Supreme Court Demands Detailed Report: Notices and Arrests Under GST Act Subject of Inquiry

The Supreme Court has called upon the Centre to furnish a comprehensive report regarding the issuance of notices and arrests carried out under the provisions of the Goods and Services Tax (GST) Act. This request aims to enable the court to interpret the law effectively and establish appropriate guidelines to safeguard citizens’ liberties, preventing any unwarranted harassment.

Examining Ambiguities: Special Bench’s Concerns

A special bench, comprising Justices Sanjeev Khanna, MM Sundresh, and Bela M Trivedi, is currently scrutinizing 281 petitions challenging various aspects of not only the GST Act but also the Customs Act and provisions of the Prevention of Money Laundering Act (PMLA). The bench expressed particular concern over the ambiguity within section 69 of the GST Act, which pertains to the powers of arrest.

Ensuring Protection: Bench’s Directive

Emphasizing their commitment to protecting citizens’ liberties and preventing harassment, the bench instructed the Centre to furnish data on notices and arrests under the GST Act for alleged defaults ranging from Rs 1 crore to Rs 5 crore over the past three years. This directive followed concerns raised by senior advocate Siddharth Luthra, representing some petitioners, regarding the alleged misuse of authorities’ powers under the GST regime.

Addressing Concerns: Luthra’s Arguments

During Thursday’s hearing, Luthra highlighted concerns about individuals facing harassment through the issuance of threatening notices, even without actual arrests. He stressed that, according to the GST Act, arrests should only occur after the adjudication of the amount due from a taxpayer. Luthra questioned whether individual liberty could be restricted under section 69 before the assessment and quantification of the owed amount.

Ensuring Transparency: Response from the Centre

In response, Additional Solicitor General SV Raju, representing the Centre, assured the bench that he would gather data on notices and arrests under the central GST Act. However, he noted that obtaining such information from states might pose challenges.

Upholding Fairness: Bench’s Focus

The bench reiterated the necessity for comprehensive data and urged Raju to procure it from the GST Council. They emphasized the importance of distinguishing between cases of fraud and unintentional errors. Furthermore, the bench expressed intentions to examine the requirement of providing written grounds for arrest, citing the precedent set in a PMLA case where providing written grounds for arrest was mandated.

Next Steps: Ensuring Accountability

Finally, the Additional Solicitor General informed the bench that on May 9, he would make efforts to address the court’s inquiries when the matter is next heard. This underscores the ongoing efforts to ensure accountability and fairness within the realm of GST enforcement.

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About the Author: Payal Singh