AMIT BAJAJ ADVOCATE

The power of arrest under the Goods and Services Tax regime is one of the most sensitive and closely scrutinised aspects of GST enforcement. While Section 69 of the CGST Act, 2017 authorises the Commissioner to order arrest when he has “reasons to believe” that a person has committed offences under Section 132, that power must be exercised within the broader procedural framework governing criminal investigations in India. The GST Acts do not exist in isolation. They operate within the constitutional ecosystem of Article 21 and the procedural safeguards enshrined in the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS), which has now replaced the Code of Criminal Procedure.

A crucial provision of BNSS is Section 35, which governs the circumstances and manner in which an arrest may be made. For offences punishable with imprisonment of less than seven years or which may extend up to seven years, the officer cannot proceed to arrest unless the conditions under Section 35(1)(b)(ii) are satisfied. This requires the arresting authority to record reasons in writing demonstrating why arrest is necessary, such as preventing the accused from tampering with evidence or influencing witnesses. The statute does not permit the officer to use arrest as a matter of course. It mandates an independent application of mind and a reasoned justification supported by tangible material. Significantly, Section 69 of the CGST Act may confer the power to arrest, but the actual exercise of that power is restricted by Section 35 of BNSS. Thus, in GST cases involving offences punishable up to seven years, the authority must demonstrate compliance with Section 35(1)(b)(ii) of BNSS before depriving any person of liberty.

This legal position has been expressly recognised by the Gauhati High Court in Gaurav Aggarwal vs. Union of India [2025] 178 taxmann.com 237 (Gauhati). The Court held that a mere mechanical reproduction of the statutory language contained in Section 35(1)(b)(ii), such as stating that the accused may tamper with evidence or influence witnesses, is wholly insufficient. Unless the arresting officer has material on record to justify such apprehension and unless those reasons are specifically recorded in writing, the arrest violates Section 35 and becomes illegal. The High Court emphasised that the requirement of satisfaction under Section 35(1)(b)(ii) is not a mere formality but a statutory obligation, and its breach vitiates the arrest.

The Supreme Court’s landmark judgment in Arnesh Kumar vs. State of Bihar (2014) 8 SCC 273 provides the constitutional foundation for these safeguards. The Court held that arrest cannot be made on a mere ipse dixit of the police or investigating officer and insisted that arrest in offences punishable up to seven years must adhere strictly to the procedural requirements of Sections 41 and 41A of the CrPC, which now find place in Section 35 of BNSS. The Court warned that the power to arrest must not be confused with the need to arrest and directed Magistrates not to mechanically authorise remand without verifying compliance with statutory conditions. These principles are of universal application and govern arrests under GST law as well.

In addition, the Supreme Court in Radhika Agarwal v. Union of India (2025) reaffirmed that GST officers are bound by the procedural safeguards of the criminal process. The Court held that the investigation and arrest powers under GST cannot override the protections under Sections 41, 41A and their successor provisions in BNSS. As a result, before arresting any person under Section 69 of the CGST Act for offences punishable up to seven years, GST officers must issue a notice under Section 35(3) of BNSS, seek cooperation from the accused, and record detailed reasons showing the necessity of arrest in accordance with Section 35(1)(b)(ii).

When an arrest takes place without issuance of the mandatory notice under Section 35(3), without recording reasons under Section 35(1)(b)(ii), or on the basis of a mechanical and unreasoned formality, such arrest directly infringes the constitutional guarantees of Articles 21 and 22. Midnight arrests or sudden custodial actions for offences punishable up to five years, without statutory justification, become particularly vulnerable to judicial scrutiny. Courts across India have consistently held that personal liberty cannot be curtailed without strict adherence to statutory and constitutional protections.

Thus, the legal framework governing arrest under GST establishes a clear and stringent standard. Section 69 of the CGST Act grants the power, but Section 35 of BNSS restricts and conditions its use. The Supreme Court in Arnesh Kumar and the High Court in Gaurav Aggarwal have clarified that arrest is permissible only when supported by demonstrable necessity recorded in writing and grounded in material facts. Any arrest lacking such compliance is illegal, arbitrary and unconstitutional. As GST enforcement matures, the faithful application of these safeguards will be essential to ensure that the objective of tax administration does not overshadow the fundamental rights of the citizen and the rule of law.