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The Supreme Court of India has delivered a significant judgment upholding the constitutional validity of Sections 69 and 70 of the Goods and Services Tax (GST) Act. These sections grant authorities the power to arrest individuals and issue summons related to GST matters. The decision addresses concerns raised about the legislative competence of the Parliament to enact such provisions, particularly in light of Article 246-A of the Constitution. This article delves into the arguments presented before the court, the reasoning behind the Supreme Court's decision, and the broader implications for the administration and enforcement of GST in India. The challenge to the constitutional validity of Sections 69 and 70 was primarily based on the assertion that the Parliament lacked the necessary legislative competence. The petitioners argued that while Article 246-A confers legislative powers on both the Parliament and State Legislatures to levy and collect GST, it does not explicitly authorize the creation of criminal offenses related to GST violations. They further contended that Entry 93 of List I to the Seventh Schedule restricts the Parliament's ability to enact criminal provisions solely to matters listed in List I. The petitioners also argued that the powers to summon, arrest, and prosecute are not inherently ancillary or incidental to the power to levy GST. Therefore, they claimed that these provisions exceeded the legislative competence granted to the Parliament under Article 246-A. The Supreme Court, however, firmly rejected these arguments, providing a comprehensive rationale for its decision. The bench, comprising Chief Justice of India Sanjiv Khanna, Justice MM Sundresh, and Justice Bela M Trivedi, held that Sections 69 and 70 are indeed traceable to Article 246-A. The court emphasized that Article 246-A is a special provision that defines the source of power and the field of legislation for both the Parliament and State Legislatures concerning GST. The core of the Supreme Court's reasoning lies in its interpretation of Article 246-A as a comprehensive provision that grants the Parliament the power to make laws regarding GST, including provisions necessary to combat tax evasion. The court applied the doctrine of pith and substance, which dictates that a law should be examined to determine its true nature and character. In this context, the court found that the impugned provisions, namely the power to summon and arrest, are essential tools for the effective levy and collection of GST. The judgment authored by CJI Sanjiv Khanna underscored that a penalty or prosecution mechanism for the levy and collection of GST, as well as for checking evasion, is a permissible exercise of legislative power. The court further clarified that the GST Acts, in pith and substance, pertain to Article 246-A of the Constitution, and the powers to summon, arrest, and prosecute are ancillary and incidental to the power to levy and collect goods and services tax. The court also cited previous judgments that emphasize the importance of interpreting legislative entries broadly and with the widest amplitude, recognizing that they are intrinsic to the machinery of government. The Supreme Court's decision has significant implications for the administration and enforcement of GST in India. By upholding the constitutional validity of Sections 69 and 70, the court has affirmed the Parliament's authority to enact provisions that are necessary for the effective levy and collection of GST. This decision empowers GST authorities to take necessary actions, including arrest and summons, to combat tax evasion and ensure compliance with GST regulations. The judgment provides clarity on the scope of the Parliament's legislative competence under Article 246-A, reinforcing its power to enact provisions that are ancillary and incidental to the power to levy and collect GST. This clarity is crucial for ensuring that GST authorities can effectively discharge their duties and responsibilities. The court's ruling also aligns with the broader objective of promoting a fair and efficient GST regime in India. By upholding the constitutional validity of Sections 69 and 70, the court has sent a strong message that tax evasion will not be tolerated and that GST authorities have the necessary powers to enforce compliance. The Supreme Court's judgment underscores the importance of interpreting constitutional provisions in a manner that supports the effective functioning of the government and the administration of justice. By applying the doctrine of pith and substance and emphasizing the need for a broad interpretation of legislative entries, the court has provided valuable guidance for future cases involving the interpretation of constitutional provisions. In conclusion, the Supreme Court's decision upholding the constitutional validity of Sections 69 and 70 of the GST Act is a significant milestone in the administration and enforcement of GST in India. The judgment reinforces the Parliament's legislative competence under Article 246-A, empowers GST authorities to combat tax evasion, and promotes a fair and efficient GST regime. It also provides valuable guidance for the interpretation of constitutional provisions in future cases.
The Supreme Court's decision in Radhika Agarwal v. Union of India and Ors. carries several important implications for the enforcement of the Goods and Services Tax (GST) regime in India. By upholding the constitutional validity of Sections 69 and 70 of the GST Act, the court has affirmed the powers of arrest and summons granted to GST authorities. This has significant ramifications for businesses and individuals who are subject to GST regulations. One of the key implications of the judgment is that GST authorities now have a clearer legal basis for exercising their powers of arrest and summons in cases of suspected tax evasion. This means that businesses and individuals who are found to be non-compliant with GST regulations could face the risk of arrest and prosecution. This could have a deterrent effect on tax evasion and encourage greater compliance with GST regulations. Another important implication of the judgment is that it reinforces the importance of adhering to the principles of natural justice in the exercise of GST authorities' powers. The Supreme Court has emphasized that any arrest or summons must be carried out in a fair and reasonable manner, and that individuals must be given an opportunity to be heard before any adverse action is taken against them. This means that GST authorities must exercise their powers with caution and ensure that they are not used arbitrarily or unfairly. The Supreme Court's judgment also has implications for the rights of arrested persons. The court has clarified that the provisions of the Code of Criminal Procedure (CrPC) and the BNSS Act (Bharatiya Nagarik Suraksha Sanhita) apply to arrests made under the GST Act. This means that arrested persons have the right to legal representation, the right to remain silent, and the right to be produced before a magistrate within 24 hours of their arrest. This provides important safeguards for the rights of individuals who are arrested under the GST Act. The judgment also sheds light on the circumstances in which anticipatory bail can be granted in cases of arrest under the GST Act. The Supreme Court has clarified that anticipatory bail is maintainable against arrest under the GST Act, and that the court can grant anticipatory bail if it is satisfied that there are reasonable grounds to believe that the person is not guilty of the alleged offence. This provides a valuable remedy for individuals who fear that they may be arrested under the GST Act. However, the Supreme Court has also cautioned that arrest under the GST Act should not be made merely to investigate whether a cognizable and non-bailable offence has been committed. The court has emphasized that there must be a sufficient degree of certainty about the offence before an arrest is made. This means that GST authorities must have a reasonable basis for believing that an offence has been committed before they can arrest someone. The Supreme Court has also clarified that an arrest under the GST Act can be made without a final determination of tax liability if there is a sufficient degree of certainty about the offence. This means that GST authorities do not have to wait until a final assessment of tax liability has been made before they can arrest someone for tax evasion. The Supreme Court's judgment also has implications for the powers of customs officers to make arrests. The court has clarified that customs officers are not police officers and must satisfy a higher threshold of 'reasons to believe' before making an arrest. This means that customs officers must have a stronger basis for believing that an offence has been committed before they can arrest someone. Overall, the Supreme Court's decision in Radhika Agarwal v. Union of India and Ors. has significant implications for the enforcement of the GST regime in India. The judgment clarifies the powers of GST authorities to make arrests and issue summons, while also emphasizing the importance of adhering to the principles of natural justice and safeguarding the rights of arrested persons. The judgment provides valuable guidance for GST authorities, businesses, and individuals on their respective rights and responsibilities under the GST Act.
The decision in Radhika Agarwal v. Union of India (2025 LiveLaw (SC) 255) is expected to have a cascading effect on the way GST is administered and enforced in India. By affirming the legality of arrest and summons powers, the Supreme Court has given more teeth to the tax authorities. The court's observation that anticipatory bail is maintainable under the GST Act also provides a layer of protection for individuals who may be unfairly targeted. However, the insistence on a 'sufficient degree of certainty' before an arrest is made is a crucial safeguard against potential abuse of power. This balance is essential for maintaining public trust in the tax system. The implications of this ruling extend beyond individual cases. The Supreme Court's interpretation of Article 246-A of the Constitution as a 'comprehensive provision' has clarified the legislative competence of the Parliament in enacting laws related to GST. This will likely have a stabilizing effect on the GST regime as a whole, reducing the potential for future challenges to the validity of GST-related laws. The judgment also underscores the importance of adhering to the principles of natural justice. The Supreme Court has made it clear that any action taken by GST authorities, including arrest and summons, must be fair, reasonable, and non-arbitrary. This is a crucial reminder that the pursuit of tax revenue should not come at the expense of fundamental rights. The emphasis on the rights of arrested persons is another important aspect of the judgment. The Supreme Court has clarified that the provisions of the CrPC and the BNSS Act apply to arrests made under the GST Act. This ensures that individuals who are arrested under GST have access to legal representation, the right to remain silent, and the right to be produced before a magistrate within 24 hours of their arrest. The court's ruling that customs officers are not police officers and must satisfy a higher threshold of 'reasons to believe' before making an arrest is also significant. This provides an additional layer of protection against unwarranted arrests. In conclusion, the decision in Radhika Agarwal v. Union of India is a landmark ruling that has far-reaching implications for the GST regime in India. The court has clarified the powers of GST authorities, while also emphasizing the importance of protecting the rights of individuals and adhering to the principles of natural justice. This balance is essential for maintaining public trust in the tax system and ensuring that GST is administered in a fair and equitable manner.
Source: Supreme Court Upholds Constitutionality Of GST Act Provisions On Arrest & Summons