Anticipatory Bail under the CGST Act

On 17.07.2023, a Division Bench of the Supreme Court passed a curious judgment and final order in State of Gujarat v. Choodamani Parmeshwaran Iyer Etc. [SLP (Crl.) 4212-13 of 2019, decided on 17.07.2023 (Choodamani)]. The controversy arose out of petitions filed before the Gujarat High Court where persons challenged summons received by them under Section 70 of the Central Goods and Services Act 2017 [CGST Act]. The concerned persons and their firms were already facing a tax inquiry and feared that the notices might lead to their arrests. Accordingly, writ petitions were filed before the High Court, requesting for directions to the authorities to not take 'coercive action' pending the determination of the tax inquiry. 

The High Court, in an order dated 24.12.2018, agreed, being swayed by the plea that the concerned firms were willing to fully participate in the inquiry process which it was directed had to be concluded within eight weeks. This order was challenged by the State of Gujarat in 2019 itself, but besides getting a relaxation on the time limit for completing the tax inquiry, it did not manage to get any relief in respect of the protection against any coercive action. As a result, the inquiry apparently kept languishing, since the concerned persons did not respond to summonses knowing that they had protection from arrest. 

The Supreme Court finally decided the petitions in Choodamani and set aside the order in its entirety. It held that the High Court not have interfered with the statutory power of arrest conferred upon authorities by the CGST Act, drawing inspiration for this conclusion from earlier cases such as Union of India v. Padam Narain Aggarwal [(2008) 13 SCC 305]. The problematic nature of this view which deprives courts of striking a useful balance between the interests of the state and individual, and of the judgment in Padam Narain Aggarwal, have both been discussed recently in a post on the blog and I need not elaborate on it further.

What is of interest for this post is a separate observation in Choodamani. After referring to Padam Narain Aggarwal, it has held that the High Court's order was incorrect for a separate reason altogether: the High Court granted reliefs akin to anticipatory bail under Section 438 of the Criminal Procedure Code 1973 in the context of the CGST Act where such reliefs were impossible.

The paragraph in question merits repeating in full:

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 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 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. 

To conclude that anticipatory bail is not envisaged under the CGST Act merely because there is no First Information Report being registered is as incorrect as proposition as any. The legal position of there being no necessity for any FIR to be registered for considering anticipatory bail is as clear as day. In no uncertain terms did the Constitution Bench in Sibbia [(1980) 2 SCC 565] declare that the filing of an FIR is not a condition precedent to the exercise of powers under Section 438 of the Criminal Procedure Code. Benches of varying strengths have repeated in unison ever since that the question which courts have to consider while exercising their powers of granting anticipatory bail is not the existence of any FIR, but the reasonableness of the purported apprehension in the mind of an accused of an arrest being imminent in respect of accusations disclosing a non-bailable offence. 

Nothing in the CGST Act requires courts to depart from this settled view, and it is safe to conclude that the Supreme Court of India was aware of this while passing Choodamani. Therefore, it is arguably safe to assume that this sentence is one of the many errors that have crept in this paragraph inadvertently — such as the reference to Section 69 when obviously Section 70 of the CGST Act was in the mind of the Court, and referring to the Criminal Procedure Code of '1908' when it could have only meant to refer to the 1973 Code.

Choodamani cannot, therefore, stand for the blanket proposition that no anticipatory bail request can ever be preferred in the context of the CGST Act. At best, it can only bolster the statutory position, that the accused must demonstrate reasonable apprehensions in respect of non-bailable offences under the CGST Act (which also contains bailable offences, for which anticipatory bail cannot apply). A clarification would not hurt, of course, to ensure that such an obviously inadvertent error may not come to prejudice the interests of personal liberty in the future, as even the mistakes of the Supreme Court are often too difficult to ignore for the courts below.