SC Limits Arrest Powers of Tax Officials

(Source – Indian Express, Section – Explained, Page – 12)

Topic: GS2 – Polity

Context

The Supreme Court restricted the arrest powers of tax officials under the Customs Act and CGST Act, ensuring they follow CrPC safeguards.

Analysis of the news:

SC’s Ruling on Arrest Powers

• In Radhika Agarwal v. Union of India, the Supreme Court ruled that officials under the Customs Act, 1962, and CGST Act, 2017, exercise powers similar to the police and must be bound by the same procedural safeguards as per the Code of Criminal Procedure, 1973 (CrPC).

• This decision aligns with the court’s broader attempt to restrict the unchecked arrest powers of enforcement agencies, as seen in the Arvind Kejriwal v. Directorate of Enforcement (2025) case concerning the Prevention of Money Laundering Act, 2002 (PMLA).

Ensuring Due Process in Arrests

The SC emphasized that while tax officials are not police officers, they possess investigative and arrest powers. Thus, their actions must follow CrPC safeguards, including:

• Presenting the accused before a magistrate within 24 hours.
• Informing family members or friends of the arrest.
• Allowing the presence of a lawyer during interrogation.

The ruling ensures that tax officials cannot misuse their powers beyond those granted to regular police officers.

Conditions for Arrest Under Customs & CGST Acts

Under Section 104(4) of the Customs Act, certain offences (e.g., evading duty over ₹50 lakh) are cognizable, allowing arrest without a warrant. The CGST Act, 2017, has similar provisions. The SC ruled that even in these cases, officials must:

1. Possess material evidence justifying the arrest.
2. Clearly record their “reasons to believe” in writing.
3. Provide the grounds for arrest to the accused to facilitate legal defense.

These conditions, initially set in Kejriwal v. ED, have now been extended to tax law enforcement.

Preventing Misuse of Arrest Powers

The SC acknowledged concerns about tax officials coercing businesses into paying overdue taxes under the threat of arrest. It ruled that such coercion is illegal and:

• Victims can seek refunds for tax payments made under duress.
• Disciplinary action will be taken against erring officials.
• The CBIC must issue guidelines to prevent arbitrary arrests.

Conclusion

• The ruling curbs arbitrary arrests under tax laws while maintaining officials’ powers.

• By enforcing CrPC safeguards, the SC aims to protect individuals from coercion and uphold the rule of law.

Practice Question: The Supreme Court has ruled that tax officials under the Customs Act and CGST Act must follow the same procedural safeguards as police officers under the CrPC while making arrests. Discuss the significance of this judgment in curbing the misuse of arrest powers and ensuring constitutional rights. (150 Words /10 marks)