Introduction
In a recent ruling, Bharat Bhushan v. Director General of GST Intelligence[i], the Hon’ble Supreme Court of India addressed the issue of whether a person summoned under s. 69 of the Central Goods and Services Tax Act, 2017 (‘CGST’) can invoke s. 438 of the Code of Criminal Procedure, 1973 (‘CrPC’) for anticipatory bail. The Supreme Court was considering a challenge to the decision of the Hon’ble High Court of Bombay, which had cancelled the anticipatory bail granted to the Petitioner in a case involving GST evasion.
Brief Facts
The Director General of Goods and Service Tax Intelligence (‘Respondent Authority’) summoned the Petitioner under s. 69 of the CGST on 29.03.2022 and 18.04.2022 to inquire into the Petitioner’s alleged involvement in running fake firms and generating fake e-way bills to evade GST.
During the inquiry, the Petitioner anticipated arrest and filed an application for anticipatory bail under s. 438 of the CrPC before the Sessions Court. The Sessions Court granted anticipatory bail to the Petitioner, allegedly without adequately considering the seriousness of the offence or the need for custodial interrogation.
The Respondent Authority challenged this decision before the High Court, arguing that the anticipatory bail was not maintainable since the Supreme Court in State of Gujarat v. Choodamani Parmeshwaran Iyer[ii] held that s. 438 of the CrPC cannot be invoked when a person is summoned under s. 69 of the CGST Act.
The High Court, relying on the aforementioned Supreme Court’s judgment, found that anticipatory bail was granted contrary to the law and thus cancelled it.
Aggrieved from the judgment rendered by the High Court, the Petitioner preferred a special leave petition (SLP) before the Supreme Court.
Held
The Supreme Court upheld the High Court’s decision, stating that the anticipatory bail granted by the Sessions Court had rightly been cancelled.
The Supreme Court reiterated that, as per the precedent set in State of Gujarat v. Choodamani Parmeshwaran Iyer (Supra), s. 438 of the CrPC cannot be invoked when a person is summoned under s. 69 of the CGST Act for recording their statement.
However, the Supreme Court granted the Petitioner liberty to invoke the writ jurisdiction under a. 226 of the Constitution of India (‘Constitution’). It provided protection from arrest for six weeks, allowing the Petitioner time to seek alternative legal remedies.
Our Analysis
The judgment rendered by the Supreme Court in this case was grounded in the precedent established in the State of Gujarat v. Choodamani Parmeshwaran Iyer (Supra). In that case, the Supreme Court held that a person summoned under s. 69 of the CGST Act cannot invoke s. 438 of the CrPC for anticipatory bail. The reasoning was that since no first information report (‘FIR’) is registered before the power of arrest is invoked under s. 69(1) of the CGST Act, the person cannot seek anticipatory bail. This interpretation reflects a strict adherence to statutory provisions, recognising that granting bail is a statutory right rather than a fundamental one. The Supreme Court emphasised that allowing anticipatory bail in such situations would undermine the purpose of investigations under the CGST Act. Moreover, since s. 69 of the CGST Act does not explicitly apply the CrPC provisions, the statutory nature of s. 69 should not be overridden by judicial intervention.
The Supreme Court’s decision to uphold the High Court’s ruling highlights a strict interpretation of the legal framework surrounding anticipatory bail in the context of the CGST Act. The judgment clarifies that anticipatory bail under s. 438 of the CrPC is not a universally applicable remedy, especially in cases involving economic offences where no FIR has been filed and the individual is summoned under statutory provisions like s. 69 of the CGST Act. This interpretation aligns with the principle that the law must balance individual rights with the need for effective law enforcement, particularly in significant financial misconduct cases. While the decision reinforces procedural rigour, it also raises concerns about protecting individual liberties, especially against arbitrary arrests in tax-related cases. By granting temporary protection and allowing the Petitioner to seek recourse under a. 226 of the Constitution, the Supreme Court sought to balance these competing interests, making this ruling a crucial reference for future cases involving the intersection of anticipatory bail and statutory summons issued in cases involving economic offences and tax laws.
End Notes
[i] [2024] 164 taxmann.com 435 (SC).
[ii] [2023] 152 taxmann.com 522 (SC).
Authored by Kushagra Gahlot, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinions.
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