On August 25, the Supreme Court took a significant step by issuing notice in two closely related writ petitions that were presented under Article 32 of the Indian Constitution. These petitions challenge the legality of certain aspects within the Central Goods and Services Tax Act of 2017 (CGST Act), most notably Section 69 (the power to make arrests) and Section 70(1) (the authority to summon individuals for testimony and document presentation). Remarkably, the Court has also taken the proactive measure of halting any forceful actions against the individuals who lodged these petitions. The judicial panel presiding over these matters consisted of Justices Sanjay Kishan Kaul and Sudhanshu Dhulia.
In the heart of these petitions lies the assertion that Sections 69 and 70 of the CGST Act hold an unconstitutional character due to their criminal nature. According to the petitioners, these provisions couldn’t have been established under the framework of Article 246A of the 1950 Indian Constitution. This argument stems from the idea that the power to detain and prosecute should not be viewed as secondary to the authority to impose and gather taxes on goods and services.
The petitioners clarified this viewpoint by referencing Entry 93 of List 1 within the Seventh Schedule of the Indian Constitution. This entry, they emphasize, grants jurisdiction to the Parliament to create criminal laws exclusively for matters outlined in List 1, not for matters related to CGST. Consequently, Sections 69 and 70 of the CGST Act are deemed to fall outside the legislative competence of the Parliament.
Furthermore, it was argued that despite endowing CGST officers with police officer and civil court powers during investigations, the proceedings are labeled as ‘inquiries’, and those summoned are not categorized as ‘accused’ individuals. This categorization, the petitioners believe, is inconsistent, as these officers do not possess the status of actual police officers and consequently, those summoned lack the protections afforded by Article 20(3) of the Indian Constitution. This discrepancy, the petitioners contend, places them at a distinct disadvantage.
The petitions also highlight ongoing legal matters before the Apex Court that concern the obligatory adherence to the procedures outlined in the Code of Criminal Procedure of 1973 (CrPC) when investigating offenses under the CGST Act of 2017.
In the context of these specific petitions, the situation involves the initiation of an investigation by the office of Respondent No. 2 pertaining to allegations of GST evasion or non-payment.
Given these circumstances, the petitioners initiated these legal actions, fearing potential coercive measures by the respondents. Their primary objective is to have the ongoing proceedings against them under the CGST Act, in connection to an alleged non-cognizable offense, quashed. They maintain that the current proceedings lack adherence to established legal procedures, as specified in Chapter-XII of the CrPC, particularly Sections 154 to 157 and Section 172.
Case Title: Gagandeep Singh v. Union of India, W.P. (Crl) No. 339/2023, Gagan Kakkar v. Union of India, W.P. (Crl) No. 357/2023