Supreme Court Seeks Details on Notices and Arrests Under GST Act

The Supreme Court has directed the Centre to provide details regarding the issuance of notices and arrests conducted under the provisions of the Goods and Services Tax (GST) Act. Expressing concern over potential harassment and ambiguity in the law, the court emphasized the need to protect the liberty of citizens while ensuring compliance with tax regulations.

A special bench comprising Justices Sanjeev Khanna, MM Sundresh, and Bela M Trivedi is currently hearing a batch of 281 petitions challenging various provisions of the GST Act, Customs Act, and the Prevention of Money Laundering Act (PMLA). During the proceedings, the bench underscored the importance of interpreting the law to prevent the misuse of authority and avoid undue harassment of individuals.

The bench instructed the Centre to furnish data on notices issued and arrests made under the GST Act for alleged defaults ranging from Rs 1 crore to Rs 5 crore over the past three years. Senior advocate Siddharth Luthra, representing some petitioners, raised concerns about the misuse of powers by authorities under the GST regime, highlighting instances of harassment through notices without proper justification.

Luthra emphasized that arrest under the GST Act should follow an adjudication process to quantify the amount due from a taxpayer. He questioned whether the liberty of individuals can be restricted under section 69 of the Act before assessment and quantification of the alleged default.

In response, the Additional Solicitor General assured the court that data on notices and arrests under the central GST Act would be provided, although obtaining similar information from states might pose challenges. The bench stressed the importance of differentiating between cases of fraud and inadvertent lapses, emphasizing the need for fairness and adherence to principles of natural justice.

The Supreme Court also raised the issue of providing written grounds for arrest to individuals, suggesting parallels with the provisions of the Prevention of Money Laundering Act. Ensuring transparency and accountability in enforcement actions, the court underscored the significance of enabling arrested persons to challenge their detention based on clear and explicit grounds.

The matter is scheduled for further hearing on May 9, with the court expecting the Centre to address its queries comprehensively.

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