the CGST Act, 2017 is treated like a Civil Court, there are four other places in the Act, where a reference is made, directly or indirectly, to the Cr.P.C. They are (1) the reference to Cr.P.C. in relation to search and seizure under Section 67(10) of CGST Act, 2017, (2) the reference to Cr.P.C. under sub- Section (3) of Section 69 in relation to the grant of bail for a person arrested in connection to a non-cognizable and bailable offence, (3) the reference to Cr.P.C. in Section 132 (4) while making all offences under the CGST Act, 2017 except those specified in clauses (a) to (d) of Section 132 (1) of CGST Act, 2017 as non-cognizable and bailable and (4) the reference to Sections 193 and 228 of IPC in Section 70(2) of the CGST Act, 2017. Therefore, the contention of learned Additional Solicitor General that in view of Section 69(3) of the CGST Act, 2017, the petitioners cannot f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that the authorization was bad. 45. But, as we have pointed, the requirement under Section 41A(3) of Cr.P.C. is the recording of a reason , while the requirement under Section 69(1) of CGST Act, 2017 is the reason to believe . In fact, on the question as to whether or not, reasons to believe should be recorded in the authorization for arrest, the learned Additional Solicitor General submitted that reasons are recorded in files. The learned Additional Solicitor General also produced the files. 46. If reasons to believe are recorded in the files, we do not think it is necessary to record those reasons in the authorization for arrest under Section 69(1) of the CGST Act. Since Section 69(1) of the CGST Act, 2017 specifically uses the words reasons to believe , in contrast to the words reasons to be recorded appearing in Section 41A(3) of Cr.P.C., we think that it is enough if the reasons are found in the file, though not disclosed in the order authorizing the arrest. 47. Once it is found that Article 226 of the Constitution of India can be invoked even in cases where Section 438 Cr.P.C. has no application (in contrast to cases such as those under the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s true that CGST Act, 2017 provides for (i) self assessment, under Section 59, (ii) provisional assessment, under Section 60, (iii) scrutiny of returns, under Section 61, (iv) assessment of persons who do not file returns, under Section 62, (v) assessment of unregistered persons, under Section 63, (vi) summary assessment in special cases, under Section 64 and (vii) audit under Sections 65 and 66. 52. But, to say that a prosecution can be launched only after the completion of the assessment, goes contrary to Section 132 of the CGST Act, 2017. The list of offences included in sub-Section (1) of Section 132 of CGST Act, 2017 have no co-relation to assessment. Issue of invoices or bills without supply of goods and the availing of ITC by using such invoices or bills, are made offences under clauses (b) and (c) of sub-Section (1) of Section 132 of the CGST Act. The prosecutions for these offences do not depend upon the completion of assessment. Therefore, the argument that there cannot be an arrest even before adjudication or assessment, does not appeal to us. 53. An argument was advanced by Mr. Raghunandan Rao, learned Senior Counsel for the petitioners that all the offences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the petitioners that the arrest under Section 69, does not advance the cause of investigation/enquiry, but only provides a satisfaction to the respondents that they have punished the arrested person even before trial. According to the learned Senior Counsel, the arrest of a person which will not facilitate further investigation, has to be discouraged, since the same has the potential to punish a person before trial. 56. But, the aforesaid contention proceeds on the premise as though the only object of arresting a person pending investigation is just to facilitate further investigation. However, it is not so. The objects of pre-trial arrest and detention to custody pending trial, are manifold as indicated in section 41 of the Code. They are: (a) to prevent such person from committing any further offence; (b) proper investigation of the offence; (c) to prevent such person from causing the evidence of the offence to disappear or tampering with such evidence in any manner; (d) to prevent such person from making any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of against the petitioners constitute a threat to the very implementation of a law within a short duration of its inception. 61. In view of the above, despite our finding that the writ petitions are maintainable and despite our finding that the protection under Sections 41 and 41-A of Cr.P.C., may be available to persons said to have committed cognizable and non-bailable offences under this Act and despite our finding that there are incongruities within Section 69 and between Sections 69 and 132 of the CGST Act, 2017, we do not wish to grant relief to the petitioners against arrest, in view of the special circumstances which we have indicated above. 69. We are in complete agreement with the above dictum of law except with regard to the findings of the Telangana High Court that there is incongruity within section 69(1) and section 69(3) of the Act. We reiterate that the Section 69(1) of the CGST Act provides for the power to arrest for both types of the offences i.e. cognizable and non bailable offences as well non-cognizable and bailable offences as per the provisions of the sub-section(5) and the subsection( 4) of the section 132 of the CGST Act. We again make it clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er in charge of a police station in section 69(3)(b) of the Act referred to above, but the question is what powers of the police officer have been conferred to the GST officers. The provision does not confer upon the GST officers, the powers of the officer in charge of a police station in respect of the investigation and report. Instead of defining the power to grant bail in detail, saying as to what they should do or what should not do, the short and expedient way of referring to the powers of another officer when placed in somewhat similar circumstances, has been adopted. By its language, the sub-section does not equate the officers of the GST with an officer in charge of a police station, nor does it make him one by implication. It only, therefore, means that he has got the powers as defined in the Code of Criminal Procedure for the purpose of releasing such person on bail or otherwise. This does not necessarily mean that a person alleged to have committed a non cognizable and bailable offence cannot be arrested without a warrant issued by the Magistrate. 71. We also do not subscribe to the view expressed in the decision of learned Single Judge of Madras High Court in case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a), (b), (c) or (d) of sub-section (1) of section 132 of the CGST Act, which is punishable under the clause (i) or clause (ii) of sub-section(1) or sub-section(2) of section 132 of the CGST Act only and if the Commissioner has reason to believe that person has committed offences other than the aforesaid clauses, such person cannot be arrested. It is required to be made clear that arrest and bail both are different parallels of law and cannot be mixed together. Clause (a) of subsection( 3) of section 69 of the CGST Act provides for provision of default bail if a person is arrested for any offence specified under sub-section(4) of section 132 of the CGST Act which means offences under the clauses (a)to (d) punishable under the clause(ii) of the sub-section (1) or sub-section (2) of the section 132 of the CGST Act. Therefore, except the offences referred to in sub-section(5) which are cognizable and non bailable, all other offences are bailable and non-cognizable. In order to understand the provisions of section 69, conferring powers to arrest, the same can be summarized as under: OFFENCE AND PUNISHMENT UNDER SECTION 132 OF THE CGST ACT Sr. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer and as such the provisions of the Code are not required to be adhered to while exercising the power of arrest as under: 41. We may also quickly answer the question as the same is no longer res integra, whether the Customs/DRI officers are police officers and whether they are required to register FIR in respect of an offence under Sections 133 to 135 of the Customs Act, 1962. 42. In Lalitha Kumari v. Government of Uttar Pradesh and others, (2014) 2 SCC 1), the issue which arose for consideration was, whether a police officer was bound to register a First Information Report upon receiving any information relating to commission of a cognizable offence under Section 154 of the Code of Criminal Procedure, 1973, and the police officer has the power to conduct a preliminary enquiry in order to test the veracity of such information before registering the same. The decision in Lalitha Kumari's case does not, as such, apply to the present case. 43. In Soni Vallabhdas Liladhar and another v. The Assistant Collector of Customs, Jamnagar, AIR 1965 SC 481, a Constitution Bench of the Supreme Court held that the Customs Officers are not police officers and the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onducting an inquiry under Section 107 or Section 108 of the Customs Act is not a police officer and the person against whom inquiry is made is not an accused and the statement made by such person in that inquiry is not a statement made by a person accused of an offence . The decision in Illias v. The Collector of Customs, Madras, AIR 1970 SC 1065, was also followed in the decision in Percy Rustomji Basta v. The State of Maharashtra, AIR 1971 SC 1087. 48. In Veera Ibrahim v. The State of Maharashtra, (1976) 2 SCC 302), the Customs authorities called the appellant and his companion to the Customs house, took them into custody, and after due compliance with the requirements of law, the Inspector of Customs questioned the appellant and recorded his statement under Section 108 of the Customs Act. The Supreme Court held that under the circumstances it was manifest that at the time when the Customs Officer recorded the statement of the appellant, he was not formally accused of any offence and therefore, his statement is not hit by Article 20(3) of the Constitution of India. 49. In Directorate of Enforcement v. Deepak Mahajan and another, (1994)3 SCC 440, the question of la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not with the power of filing a final report as in the case of a police officer. ................... 132. For the aforementioned reasons, we hold that the operation of Section 4(2) of the Code is straightaway attracted to the area of investigation, inquiry and trial of the offences under the special laws including the FERA and Customs Act and consequently Section 167 of the Code can be made applicable during the investigation or inquiry of an offence under the special Acts also inasmuch as there is no specific provision contrary to that excluding the operation of Section 167. .................... 136. In the result, we hold that sub-sections (1) and (2) of Section 167 are squarely applicable with regard to the production and detention of a person arrested under the provisions of Section 35 of FERA and Section 104 of Customs Act and that the Magistrate has jurisdiction under Section 167(2) to authorise detention of a person arrested by any authorised officer of the Enforcement under FERA and taken to the Magistrate in compliance of Section 35(2) of FERA. 51. In Union of India v. Padam Narain Aggarwal, AIR 2009 SC 254), it was held that the power to arr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd detention are only for the purpose of holding effectively an inquiry under Sections 107 and 108 of the Customs Act with a view to adjudging confiscation of dutiable or prohibited goods and imposing penalty. At that stage there is no question of the offender against the Customs Act being charged before a Magistrate. Ordinarily, after adjudging penalty and confiscation of goods or without doing so, if the Customs Officer forms an opinion that the offender should be prosecuted, he may prefer a complaint in the manner provided under Section 137 with the sanction of the Collector of Customs and until a complaint is so filed, the person against whom an inquiry is commenced under the Customs Act does not stand in the character of a person accused of an offence under Section 135. (vii) The Customs Officer is a revenue officer primarily concerned with the detection of smuggling and enforcement and levy of proper duties and prevention of entry into India of dutiable goods without payment of duty and of goods of which the entry is prohibited. 53. In Bhavin Impex Pvt. Ltd.'s case, this Court further held that: 31. The above discussion leads to the inevitable conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enable the Magistrate to communicate with the proper officers of the Customs and it provided that the Magistrate should release any such person on his giving satisfactory security. Section 104 of the Customs Act, 1962 restricts the exercise of the power of arrest to officers who are either generally or specially authorised by the Collector of Customs only if they have reason to believe that an offence has been committed. The marked difference between Section 173 of the old Act and Section 104 of the Act, 1962 is that, under the old Act he could arrest on a reasonable suspicion, while under the new section he must have reasonable belief that the person has been guilty of an offence. Certainly, the provision is for the benefit of the citizen and it is not intended to invest the Customs officers with larger powers. Sub- section (2) of Section 104 of the Act, 1962, is practically similar to Section 174 of the old Act except that the word 'forthwith' has been substituted with the words 'without unnecessary delay'. This, however, means the same thing. It is intended to meet an inconvenience of a temporary duration. Sub-section (3), however, is very much relied for it pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investigation which a police officer may in investing the commission of an offence. He is invested with the power to enquire into infringements of the Act primarily for the purpose of adjudicating forfeiture and penalty. He has no power to investigate an offence triable by a Magistrate, nor has he the power to submit a report under Section 173 of the Code of Criminal Procedure. He can only make a complaint in writing before the competent Magistrate. (iii) The expression 'any person' includes a person who is suspected or believed to be concerned in the smuggling of goods. But a person arrested by a Customs Officer because he is found in possession of smuggled goods or on suspicion that he is concerned in smuggling goods is not when called upon by the Customs Officer to make a statement or to produce a document or thing, a person accused of an offence within the meaning of Article 20 (3) of the Constitution. The steps taken by the Customs Officer are for the purpose of holding an enquiry under the Customs Act and for adjudging confiscation of goods dutiable or prohibited and imposing penalties. The Customs Officer does not at that stage accuse the person suspected of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t such person has been guilty of an offence punishable under Section 135 of the Customs Act. (viii) The police is the instrument for the prevention and detection of crime which can be said to be the main object of having the police. The powers of the customs officers are really not for such purpose and are meant for checking the smuggling of goods and due realization of customs duties and determining the action to be taken in the interest of the revenue of the country by way of confiscation of goods of which no duty has been paid and by imposing penalties and fine. OM PRAKASH'S CASE : 68. We shall now look into the decision of the Supreme Court in the case of Om Prakash (supra). A three Judge Bench of the Supreme Court, considering the distinction between the offences punishable under the Indian Penal Code and that under the Central Excise Act, 1944, and the Customs Act, 1962, held as under: 16. As has been indicated hereinbefore in this judgment, Section 2(a) of the Code defines 'bailable offence' to be an offence shown as bailable in the First Schedule to the Code or which is made bailable by any other law for the time being in force. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this judgment, the question which we are required to answer in this batch of matters relating to the Central Excise Act, 1944, is whether all offences under the said Act are non- cognizable and, if so, whether such offences are bailable ? In order to answer the said question, it would be necessary to first of all look into the provisions of the said Act on the said question. 37. Sub-section (1) of Section 9-A, which has been extracted hereinbefore, states in completely unambiguous terms that notwithstanding anything contained in the Code of Criminal Procedure, offences under Section 9 shall be deemed to be non- cognizable within the meaning of that Code. There is, therefore, no scope to hold otherwise. It is in the said context that we will have to consider the submissions made by Mr.Rohatgi that since all offences under Section 9 are to be deemed to be noncognizable within the meaning of the Code of Criminal Procedure, such offences must also be held to be bailable. 38.The expression bailable offence has been defined in Section 2(a) of the Code and set out hereinabove in para 6 of the judgment, to mean an offence which is either shown to be bailable in the First Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in view of the Central Excise Act, 1944, the non-cognizable offences are bailable in nature and if a person is arrested, he shall be released on bail. The Supreme Court held that the offences under the Customs Act are bailable and the officers have the same powers as that of a Police Officer. 71. We take notice of the various decisions of different High Courts explaining the true purport of the ratio of Om Prakash (supra). 72. We have to our advantage a very exhaustive judgment delivered by a Division Bench of the Bombay High Court in the case of Chhagan Chandrakant Bhujbal v. Union of india and others, reported in 2016 SCC Online Bom 9938. The Division Bench of the Bombay High Court was dealing with a matter under the PMLA Act. The Bombay High Court considered the decision of Om Prakash (supra) and also the question whether the arresting authority under the PMLA Act was required to follow the procedure laid down under Section 155(1) of the Code of Criminal Procedure, 1973 .. xxx 77. The only idea with which we have referred to a Division Bench decision of the Bombay High Court drawing a fine distinction between the scheme of Section 108 of the Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) The Customs/DRI Officers are not the Police Officers and, therefore, are not obliged in law to register FIR against the person arrested in respect of an offence under Sections 133 to 135 of the Customs Act, 1962. (4) The decision of the Supreme Court in the case of Om Prakash (supra) has no bearing in the case on hand. (5) A DRI Officer is a 'proper officer' for the purposes of the Customs Act, 1962. As the Customs/DRI Officers are not the Police Officers, the statements made to them are not inadmissible under Section 25 of the Evidence Act. (6) A Police Officer, making an investigation of an offence, representing the State, files a report under Section 173 of the Code, becomes the complainant, whereas, the prosecuting agency under the special Acts files a complaint as a complainant, i.e. under Section 137 of the Customs Act. (7) The power to arrest a person by a Customs Officer is statutory in character and should not be interfered with. Section 108 of the Act does not contemplate any Magisterial intervention. The statements recorded under Section 108 of the Customs Act are distinct and different from the statements recorded by the Police Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iction of the DRI office at Vapi to summon the writapplicant under Section 108 of the Customs Act, 1962, pales into insignificance. (11)Although the allegations of harassment at the end of the DRI officials at Vapi are not substantiated by any credible material on record, yet there should not be any unnecessary harassment to a person summoned for the purpose of interrogation under Section 108 of the Customs Act, 1962. 93. In view of the aforesaid discussion, this writ-application stands disposed of accordingly. 76. Therefore, the question as to whether the provisions of Code would be applicable while invoking the power to arrest under section 69 of the CGST Act or not is now answered in the above judgment as the provisions of the section 69 of the CGST Act is pari materia with that of the section 104 of the Customs Act,1962. CONCLUSION : 77. In view of foregoing reasons and conspectus of law and the analysis of provisions of the section 69 read with section 132 of the CGST Act and provisions of the Code, we may sum up our Final conclusion to answer the questions arising in these petitions as under: (1) Q. whether the power to arrest as provided under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... `er authorised to arrest to inform such person about grounds of his arrest and in case if the person is ordered to be arrested for offences which are noncognizable and bailable , he would be released on bail as per provision of sub-section (3) of section 69 of the CGST Act. (ii) The Commissioner while recording his reasons to believe that a person has committed any offence has only to form a prima facie opinion based on cogent materials and credible information. The words reason to believe contemplate an objective determination based on intelligence, care and deliberation involving judicial review as distinguished from a purely subjective consideration and hence he is not required to conclude that the person sought to be arrested is guilty of any offence. The expression 'any person' in Section 69 of the CGST Act includes a person who is suspected or believed to be concerned in the evasion of tax or availing illegal input tax credit. However, a person arrested by an authorised Officer because he is found to be evading tax or availing input tax credit as specified in the clauses (a) to (d) of the sub-section (1) of the section 132 of the CGST Act is not, when called upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a person. It would be prudent for the authority in the interest of protection of the constitutional rights of a citizen and perhaps in his own interest that no arrest should be made without a reasonable satisfaction reached after some investigation as to the genuineness and bona fides of a complaint and a reasonable belief both as to the person's complicity and even so as to the need to effect arrest. Denying a person of his liberty is a serious matter. A person is not liable to be arrested merely on the suspicion of complicity in an offence. There must be some reasonable justification in the opinion of the authority effecting the arrest that such arrest is necessary and justified. (3) Q. (i) Whether the provisions of sections 154, 155(1), 155(2), 155(3), 157, 172 of the Code of Criminal Procedure, 1973 are applicable or should be made applicable for the purpose of invoking the power to arrest under section 69 of the CGST Act? In other words, whether the authorised officer can arrest a person alleged to have committed non cognizable and bailable offences without a warrant of arrest issued by the Magistrate under the provisions of the Code of Criminal Procedure, 1973? (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be arrested without a warrant issued by the Magistrate. (iii)The authorised officer exercising power to arrest under section 69 of the CGST Act, is not a Police Officer and, therefore, is not obliged in law to register FIR against the person arrested in respect of an offence under Sections 132 of the CGST Act. (iv) The decision of the Supreme Court in the case of Om Prakash (supra) has no bearing in the case on hand. (v) An authorised Officer is a 'proper officer' for the purposes of the CGST Act. As the authorised Officers are not Police Officers, the statements made before them in the course of inquiry are not inadmissible under Section 25 of the Evidence Act. (vi)The power to arrest a person by an authorised Officer is statutory in character and should not be interfered with. Section 69 of the CGST Act does not contemplate any Magisterial intervention. (vii) The main thrust of the decision in the case of Om Prakash (supra) to ascertain whether the offence was bailable or non-bailable, was on the point that the offence being noncognizable, it had to be bailable. In other words, Om Prakash (supra) deals with the question, whether the offences under the Cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectorate of Enforcement. After getting an enquiry conducted by the additional District Judge, which disclosed a prima facie case for investigation and prosecution, this Court directed the CBI to lodge a FIR and initiate criminal proceeding against all persons named in the report of the Additional District Judge and proceed against them. The Union of India/Directorate of Enforcement was also directed to pay sum of ₹ 2 lacs to the widow of the deceased by was of the relevant provisions of law to protect the interest of arrested persons in such cases too is a genuine need. ......... 33. There can be no gainsaying that freedom of an individual must yield to the security of the State. The right of preventive detention of individuals in the interest of security of the State in various situations prescribed under different statures has been upheld by the Courts. The right to interrogate the detenues, culprits or arrestees in the interest of the nation, must take precedence over an individual's right to personal liberty. The latin maxim salus populi est suprema lex (the safety of the people is the supreme law) and salus republicae est suprema lex (safety of the state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of an accused because of his right under Article 22 of the Constitution of India but the same cannot be made applicable to a person who is interrogated under section 70 of the GST Act or section 108 of the Customs Act where no right under Article 22 of the Constitution is affected as held by the Supreme Court in case of Poolpandi (supra). This Court, however, is quite conscious of the fact that pronouncement of Supreme Court in case of Poolpandi (supra) as also in another case, pointing out that the right of investigating authority should not be interfered with, as given to them under the provisions of the Act, does not give them an uncharted liberty to proceed in whatsoever manner they like in the matter of such inquiry or to extract statements from the person concerned by perpetuating torture or by applying third degree methods. That, no doubt, will be in clear violation of the right guaranteed under Article 21 of the Constitution of India which is available to all the citizens including a person who will be interrogated under section 70 of the GST Act or section 108 of the Customs Act as held by the Supreme Court in case of D.K. Basu (supra). 78. The petitioners have expre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons which persuaded the authority to pass an order adverse to his interest were erroneous, irrational or irrelevant, and (2) that the obligation to record reasons and convey the same to the party concerned operates as a deterrent against possible arbitrary action by the quasi-judicial or the executive authority invested with judicial powers. 32. Section 269UD(1), in express terminology, provides that the appropriate authority may make an order for the purchase of the property for reasons to be recorded in writing . Section 269UD(2) casts an obligation on the authority that it shall cause a copy of its order under Ss. (1) in respect of any immovable property to be served on the transferor . It is, therefore, inconceivable that the order which is required to be served by the appropriate authority under Ss. (2) would be the one which does not contain the reasons for the passing of the order or is not accompanied by the reasons recorded in writing. It may be permissible to record reasons separately but the order would be an incomplete order unless either the reasons are incorporated therein or are served separately along with the order on the affected party. We are, of the view, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e being informed, as soon as practicable, that he has been arrested and is being detained at the particular place, unless the attesting witness of the memo of arrest is himself such a friend or a relative of the arrestee. (4) The time, place of arrest and venue of custody of an arrestee must be notified by the police where the next friend or relative of the arrestee lives outside the district or and through the Legal Aid Organisation in the District and the police station of the area concerned telegraphically within a period of 8 to 12 hours after the arrest. (5) The person arrested must be made aware of this right to have someone informed of his arrest or detention as soon as he is put under arrest or is detained. (6) An entry must be made in the diary at the place of detention regarding the arrest of the person which shall also disclose the name of the next friend of the person who has been informed of the arrest and the names and particulars of the police officials in whose custody the arrestee is. (7) The arrestee should, where he so requests, be also examined at the time of his arrest and major and minor injuries, if any, present on his/her body, must be recorded a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime when the person arrested is remanded to the judicial custody, the Magistrate may not have any idea as to on what basis and what type of allegations, the person has been arrested by the authorized officers of the GST and has been produced before him. The production of a person accused should not be accepted by the Magistrate without being convinced that the arrest is on lawful grounds and on prima-facie materials indicating the complicity of the accused in the alleged offence. It is at that stage that the arrest memo assumes importance. It is not just sufficient to state in the arrest memo that the person arrested and produced has committed offences under Section 132 of the Act, 2017. The arrest memo should contain some details or information on the basis of which the Magistrate can arrive at a subjective satisfaction that the person has been arrested on lawful grounds. It is necessary, therefore, to incorporate some prima-facie material against the accused showing his complicity in the alleged offence. 83. There is no doubt that the arrest memo is a key safeguard against illegal arrest and a crucial component of the legal procedure of arrest. Full and consistent compliance i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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