The Supreme Court on Thursday ruled that customs and GST officials cannot arbitrarily arrest alleged tax evaders without recording the reasons for such action and furnishing to the offender the grounds for arrest.

A three-judge bench led by Chief Justice of India Sanjiv Khanna held that the recent directions passed by the Supreme Court relating to adherence to procedural safeguards in the Prevention of Money Laundering Act case involving then Delhi chief minister Arvind Kejriwal would also apply to safeguards relating to arrests under the Customs Act and GST.

The bench, which included Justice M.M. Sundresh and Bela M. Trivedi, said that persons sought to be arrested by customs and GST officials were entitled to the assistance of advocates at the time of interrogation, subject to certain conditions.

The court passed the ruling while dismissing a batch of nearly 250 petitions filed by individuals and organisations challenging the constitutional validity of the provisions relating to powers of arrest conferred on customs and GST officials in cases of tax evasion. The petitioners had alleged that the provisions were being used by tax authorities, particularly GST officials, to compel them to pay taxes whose amounts the appellants had disputed.

“We would observe that in case there is a breach of law, and the assessees are put under threat, force or coercion, the assessees would be entitled to move the courts and seek a refund of tax deposited by them. The department would also take appropriate action against the officers in such cases,” CJI Khanna, who authored the judgment, observed.

Customs and GST officials enjoy certain analogous powers relating to investigation, arrest, seizure and interrogation.

“Thus, the obligation to provide grounds of arrest is incumbent upon them. Customs officers must also maintain records of their statutory functions, including details like the name of the informant, name of the person who has violated the law, nature of information received by the officers, time of arrest, seizure details, and statements recorded during detection of the offence(s).

“To a large extent, our reasoning and the ratio on the applicability of the Code to the Customs Act would equally apply to the GST Act in view of Sections 4 sub-section (4) to Section 132…,” the bench said.

The court said the amendment made by Parliament in 2009 to the CRPC by inserting Section 41-B, which outlines the procedures of arrest and the duties of the officers making the arrests, would apply equally to customs and GST officers while making arrests.

Customs and GST officers making an arrest are required to bear an accurate, legible and clear indication of their names to facilitate ease of identification by the arrestee.

Justice Khanna also referred to the Supreme Court’s order in the Kejriwal judgment that no unbridled powers can be conferred on customs and GST officials.