The State of Gujarat Etc. v. Choodamani Parmeshwaran Iyer & Anr. Etc.

The following Order of the Court was passed: ORDER 1. Leave granted. 2. The learned counsel appearing for the private respondent s (Assessees) submitted that he is not in a position to assist this Court as his clients are not in touch with him past almost six months. 1141 3. In view of the aforesaid, we had no benefit of any assista nce from the learned counsel appearing for the private respondents. 4. We have heard Mr. Kanu Agrawal, the learned coun sel appearing for the State of Gujarat. 5. It appears from the materials on record that a summons came to be issued dated 31.10.2018 to the respondents under Section 145 of the Central Excise Act, 1944 (for short “the Act 1944”) as made applicable to the service tax vide Section 83 of the Finance Act, 1994 and Section 70 of the Central Goods and Service Tax Act, 2017 (for short “the CGST Act 2017”) calling upon them to remain present for the purpose of interrogation in connection with an inquiry against one M/s. Iyer Enterprise Mundra Kutch. The authority concerned wants to inte rrogate the respondents in regard to the alleged evasion of Goods and Service Tax Liability/Contravention of the Provision of the Finance Act 1994 a nd CGST Act 2017. 6. Upon receipt of the summons, the respondents apprehended arrest at the end of the concerned officials of the Depa rtment. 7. In such circumstances as referred to above, two writ applications came to be filed before the High Court being Special Criminal Application Nos. 11010 of 2018 and 11076 of 2018 resply. Both the writ applications came to be disposed by a common order dated 24.12.2018. The relevant part of the impugned order reads thus:- “7. Considering the voluntary nature of pleadings where the petitioners are desirous of getting themselves assist ed by the adjudicatory process, let them represent their case before the concerned authority. The authority concerned shall complete the same in 8 weeks’ time and if there is a need fo r any apprehension after once the adjudicatory process is completed, if they are not ready to fulfill their obliga tion, they may be given an opportunity of two more weeks for t aking necessary steps. Petitioners shall appear on or before 11/ 01/ 2019 before the concerned Police Station. In view of the above, the present applications stan d disposed of. Direct service is permitted.” 8. The State of Gujarat being dissatisfied with the aforesaid order passed by the High Court is here before this Court with the present appeal. THE STATE OF GUJARAT ETC. v. CHOODAMANI PARMESHWARAN IYER & ANR. ETC. 9. For the first time, this Court took up the matter on 29.04.2019 and issued notice. While issuing notice, this Court granted relief staying the directions issued by the High Court that the adjudicato ry process must be completed within a period of eight weeks. 10. The learned counsel appearing for the State of Gujarat pointed out that as many as 14 summons have been issued to one of the respondents. Only once, one of the respondents appeared for the purpose of interrogation. Thereafter, none of the respondents appeare d before the authority. It’s been now 5 years that the inquiry is still pending. He further submitted that it is only after the respondents ar e interrogated, that the department will be able to ascertain whether there is any evasion or not and on the basis of which the future course of action like filing of complaint etc., would be decided. 11. We are not convinced with the manner in which the High Court has disposed of both the writ applications filed by the respondents. It was expected of the respondents to honour the summons and appear before the authority for the purpose of interrogation. 12. It is well-settled position of law that power to arrest a person by an empowered authority under the GST Act and could be termed as statutory in character and ordinarily the writ court should not interfere with exercise of such power. We say so because such power of arrest can be exercised only in those cases where the Commissioner or his delegatee has reasons to believe that the person has com mitted any offence specified in Clause (a) or Clause (b) or Clause(c) or Clause (d) of sub-Section (1) of Section 132 which is punishable under clause (i) or (ii) or sub-section (1) or sub-Section (2) of the said Section. 13. As observed by this Court in Union of India Vs. Padam Narain Aggarwal and Ors . (2008) 13 SCC 305, (which was in context with the powers of Custom Officers to arrest under the Cu stoms Act) such statutory powers must be exercised on objective facts of commission of an offence enumerated and the officer concerned must have r eason to believe that a person sought to be arrested has been guilty of such an offence. 14. This Court in Padam Narain Aggarwal (supra) made it very clear that ordinarily the Court should not impose any condition before effecting arrest. If any conditions are imposed before effe cting arrest for instance giving prior intimation to the person concer ned etc., the 1143 statutory provisions would be rendered ineffective, nugatory and meaningless. 15. What is important are the observations made in par agraphs 44 and 45 resply of the decision of this Court in the case of Padam Narain Aggarwal (supra) , which read thus:- “44. In the case on hand, the respondents were only summoned under Section 108 of the Act for recording of their statement s. The High Court was conscious and mindful of that fac t. It, therefore, held that the applications for anticipator y bail, in the circumstances, were premature. They were, accordi ngly, disposed of by directing the respondents to appear before the Customs Authorities. The Court, however, did no t stop there. It stated that even if the Customs Authorities f ind any non-bailable offence against the applicants (the resp ondents herein), they shall not be arrested without ten days’ prior notice to them. 45. In our judgment, on the facts and in the circumstances o f the present case, neither of the above directions can be s aid to be legal, valid or in consonance with law. Firstly, the order passed by the High Court is a blanket one as held b y the Constitution Bench of this Court in Gurbaksh Singh and seeks to grant protection to the respondents in respect of any non- bailable offence. Secondly, it illegally obstructs, interferes and curtails the authority of the Customs Officers from exercising statutory power of arrest of a person said to have committed a non-bailable offence by imposing a condition of giving ten days’ prior notice, a condition not warrant ed by law. The order passed by the High Court to the exte nt of directions issued to the Customs Authorities is, therefore, liable to be set aside and is hereby set aside. ” (Emphasis supplied) 16. Thus, the position of law is that if any person is sum moned under Section 69 of the CGST Act, 2017 for the purpose of recording of his statement, the provisions of Section 438 of Criminal Procedure Code, 1908 cannot be invoked. We say so as no First Information Report gets registered before the power of arrest under Section 69(1) of the CGST Act, 2017 is invoked and in such circumstances, the person summoned cannot invoke Section 438 of the Code of Criminal Proced ure for THE STATE OF GUJARAT ETC. v. CHOODAMANI PARMESHWARAN IYER & ANR. ETC. anticipatory bail. The only way a person summoned can seek protection against the pre-trial arrest is to invoke the jurisdiction of the High Court under Article 226 of the Constitution of India. Undoubtedly, this is exactly what the respondents did in the present case. What the respon dents sought by filing two criminal applications under Articl e 226 of the Constitution before the High Court was the direction to the appe llant herein not to arrest them in exercise of the power conferred by Section 69(1) of the GST Act, 2017. This, in essence, is key to prayer for anticipatory bail. However, as we have explained aforesaid, at the stage of summons, the person summoned cannot invoke Section 438 of the Code of Criminal Procedure. 17. This Court in Kartar Singh Vs. State of Punjab , (1994) 3 SCC 569, has, in no uncertain terms, observed that a claim for pre- arrest protection is neither a statutory right nor a right guaranteed under Articles 14, 19 and 21 resply of the Constitution of India. Although the Constitution Bench of this Court held that there is no bar for the High Court to entertain an application for pre-arrest protection under Article 226 of the Constitution of India, yet it was held that such power should be exercised sparingly. There is a fundamental distinction betw een a petition for anticipatory bail and the writ of mandamus directing an officer not to effect arrest. A writ of mandamus would lie only t o compel the performance of the statutory or other duties. No writ of mandamus would lie to prevent an officer from performing his statutory function. When a writ application is filed before the High Court under Article 226 of the Constitution, the writ court owes a duty to examine the fact of the case and ascertain whether the case of the writ applicant falls un der the category of exceptional cases as indicated in Kartar Singh (supra) . The writ court should also ensure whether by issuin g the writ of mandamus, it would be preventing the competent authority or pro per officer from performing any of their statutory functions. 18. In the aforesaid context, we may refer to a Divisi on Bench decision of the High Court of Telangana which ultimately came t o be affirmed by this Court in the Special Leave Petition (Crl.) No. 4430 of 2019 order dated 27.05.2019 . We are referring to a decision in the case of P.V. Ramana Reddy Vs. Union of India Writ Petition Nos. 4764 of 2019 and allied petitions decided on 18 th April, 2019. There are few important observations made by the High Court and we are in complete agreement with the said observations. The observations of th e High 1145 Court fell in the context of certain incongruities noticed in Section 69(1) and Section 132 resply of the CGST Act, 2017. We quote the relevant observations hereunder:- “34. If CGST Act, 2017 is a complete code in itself in respect of (1) the acts that constitute offences, (2) the p rocedure for prosecution and (3) the punishment upon conviction, then the power of Commissioner, who is not a Police Offi cer, to order the arrest of a person should also emanate fr om prescription contained in the Act itself. Section 69(1) of CGST Act, 2017 very clearly delineates the power of the Commissioner to order the arrest of a person whom h e has reasons to believe, to have committed an offence wh ich is cognizable and non-bailable. Therefore, we do not know how a person whom the Commissioner believes to have committed an offence specified in clauses (f) to (l) of sub-Section (1) of Section 132 of CGST Act, which are non-cognizable a nd bailable, could be arrested at all, since Section 69(1) of the CGST Act, 2017 does not confer power of arrest in such cases. 35. The fact that the power of arrest under Section 69( 1) of the CGST Act, 2017 is confined only to cognizable and non- bailable offences, is also fortified by sub-Section (2) of S ection 69 which obliges the Officer, who carries out the a rrest to inform the arrested person of the grounds of arrest and to produce him before a Magistrate within 24 hours. Th e duty enjoined upon the Officer carrying out the arrest, t o inform the arrested person of the grounds of arrest and to p roduce him before a Magistrate within 24 hours, is co-relatable under sub-Section (2) of Section 69 of the CGST Act, 2017 to Section 132(5) of the CGST Act, 2017 that deals only with cognizable and non-bailable offences. 36. But, interestingly, clauses (a) and (b) of sub-Sect ion (3) of Section 69 of the CGST Act, 2017 deal in entirety only with cases of persons arrested for the offences which are indicate d as non-cognizable and bailable. The phrase “subject to the provisions of the Code of Criminal Procedure” is use d only in sub-Section (3), which deals in entirety only wi th the procedure to be followed after the arrest of a person wh o is believed to have committed a non-cognizable and bai lable THE STATE OF GUJARAT ETC. v. CHOODAMANI PARMESHWARAN IYER & ANR. ETC. offence. While clause (a) of sub-Section (3) gives two opt ions to the Officer carrying out the arrest, namely, to grant bai l by himself or to forward the arrested person to the cu stody of the Magistrate, clause (b) confers the powers of an Officer incharge of a police station, upon the Deputy Commissio ner or the Assistant Commissioner (GST), for the purpos e of releasing an arrested person on bail, in the case o f non- cognizable and bailable offences. 37. In other words, even though Section 69(1) of the CGST Act, 2017 does not confer any power upon the Commissioner to order the arrest of a person, who has committed an offenc e which is non-cognizable and bailable, sub-Section ( 3) of Section 69 of the CGST Act, 2017 deals with the gra nt of bail, remand to custody and the procedure for grant o f bail to a person accused of the commission of non-cognizable and bailable offences. Thus, there is some incongruity between sub-Sections (1) and (3) of Section 69 read with section 1 32 of the CGST Act, 2017. 38. Another difficulty with Section 69 of the CGST Act, 2017 is that sub-Sections (1) and (2) of Section 69 which deal wit h the power of arrest and production before the Magistrat e in the case of cognizable and non-bailable offences, do not use the phrase “subject to the provisions of Cr.P.C.” This phr ase is used only in sub-Section (3) of Section 69 in relation to the arrest and grant of bail for offences which are non-cognizabl e and bailable, though no power of arrest is expressly conferred in relation to non-cognizable and bailable offences. 39. It is important to note that under sub-Section (4) of Section 132 of the CGST Act, 2017, all offences und er the Act except those under clauses (a) to (d) of Sectio n 132 (1), are made non-cognizable and bailable, notwithstandi ng anything contained in Cr.P.C. In addition, Section 67(10) of the CGST Act, 2017 makes the provisions of Cr.P. C. relating to search and seizure, apply to searches and seizures under this Act, subject to the modification that th e word “Commissioner” shall substitute the word “Magistrat e” appearing in Section 165 (5) of Cr.P.C., in its applic ation to CGST Act, 2017. 1147 40. Therefore, (1) in the light of the fact that Section 69(1 ) of the CGST Act, 2017 authorizes the arrest only of persons w ho are believed to have committed cognizable and non-bail able offences, but Section 69(3) of the CGST Act, 2017 deals with the grant of bail and the procedure for grant of bail eve n to persons who are arrested in connection with non-cognizabl e and bailable offences and (2) in the light of the fact that the Commissioner of GST is conferred with the powers of searc h and seizure under Section 67(10) of the CGST Act, 2017, in the same manner as provided in Section 165 of the Cr.P .C., 1973, the contention of the Additional Solicitor General t hat the petitioners cannot take umbrage under Sections 41 and 41A of Cr.P.C. may not be correct. 41. Though for the purpose of summoning of witnesses and for summoning the production of documents, the Prop er Officer holding the enquiry under the CGST Act, 201 7 is treated like a Civil Court, there are four other place s in the Act, where a reference is made, directly or indirectly, to the Cr.P.C. They are (1) the reference to Cr.P.C. in re lation to search and seizure under Section 67(10) of CGST Act, 2017, (2) the reference to Cr.P.C. under sub-Section (3) of Section 69 in relation to the grant of bail for a person ar rested in connection to a non-cognizable and bailable offence, (3) the reference to Cr.P.C. in Section 132 (4) while makin g all offences under the CGST Act, 2017 except those specifi ed in clauses (a) to (d) of Section 132 (1) of CGST Act, 2017 as non-cognizable and bailable and (4) the reference to Sections 193 and 228 of IPC in Section 70(2) of the CGST Act, 2017. Therefore, the contention of learned Additional Sol icitor General that in view of Section 69(3) of the CGST Act, 2017, the petitioners cannot fall back upon the limited pro tection against arrest, found in Sections 41 and 41A of Cr.P.C., ma y not be correct. As pointed out earlier, Section 41- A was inserted in Cr.P.C. by Section 6 of the Code of Cri minal Procedure (Amendment) Act, 2008. Under sub-Section (3) of Section 41A Cr.P.C., a person who complies with a notice for appearance and who continues to comply with the notice for appearance before the Summoning Officer, shall not be arrested. In fact, the duty imposed upon a Police THE STATE OF GUJARAT ETC. v. CHOODAMANI PARMESHWARAN IYER & ANR. ETC. Officer under Section 41A(1) Cr.P.C., to summon a p erson for enquiry in relation to a cognizable offence, is what is substantially ingrained in Section 70(1) of the CGS T Act. Though Section 69(1) which confers powers upon the Commissioner to order the arrest of a person does not contain the safeguards that are incorporated in Section 41 an d 41A of Cr.P.C., we think Section 70(1) of the CGST Act takes car e of the contingency. 42. In any case, the moment the Commissioner has reasons to believe that a person has committed a cognizable and non- bailable offence warranting his arrest, then we think that t he safeguards before arresting a person, as provided in Sectio ns 41 and 41A of Cr.P.C., may have to be kept in mind. 43. But, it may be remembered that Section 41A(3) of Cr.P.C., does not provide an absolute irrevocable guarantee again st arrest. Despite the compliance with the notices of app earance, a Police Officer himself is entitled under Section 41A(3) Cr.P.C., for reasons to be recorded, arrest a perso n. At this stage, we may notice the difference in language bet ween Section 41A(3) of Cr.P.C. and 69(1) of CGST Act, 2017. Under Section 41A(3) of Cr.P.C., “reasons are to be recorded”, onc e the Police Officer is of the opinion that the persons c oncerned ought to be arrested. In contrast, Section 69(1) uses the p hrase “reasons to believe”. There is a vast difference be tween “reasons to be recorded” and “reasons to believe.” 19. We are still inclined to give one more opportunity to both the respondents to appear before the authorities for the purpose of recording of their statements. If the respondents fail to appear, then i t shall be open for the authority concerned to proceed further in accordance with law. 20. In view of the aforesaid, both the appeals stand allowed. The common order dated 24.12.2018 passed by the High Court is set aside. 21. Pending application(s), if any, stand(s) disposed of. Divya Pandey Appeals allowed. (Assisted by : Shevali Monga, LCRA)