Pramod Agarwal vs. Union Of INDIA Through Its Secretary Department Of Revenue Ministry Of Finance

Held

The Court held that the Senior Intelligence Officer, who issues summons under Section 70 of the Central Goods and Services Tax Act, 2017, does not have the inherent power to arrest a person. The power to arrest is vested with the Commissioner under Section 69 of the CGST Act, who must have 'reasons to believe' that a person has committed an offence and must pass an order authorizing an officer of central tax to make the arrest. Therefore, the Senior Intelligence Officer cannot arrest an assessee before the Commissioner records his satisfaction on 'reasons to believe' and issues an authorization order. The Court noted that the respondents' stand in their counter-affidavit also acknowledged that arrest is made only when there are "reasons to believe" after proper investigation. Consequently, the Court directed the petitioners to appear before the Senior Intelligence Officer as and when called, but explicitly stated that they shall not be arrested on the first day of their appearance. The Court also emphasized that the Senior Intelligence Officer must act fairly.

Facts

The petitioners, Pramod Agarwal, Pradeep Agarwal, Pankaj Agarwal, Suman Agarwal, and Ravi Agarwal, filed writ petitions before the Jharkhand High Court apprehending arrest. They had received summons under Section 70 of the Central Goods and Services Tax Act, 2017, issued by the Senior Intelligence Officer of the Directorate General of Goods & Services Tax Intelligence. The petitioners had not appeared before the officer due to their apprehension of arrest. The respondents, including the Union of India and the Directorate General of Goods & Services Tax Intelligence, contended that shell companies were claiming illegal Input Tax Credit through fake invoices, and the petitioners' testimony was necessary to verify the genuineness of transactions, which allegedly involved fake transactions to the tune of Rs. 400 crores. The respondents asserted that arrest power under Section 69 of the CGST Act is exercised only when there are "reasons to believe" after proper investigation.

Key Issues

1. Whether the Senior Intelligence Officer, who issues summons under Section 70 of the Central Goods and Services Tax Act, 2017, has the jurisdiction to arrest a person without an order from the Commissioner authorizing such arrest based on 'reasons to believe' as stipulated in Section 69 of the CGST Act? Petitioner's Contention: The petitioners argued that the Senior Intelligence Officer lacks the jurisdiction to arrest them on the first date of their appearance pursuant to a summons issued under Section 70 of the CGST Act. They contended that such an arrest would be in contravention of Section 41-A(3) of the Code of Criminal Procedure and various Supreme Court pronouncements. They relied on the principle that arrest powers are vested with specific authorities and must be exercised in accordance with the law. Revenue's Contention: The respondents argued that Section 69 of the CGST Act mandates the competent authority (Commissioner) to have "reasons to believe" based on investigation before ordering an arrest. They stated that the Directorate General of Goods & Services Tax Intelligence is an investigating wing and that while many persons are summoned under Section 70 for statements, only those against whom there are "reasons to believe" after proper investigation are arrested. They cited observations from the Calcutta High Court in similar cases regarding the standard of "reasonable belief" for arrest.