SC agrees to hear govt on CGST, asks high courts to not hear such cases

The central government had moved SC seeking clarification on its powers to arrest a person without filing an FIR under the CGST

The Supreme Court on Wednesday agreed to hear the government’s plea seeking clarifications on powers to arrest an accused without filing a first information report (FIR) under the Central Goods and Services Tax (CGST) laws. The court, while constituting a three-judge Bench to hear the matter, also asked high courts (HCs) across the country not to interfere in such cases at this stage.

The apex court’s order came on a plea moved by the government in which it claimed that HCs were granting ex-parte interim relief to petitioners without considering any principles. The plea challenged a Bombay HC order that had, while granting anticipatory bail to a person accused of evading CGST, asked the government to file an FIR and only then proceed with the arrest.

The HC had directed that the accused could not be arrested by the authorities “without following the procedure prescribed under the Criminal Procedure Code, and specifically registration of an FIR”. The accused person, who was being probed by the Serious Fraud Investigation Office (SFIO), had moved the HC, seeking anticipatory bail.

The central government had, on the other hand, contended that the filing of FIR was not necessary to arrest an accused in the cases of indirect tax evasion. 

To support its stand, it had cited an order passed by the Telangana HC, which had refused to provide any interim relief to the petitioner and upheld the powers of the commissioner of CGST to arrest. The order was later upheld by the apex court on May 27. As the two HCs had taken differing views in similar cases, the government approached the apex court and sought that it should hear the issue and settle the issue of powers of arrest.

In its order on Wednesday, the Supreme Court clarified that if HCs were to entertain such cases, they “will keep in mind” that the top court had on May 27 agreed with the Telangana HC order upholding the powers of the GST commissioner to arrest an accused without filing an FIR under the CGST laws.

Though the apex court has asked high courts not to interfere at this stage, it did not set aside the order granting interim relief, passed by the Bombay HC. The favourable interim relief granted by the Bombay HC will continue to protect the taxpayers until the matter is finally decided by the three-judge Bench of the Supreme Court, said Abhishek A Rastogi, partner at Khaitan & Co, who represented the accused. In its plea, the government has also claimed to have noticed a trend of “short-circuiting the procedure established by law by individuals being investigated for economic offences by filing writ petitions, challenging the constitutional validity of every provision”.