Supreme Court Aligns GST and Customs Arrests with Criminal Procedure Safeguards
Last Updated on February 27, 2025 by Amit Patra
In a historic judgment that greatly enhances civil rights, the Supreme Court on Thursday ruled that arrests under the Customs Act and the Goods and Services Tax (GST) Act must meet the same procedural protections that apply in criminal cases under the Code of Criminal Procedure.
The ruling, pronounced by a bench headed by Chief Justice Sanjiv Khanna and Justice MM Sundresh and Bela M Trivedi, is a noteworthy reinstating of tax and citizen rights against the shadow of government tyranny and harassment.
Central to the verdict is the deployment of the “reasons to believe” test—so far developed in the Arvind Kejriwal case to PMLA arrests—extended to GST and Customs arrests. The Court noticed virtual identity between Section 19(1) of PMLA and Section 104 of the Customs Act, both vesting arrest powers.
“We are of the opinion that principles and ratio developed in the case of Arvind Kejriwal are equally applicable to the power of arrest under Section 104 of the Customs Act,” the Court held, mandating the authorities to have reasons for arrest, not suspicion.
Most striking is the Court’s recognition that there “may be some merit” to charges of tax harassment and coercion, evidencing judicial responsiveness to taxpayers’ complaints. The court emphasized the fact that coercive collection of taxes by intimidation “cannot be allowed” and is “against law.”
The decision also laid down that anticipatory bail provisions were applicable under both Acts and permitted the people to approach the courts’ protection even when there was no valid FIR registered. This is an essential protection against false detention.
In operational terms, the judgment requires tax authorities to follow certain procedures at the time of arrest, including identification of arresting officers, immediate notification to relatives or friends, reasonable treatment of the health of the arrestee, and allowing access to legal advisors during interrogation.
Justice Trivedi’s concurring opinion addressed judicial review powers directly, upholding the role of the courts in checking administrative excesses.
This judgment—on the basis of 279 petitions challenging the consistency of penal provisions under these tax legislations with the Constitutional values—lays to rest long-standing uncertainties of Section 69 of the GST Act and demonstrates the Court’s dedication to “strengthen liberty” while upholding tax compliances under the rule of law.
For the taxpayers threatened with enforcement action, the judgment enunciates unambiguous procedural safeguards and redress against arbitrary exercise of state power.
