On Thursday, the Supreme Court confirmed the constitutional validity of the provisions on arrest and prosecution pursuant to the Tax Act on goods and services and the Customs Act, but provided guarantees against coercive measures including arrest. Experts emphasize that the decision is a significant development in the area of tax recovery and will help reduce tax terrorism.
The decision of a special bench, including the main judge of Sanjiv Khanna, the judiciary Bela M. TRIVEDI and the judiciary MM Sundresh, decided that customs officials are not police officials and the rights will be available to those who are arrested according to GST and customs acts.
The court also explained that these arrests could not be used for renewal purposes, which explains that the arrest cannot be used for recovery and the accused may in such cases gain access to remedies pursuant to Article 226.
The bench attacked a total of 279 petitions that questioned the criminal provisions under the Customs Act and the State and Central Act of GST. The decision also suppressed the case of Makemytrip during quantification before arrest. The thing is scheduled for the final liquidation next month 17th. March.
Sudipta Bhattaccharjee, Partner, Khaitan & Co said that the Supreme Court obeying the constitutional validity of these arrests was not entirely unexpected, but provided critical checks and balances, which should perhaps be a long way to restrict tax terrorism and providing a certain level of protection for tax payments.
For example, the court stressed the requirement that the authorities documented their “reasons to believe” before the commencement of arrest, in accordance with the principles set out in the case of Arvind Kejriwal. The Supreme Court also ruled that people facing GST or customs law will be entitled to guarantees available according to the Code of Criminal Procedure and that the predictive deposit can be enabled in the case of immediate arrest under the law of GST, which rewrote the opposite judgment.
Abhishek and Rastogi, the founder of Rastogi Chambers, said: “In the alleged case of tax evasion, any arrest is obviously arrest before the proceedings and completion of the tax demand. The arrest should only be carried out after the proceedings are completed and tax evasion is proven. ”
AMIT Maheshwari, Tax Partner, AKM Global said that the decision strengthens the authorities to take strict steps against serious tax fraud, also ensures legal guarantees for companies and individuals, including the right to predict the bail before the company.
“The decision underlines the need for enterprises to strengthen the compliance with GST regulations, as the arrest may occur, although the exact tax liability is not fully determined. This decision causes a balance between the prevention of tax evasion and the protection of the rights of taxpayers, which makes it essential for the industry to be involved to accept a proactive approach to compliance, ”he stressed.
