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Supreme Court directs Centre to provide data on notices, arrests under GST Act

The Supreme Court recently directed the Centre to provide details of issuance of notices and arrests done under the provisions of the Goods and Services Tax (GST), mentioning that it may interpret the law. It further asked the Centre to lay down appropriate guidelines to avoid any harassment of citizens by depriving their liberty.

A special bench comprising Justice Sanjeev Khanna, Justice MM Sundresh and Justice Bela M Trivedi, was hearing a batch of 281 petitions against various provisions of the GST Act, Customs Act and the provisions of PMLA. During the hearing, the bench raised concern over the ambiguity in section 69 of the GST Act that deals with the powers of arrest.

The bench added that it would interpret the law to strengthen liberty, if need be, but not allow citizens to be harassed. The bench asked Additional Solicitor General SV Raju, representing the Centre to furnish the data on notices issued and arrests made under the GST Act for alleged defaults of Rs 1 crore to Rs 5 crore respectively for the past three years. The bench remarked that they cannot allow harassment of people. It underlined that if the court finds there is ambiguity in the provision, they will set it right.

The top court sought the data after Senior Advocate Siddharth Luthra, appearing for some of the petitioners, pointed out the alleged misuse of the powers of the authorities under the GST regime, stating it is curtailing the liberty of individuals. The Senior Advocate mentioned that sometimes arrests are not made, but people are harassed by issuing notices to them, threatening arrest.

The counsel further underscored that arrest under the GST Act is to be preceded by adjudication of the amount considered due and payable on the part of a taxpayers. He said that the question which needs to be considered is whether the liberty of an individual can be curtailed under section 69 until the assessment is made and amount is quantified.

Meanwhile, Solicitor General SV Raju said that he will gather data regarding notices and arrests made under the central GST Act but such information relating to states would be difficult to collate.

The bench stated that they need all the data, adding that the GST Council will have those data. It mentioned that there has to be a distinction between cases of fraud and inadvertent or innocuous lapses. It further asserted that the court would look into the issue of supplying grounds of arrest to a person in writing, noting merely informing the reasons may not be sufficient compliance with the principles of natural justice.

Questioning how would an arrested person challenge his detention or a plea for remand unless he has the grounds of arrest in writing, the bench recalled that in the PMLA case, the top court has made it mandatory to provide grounds of arrest to the accused in writing and that a similar arrangement can be made under the GST as well.

Subsequently, the ASG affirmed the bench that he would try to answer the court’s queries, when the matter will be heard next.

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