The Supreme Court in Choodamani Case and P.V. Ramana Reddy Vs. Union of India did not settled the equation raised through Choodamani Case by on the basis Sibbia that in case of CGST.

Chandigarh (ABC Live): The Supreme Court of India 17 July, 2023 in case titled State Of Gujarat vs Choodamani Parmeshwaran Iyer in SLP (Crl.) No. 4212-4213 of 2019 failed to answer what remedies left with person summoned  U/Section 70 read with U/s 69(1) of the Central Goods and Services Act 2017 in absence of First Information Report (FIR). 

Facts of case  

On 31/10/2018 the Partners of M/s. Iyer Enterprise Mundra Kutch were summoned  U/s Section 70 of the Central Goods and Service Tax Act, 2017 for the purpose of interrogation in connection with an inquiry. 

Upon receipt of the summons, the respondents apprehended arrest and filed two writ petitions U/s article 226 of the constitution of India in Gujarat High Court in year 2018, wherein the High Court issued a directions to the State not to take any coercive actions against the respondents in case arrest is needed then the respondents be given an opportunity of two more weeks for taking necessary steps.

The State of Gujarat impugned the order of Gujarat High Court in Supreme Court vide two SLP (criminal) No. 4212 and 4213 of 2019 on grounds 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 committed 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. 

In Para 16 of judgment admitted that the position of law is that if any person is summoned 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 Procedure for 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 respondents sought by filing two criminal applications under Article 226 of the Constitution before the High Court was the direction to the appellant 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.

Finally agreeing with its earlier judgment in P.V. Ramana Reddy Vs. Union of India, wherein also on 18th April, 2019 the apex court ruled that, “ the writ petitions are maintainable and despite our finding that the protection under Sections 41 and 41-A of Cr.P.C., may be available to persons said to have committed cognizable and non-bailable offences under this Act and despite our finding that there are incongruities within Section 69 and between Sections 69 and 132 of the CGST Act, 2017, we do not wish to grant relief to the petitioners against arrest, in view of the special circumstances which we have indicated above.”

Further in para 18 of judgment the Supreme Court referred the case titled Kartar Singh Vs. State of Punjab,(1994) 3 SCC 569, wherein it has mentioned the exception categorizes of cases where the writ court has duty to issue mandamus  directing an officer not to effect arrest under 226 of constitution of India and ruled that, “A writ of mandamus would lie only to 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 under the category of exceptional cases as indicated in Kartar Singh (supra). The writ court should also ensure whether by issuing the writ of mandamus, it would be preventing the competent authority or proper officer from performing any of their statutory functions. “ 

Whereas while deciding the Choodamani Case the apex Court failed to considered Gurbaksh Singh Sibbia Etc vs State Of Punjab wherein the supreme court ruled in that the filing of a First Information Report is not a condition precedent to the exercise of the power under Section 438. The imminence of a likely arrest founded on a reasonable belief can be shown to exist even if an F.I.R. is not yet filed as in case of CGST there is no FIR and in absence of the same persons apprehending arrest after summon issued U/s 70 of CGST Act for alleged tax evasion more than Rs 5crocre approach high courts through writ under article 226 of constitution of India. The Supreme Court in Choodamani Case and P.V. Ramana Reddy Vs. Union of India did not settled the equation raised through Choodamani Case by on the basis Sibbia that in case of CGST.