THE STATE OF GUJARAT ETC.versusCHOODAMANI PARMESHWARAN IYER & ANR. ETC.

                        [2023] 8 S.C.R. 1139                              1139


                 THE STATE OF GUJARAT ETC.                                A
                                  v.
    CHOODAMANI PARMESHWARAN IYER & ANR. ETC.
               (Criminal Appeal Nos. 1963-64 of 2023)
                           JULY 17, 2023                                  B
                  [J. B. PARDIWALA AND
              PRASHANT KUMAR MISHRA, JJ.]
       Central Goods and Services Tax Act, 2017 – s.69 – Summons
issued under – Invocation of s.438, CrPC by the person summoned
– Impermissibility of – Held: If any person is summoned u/s.69,           C
2017 Act for the purpose of recording of his statement, the provision
of s.438, Cr.PC cannot be invoked – The only way a person
summoned can seek protection against the pre-trial arrest is to invoke
the jurisdiction of the High Court u/Art.226 – This is exactly what
the respondents did in the present case – By filing criminal              D
applications u/Art. 226 before the High Court, the respondents
sought direction to the appellant not to arrest them in exercise of
the power conferred by s.69(1), 2017 Act – This, in essence, was
prayer for anticipatory bail – However, at the stage of summons,
the person summoned cannot invoke s.438, CrPC – Power to arrest
a person by an empowered authority under the GST Act is statutory         E
in character and ordinarily the Writ Court should not interfere with
exercise of such power – Impugned order directing the concerned
authority to complete the adjudicatory process within 8 weeks and
give two more weeks to the respondents for taking necessary steps
if there was a need for any apprehension and if they were not ready       F
to fulfill their obligation, set aside – However, one more opportunity
given to both the respondents to appear before the authorities for
recording their statements – On their failure to appear, authority to
proceed in accordance with law – Code of Criminal Procedure,
1973 – s.438 – Constitution of India – Article 226 – Central Excise
Act, 1944 – s.145 – Finance Act, 1994 – s.83.                             G
       Constitution of India – Article 226 – Application for pre-arrest
protection under – Held: There is no bar for the High Court to
entertain an application for pre-arrest protection u/Art.226 however,
such power should be exercised sparingly – There is a fundamental
distinction between a petition for anticipatory bail and the writ of      H
                                1139
1140            SUPREME COURT REPORTS                          [2023] 8 S.C.R.


 A     mandamus directing an officer not to effect arrest – A writ of
       mandamus would lie only to compel the performance of the statutory
       or other duties – No writ of mandamus would lie to prevent an officer
       from performing his statutory function – When a writ application is
       filed before the High Court u/Art.226 , the writ court owes a duty to
       examine the fact of the case and ascertain whether the case of the
 B
       writ applicant falls under the category of exceptional cases as
       indicated in Kartar Singh case.
             Kartar Singh vs. State of Punjab (1994) 3 SCC 569 :
             [1994] 2 SCR 375 – followed.
 C           Union of India vs. Padam Narain Aggarwal and Ors.
             (2008) 13 SCC 305 : [2008] 14 SCR 179 – relied on.
             P.V. Ramana Reddy vs. Union of India (2021) 2 SCC
             784 – referred to.
                               Case Law Reference
 D
       [2008] 14 SCR 179                  relied on                  Para 13
       [1994] 2 SCR 375                   followed                   Para 17
       (2021) 2 SCC 784                   referred to                Para 18
             CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
 E     Nos. 1963-1964 of 2023.
             From the Judgment and Order dated 24.12.2018 of the High Court
       of Gujarat at Ahmedabad in SCRA Nos. 11010 and 11076 of 2018.
              Kanu Agarwal, Ms. Deepanwita Priyanka, Madhav Sinhal, Advs.
 F     for the Appellants.
             K. M. Nataraj, ASG, R. P. Gupta, Mukesh Kumar Maroria,
       Prashant Singh I, V. Balaji, Ms. Manjula Gupta, Shailesh Madiyal, Sharath
       Nambiar, Advs. for the Respondents.
             The following Order of the Court was passed:
 G                                     ORDER
             1. Leave granted.
              2. The learned counsel appearing for the private respondents
       (Assessees) submitted that he is not in a position to assist this Court as
 H     his clients are not in touch with him past almost six months.
       THE STATE OF GUJARAT ETC. v. CHOODAMANI                                 1141
           PARMESHWARAN IYER & ANR. ETC.

      3. In view of the aforesaid, we had no benefit of any assistance         A
from the learned counsel appearing for the private respondents.
      4. We have heard Mr. Kanu Agrawal, the learned counsel
appearing for the State of Gujarat.
       5. It appears from the materials on record that a summons came
to be issued dated 31.10.2018 to the respondents under Section 145 of          B
the Central Excise Act, 1944 (for short “the Act 1944”) as made applicable
to the service tax vide Section 83 of the Finance Act, 1994 and Section
70 of the Central Goods and Service Tax Act, 2017 (for short “the CGST
Act 2017”) calling upon them to remain present for the purpose of
interrogation in connection with an inquiry against one M/s. Iyer Enterprise   C
Mundra Kutch. The authority concerned wants to interrogate the
respondents in regard to the alleged evasion of Goods and Service Tax
Liability/Contravention of the Provision of the Finance Act 1994 and
CGST Act 2017.
       6. Upon receipt of the summons, the respondents apprehended
                                                                               D
arrest at the end of the concerned officials of the Department.
      7. In such circumstances as referred to above, two writ
applications came to be filed before the High Court being Special Criminal
Application Nos. 11010 of 2018 and 11076 of 2018 resply. Both the writ
applications came to be disposed by a common order dated 24.12.2018.
                                                                               E
The relevant part of the impugned order reads thus:-
      “7. Considering the voluntary nature of pleadings where the
      petitioners are desirous of getting themselves assisted by the
      adjudicatory process, let them represent their case before the
      concerned authority. The authority concerned shall complete
      the same in 8 weeks’ time and if there is a need for any                 F
      apprehension after once the adjudicatory process is
      completed, if they are not ready to fulfill their obligation, they
      may be given an opportunity of two more weeks for taking
      necessary steps. Petitioners shall appear on or before 11/01/
      2019 before the concerned Police Station.                                G
         In view of the above, the present applications stand
      disposed of. Direct service is permitted.”
      8. The State of Gujarat being dissatisfied with the aforesaid order
passed by the High Court is here before this Court with the present
appeal.                                                                        H
1142             SUPREME COURT REPORTS                           [2023] 8 S.C.R.


 A            9. For the first time, this Court took up the matter on 29.04.2019
       and issued notice. While issuing notice, this Court granted relief staying
       the directions issued by the High Court that the adjudicatory process
       must be completed within a period of eight weeks.
              10. The learned counsel appearing for the State of Gujarat pointed
 B     out that as many as 14 summons have been issued to one of the
       respondents. Only once, one of the respondents appeared for the purpose
       of interrogation. Thereafter, none of the respondents appeared before
       the authority. It’s been now 5 years that the inquiry is still pending. He
       further submitted that it is only after the respondents are interrogated,
       that the department will be able to ascertain whether there is any evasion
 C     or not and on the basis of which the future course of action like filing of
       complaint etc., would be decided.
              11. We are not convinced with the manner in which the High
       Court has disposed of both the writ applications filed by the respondents.
       It was expected of the respondents to honour the summons and appear
 D     before the authority for the purpose of interrogation.
               12. It is well-settled position of law that power to arrest a person
       by an empowered authority under the GST Act and could be termed as
       statutory in character and ordinarily the writ court should not interfere
       with exercise of such power. We say so because such power of arrest
 E     can be exercised only in those cases where the Commissioner or his
       delegatee has reasons to believe that the person has committed any
       offence specified in Clause (a) or Clause (b) or Clause(c) or Clause (d)
       of sub-Section (1) of Section 132 which is punishable under clause (i) or
       (ii) or sub-section (1) or sub-Section (2) of the said Section.
 F            13. As observed by this Court in Union of India Vs. Padam
       Narain Aggarwal and Ors. (2008) 13 SCC 305, (which was in context
       with the powers of Custom Officers to arrest under the Customs Act)
       such statutory powers must be exercised on objective facts of commission
       of an offence enumerated and the officer concerned must have reason
 G     to believe that a person sought to be arrested has been guilty of such an
       offence.
              14. This Court in Padam Narain Aggarwal (supra) made it very
       clear that ordinarily the Court should not impose any condition before
       effecting arrest. If any conditions are imposed before effecting arrest
       for instance giving prior intimation to the person concerned etc., the
 H
       THE STATE OF GUJARAT ETC. v. CHOODAMANI                             1143
           PARMESHWARAN IYER & ANR. ETC.

statutory provisions would be rendered ineffective, nugatory and           A
meaningless.
      15. What is important are the observations made in paragraphs
44 and 45 resply of the decision of this Court in the case of Padam
Narain Aggarwal (supra), which read thus:-
      “44. In the case on hand, the respondents were only summoned         B
      under Section 108 of the Act for recording of their statements.
      The High Court was conscious and mindful of that fact. It,
      therefore, held that the applications for anticipatory bail, in
      the circumstances, were premature. They were, accordingly,
      disposed of by directing the respondents to appear before            C
      the Customs Authorities. The Court, however, did not stop
      there. It stated that even if the Customs Authorities find any
      non-bailable offence against the applicants (the respondents
      herein), they shall not be arrested without ten days’ prior notice
      to them.
                                                                           D
      45. In our judgment, on the facts and in the circumstances of
      the present case, neither of the above directions can be said
      to be legal, valid or in consonance with law. Firstly, the order
      passed by the High Court is a blanket one as held by the
      Constitution Bench of this Court in Gurbaksh Singh and seeks
      to grant protection to the respondents in respect of any non-        E
      bailable offence. Secondly, it illegally obstructs, interferes
      and curtails the authority of the Customs Officers from
      exercising statutory power of arrest of a person said to have
      committed a non-bailable offence by imposing a condition of
      giving ten days’ prior notice, a condition not warranted by          F
      law. The order passed by the High Court to the extent of
      directions issued to the Customs Authorities is, therefore, liable
      to be set aside and is hereby set aside.” (Emphasis supplied)
        16. Thus, the position of law is that if any person is summoned
under Section 69 of the CGST Act, 2017 for the purpose of recording of     G
his statement, the provisions of Section 438 of Criminal Procedure Code,
1908 cannot be invoked. We say so as no First Information Report gets
registered before the power of arrest under Section 69(1) of the CGST
Act, 2017 is invoked and in such circumstances, the person summoned
cannot invoke Section 438 of the Code of Criminal Procedure for
                                                                           H
1144             SUPREME COURT REPORTS                           [2023] 8 S.C.R.


 A     anticipatory bail. The only way a person summoned can seek protection
       against the pre-trial arrest is to invoke the jurisdiction of the High Court
       under Article 226 of the Constitution of India. Undoubtedly, this is exactly
       what the respondents did in the present case. What the respondents
       sought by filing two criminal applications under Article 226 of the
       Constitution before the High Court was the direction to the appellant
 B
       herein not to arrest them in exercise of the power conferred by Section
       69(1) of the GST Act, 2017. This, in essence, is key to prayer for
       anticipatory bail. However, as we have explained aforesaid, at the stage
       of summons, the person summoned cannot invoke Section 438 of the
       Code of Criminal Procedure.
 C             17. This Court in Kartar Singh Vs. State of Punjab, (1994) 3
       SCC 569, has, in no uncertain terms, observed that a claim for pre-
       arrest protection is neither a statutory right nor a right guaranteed under
       Articles 14, 19 and 21 resply of the Constitution of India. Although the
       Constitution Bench of this Court held that there is no bar for the High
 D     Court to entertain an application for pre-arrest protection under Article
       226 of the Constitution of India, yet it was held that such power should
       be exercised sparingly. There is a fundamental distinction between a
       petition for anticipatory bail and the writ of mandamus directing an officer
       not to effect arrest. A writ of mandamus would lie only to compel the
       performance of the statutory or other duties. No writ of mandamus would
 E     lie to prevent an officer from performing his statutory function. When a
       writ application is filed before the High Court under Article 226 of the
       Constitution, the writ court owes a duty to examine the fact of the case
       and ascertain whether the case of the writ applicant falls under the
       category of exceptional cases as indicated in Kartar Singh (supra).
 F     The writ court should also ensure whether by issuing the writ of
       mandamus, it would be preventing the competent authority or proper
       officer from performing any of their statutory functions.
              18. In the aforesaid context, we may refer to a Division Bench
       decision of the High Court of Telangana which ultimately came to be
 G     affirmed by this Court in the Special Leave Petition (Crl.) No. 4430 of
       2019 order dated 27.05.2019. We are referring to a decision in the case
       of P.V. Ramana Reddy Vs. Union of India Writ Petition Nos. 4764 of
       2019 and allied petitions decided on 18th April, 2019. There are few
       important observations made by the High Court and we are in complete
       agreement with the said observations. The observations of the High
 H
       THE STATE OF GUJARAT ETC. v. CHOODAMANI                                1145
           PARMESHWARAN IYER & ANR. ETC.

Court fell in the context of certain incongruities noticed in Section 69(1)   A
and Section 132 resply of the CGST Act, 2017. We quote the relevant
observations hereunder:-
      “34. If CGST Act, 2017 is a complete code in itself in respect
      of (1) the acts that constitute offences, (2) the procedure
      for prosecution and (3) the punishment upon conviction, then            B
      the power of Commissioner, who is not a Police Officer, to
      order the arrest of a person should also emanate from
      prescription contained in the Act itself. Section 69(1) of CGST
      Act, 2017 very clearly delineates the power of the
      Commissioner to order the arrest of a person whom he has
      reasons to believe, to have committed an offence which is               C
      cognizable and non-bailable. Therefore, we do not know how
      a person whom the Commissioner believes to have committed
      an offence specified in clauses (f) to (l) of sub-Section (1) of
      Section 132 of CGST Act, which are non-cognizable and
      bailable, could be arrested at all, since Section 69(1) of the          D
      CGST Act, 2017 does not confer power of arrest in such cases.
      35. The fact that the power of arrest under Section 69(1) of
      the CGST Act, 2017 is confined only to cognizable and non-
      bailable offences, is also fortified by sub-Section (2) of Section
      69 which obliges the Officer, who carries out the arrest to             E
      inform the arrested person of the grounds of arrest and to
      produce him before a Magistrate within 24 hours. The duty
      enjoined upon the Officer carrying out the arrest, to inform
      the arrested person of the grounds of arrest and to produce
      him before a Magistrate within 24 hours, is co-relatable under
      sub-Section (2) of Section 69 of the CGST Act, 2017 to Section          F
      132(5) of the CGST Act, 2017 that deals only with cognizable
      and non-bailable offences.
      36. But, interestingly, clauses (a) and (b) of sub-Section (3)
      of Section 69 of the CGST Act, 2017 deal in entirety only with
      cases of persons arrested for the offences which are indicated          G
      as non-cognizable and bailable. The phrase “subject to the
      provisions of the Code of Criminal Procedure” is used only
      in sub-Section (3), which deals in entirety only with the
      procedure to be followed after the arrest of a person who is
      believed to have committed a non-cognizable and bailable                H
1146     SUPREME COURT REPORTS                        [2023] 8 S.C.R.


 A     offence. While clause (a) of sub-Section (3) gives two options
       to the Officer carrying out the arrest, namely, to grant bail by
       himself or to forward the arrested person to the custody of
       the Magistrate, clause (b) confers the powers of an Officer
       incharge of a police station, upon the Deputy Commissioner
       or the Assistant Commissioner (GST), for the purpose of
 B
       releasing an arrested person on bail, in the case of non-
       cognizable and bailable offences.
       37. In other words, even though Section 69(1) of the CGST
       Act, 2017 does not confer any power upon the Commissioner
       to order the arrest of a person, who has committed an offence
 C     which is non-cognizable and bailable, sub-Section (3) of
       Section 69 of the CGST Act, 2017 deals with the grant of
       bail, remand to custody and the procedure for grant of bail
       to a person accused of the commission of non-cognizable and
       bailable offences. Thus, there is some incongruity between
 D     sub-Sections (1) and (3) of Section 69 read with section 132
       of the CGST Act, 2017.
       38. Another difficulty with Section 69 of the CGST Act, 2017
       is that sub-Sections (1) and (2) of Section 69 which deal with
       the power of arrest and production before the Magistrate in
 E     the case of cognizable and non-bailable offences, do not use
       the phrase “subject to the provisions of Cr.P.C.” This phrase
       is used only in sub-Section (3) of Section 69 in relation to the
       arrest and grant of bail for offences which are non-cognizable
       and bailable, though no power of arrest is expressly conferred
       in relation to non-cognizable and bailable offences.
 F
       39. It is important to note that under sub-Section (4) of
       Section 132 of the CGST Act, 2017, all offences under the
       Act except those under clauses (a) to (d) of Section 132 (1),
       are made non-cognizable and bailable, notwithstanding
       anything contained in Cr.P.C. In addition, Section 67(10)
 G     of the CGST Act, 2017 makes the provisions of Cr.P.C.
       relating to search and seizure, apply to searches and seizures
       under this Act, subject to the modification that the word
       “Commissioner” shall substitute the word “Magistrate”
       appearing in Section 165 (5) of Cr.P.C., in its application to
 H     CGST Act, 2017.
THE STATE OF GUJARAT ETC. v. CHOODAMANI                             1147
    PARMESHWARAN IYER & ANR. ETC.

40. Therefore, (1) in the light of the fact that Section 69(1) of   A
the CGST Act, 2017 authorizes the arrest only of persons who
are believed to have committed cognizable and non-bailable
offences, but Section 69(3) of the CGST Act, 2017 deals with
the grant of bail and the procedure for grant of bail even to
persons who are arrested in connection with non-cognizable
                                                                    B
and bailable offences and (2) in the light of the fact that the
Commissioner of GST is conferred with the powers of search
and seizure under Section 67(10) of the CGST Act, 2017, in
the same manner as provided in Section 165 of the Cr.P.C.,
1973, the contention of the Additional Solicitor General that
the petitioners cannot take umbrage under Sections 41 and           C
41A of Cr.P.C. may not be correct.
41. Though for the purpose of summoning of witnesses and
for summoning the production of documents, the Proper
Officer holding the enquiry under the CGST Act, 2017 is
treated like a Civil Court, there are four other places in the      D
Act, where a reference is made, directly or indirectly, to the
Cr.P.C. They are (1) the reference to Cr.P.C. in relation to
search and seizure under Section 67(10) of CGST Act, 2017,
(2) the reference to Cr.P.C. under sub-Section (3) of Section
69 in relation to the grant of bail for a person arrested in
connection to a non-cognizable and bailable offence, (3) the        E
reference to Cr.P.C. in Section 132 (4) while making all
offences under the CGST Act, 2017 except those specified in
clauses (a) to (d) of Section 132 (1) of CGST Act, 2017 as
non-cognizable and bailable and (4) the reference to Sections
193 and 228 of IPC in Section 70(2) of the CGST Act, 2017.          F
Therefore, the contention of learned Additional Solicitor
General that in view of Section 69(3) of the CGST Act, 2017,
the petitioners cannot fall back upon the limited protection
against arrest, found in Sections 41 and 41A of Cr.P.C., may
not be correct. As pointed out earlier, Section 41-A was
inserted in Cr.P.C. by Section 6 of the Code of Criminal            G
Procedure (Amendment) Act, 2008. Under sub-Section (3) of
Section 41A Cr.P.C., a person who complies with a notice for
appearance and who continues to comply with the notice for
appearance before the Summoning Officer, shall not be
arrested. In fact, the duty imposed upon a Police                   H
1148              SUPREME COURT REPORTS                        [2023] 8 S.C.R.


 A            Officer under Section 41A(1) Cr.P.C., to summon a person
              for enquiry in relation to a cognizable offence, is what is
              substantially ingrained in Section 70(1) of the CGST Act.
              Though Section 69(1) which confers powers upon the
              Commissioner to order the arrest of a person does not contain
              the safeguards that are incorporated in Section 41 and 41A
 B
              of Cr.P.C., we think Section 70(1) of the CGST Act takes care
              of the contingency.
              42. In any case, the moment the Commissioner has reasons to
              believe that a person has committed a cognizable and non-
              bailable offence warranting his arrest, then we think that the
 C            safeguards before arresting a person, as provided in Sections
              41 and 41A of Cr.P.C., may have to be kept in mind.
              43. But, it may be remembered that Section 41A(3) of Cr.P.C.,
              does not provide an absolute irrevocable guarantee against
              arrest. Despite the compliance with the notices of appearance,
 D            a Police Officer himself is entitled under Section 41A(3)
              Cr.P.C., for reasons to be recorded, arrest a person. At this
              stage, we may notice the difference in language between
              Section 41A(3) of Cr.P.C. and 69(1) of CGST Act, 2017. Under
              Section 41A(3) of Cr.P.C., “reasons are to be recorded”, once
 E            the Police Officer is of the opinion that the persons concerned
              ought to be arrested. In contrast, Section 69(1) uses the phrase
              “reasons to believe”. There is a vast difference between
              “reasons to be recorded” and “reasons to believe.”
              19. We are still inclined to give one more opportunity to both the
 F     respondents to appear before the authorities for the purpose of recording
       of their statements. If the respondents fail to appear, then it shall be
       open for the authority concerned to proceed further in accordance with
       law.
           20. In view of the aforesaid, both the appeals stand allowed. The
 G     common order dated 24.12.2018 passed by the High Court is set aside.
              21. Pending application(s), if any, stand(s) disposed of.

       Divya Pandey                                                Appeals allowed.
       (Assisted by : Shevali Monga, LCRA)

 H