Clarifying the Power of Arrest under the Customs and GST Regimes: A New Judicial Framework

I. Introduction

This decision in the matter of Radhika Agarwal v. Union of India (2025 INSC 272) arises from a series of writ petitions and connected matters pertaining to the legality, scope, and constitutionality of arrest powers granted under India’s Customs Act, 1962 (“Customs Act”) and Goods and Services Tax Acts (“GST Acts”). The Supreme Court of India, through an extensive and combined hearing of multiple petitions, addressed the interpretation and impact of substantive amendments to the Customs Act and the GST Acts. These amendments alter how arrests can be made for economic offences, focusing especially on the “reasons to believe” threshold, bail and non-bailable offences, and constitutional protections under Articles 21 and 22.

The case primarily challenged:

The constitutional validity of statutory provisions (especially Sections 69 and 70 of the GST Acts) permitting arrest for economic offences.
The interplay between the Code of Criminal Procedure, 1973 (“CrPC”) and special statutes like the Customs Act and GST Acts.
The extent of “subjective satisfaction” and “reasons to believe” that must be present before an official can validly arrest an individual.
Whether the earlier decision of the Supreme Court in Om Prakash v. Union of India continues to hold sway or stood impliedly modified by subsequent legislative amendments.

This commentary provides a structured review of the Supreme Court’s judgment, explaining the ruling’s background, legal reasoning, and likely implications for future proceedings and the protection of personal liberty in the realm of economic offences.

II. Summary of the Judgment

The Supreme Court has upheld the validity of the legislative framework that confers arrest powers on officers under the Customs Act (as amended in 2012, 2013, and 2019) and the GST Acts (enacted in 2017). These provisions, the Court clarified, do not violate constitutional provisions relating to personal liberty. The Court further emphasized that while arrest powers remain intact, they are fenced in by stringent conditions such as:

The necessity of forming a “reason to believe” based on solid material that a cognizable and non-bailable offence has been committed.
The duty to inform the arrested person of the grounds of arrest at the earliest (before producing them before the magistrate).
Documenting the reasons and the material upon which the authorised officer’s belief is formed.
Following the procedural safeguards under the CrPC regarding diaries, compliance with D.K. Basu guidelines, and ensuring fundamental rights under Articles 21 and 22.

In doing so, the Court dismissed the petitions that questioned the constitutionality of these arrest provisions, while providing a clarifying interpretation which reaffirms the individual’s fundamental right to be free from arbitrary arrest.

III. Analysis

A. Precedents Cited

The Court carried out a thorough review of previous Supreme Court rulings that shaped the power of arrest under economic statutes:

Om Prakash v. Union of India: Before legislative amendments, Om Prakash required excise and customs officers to secure magistrate warrants when arresting individuals for non-cognizable offences. The Court observed that the 2012 and subsequent amendments had effectively “accepted and codified” the principle that certain offences under the Customs Act are now cognizable and that officers may arrest without a warrant, but only if statutorily permitted and subject to threshold checks.
Directorate of Enforcement v. Deepak Mahajan: Addressed whether persons arrested under the Customs Act could be remanded to judicial custody and underlined the parallel applicability of the CrPC's safeguards (including Sections 167 and 41) to such arrests.
Union of India v. Ashok Kumar Sharma: Provided further clarity on special legislation (here, the Drugs and Cosmetics Act) and how police powers to investigate and arrest may or may not be available. The decision reiterated that when a special law designates offences as non-cognizable, arrests from the regular police must follow the CrPC’s procedures, unless the special law has specific enabling provisions.
Arvind Kejriwal v. Directorate of Enforcement: A very recent decision clarifying the interplay between personal liberty under Article 21 and the statutory rigours of Section 19 of the Prevention of Money Laundering Act (PMLA). The Court held that arrest for alleged money laundering must rest on a high threshold of “material in possession” and “reasons to believe” that the person is guilty. Justice Khanna's reasoning in that matter was largely adapted here for the Customs and GST Acts.
A.R. Antulay v. Ramdas Sriniwas Nayak: A Constitution Bench decision addressing the applicability of the CrPC to offences under other special statutes absent explicit contrary provisions. Reinforced that special laws must either expressly or impliedly exclude CrPC provisions or else those provisions would supplement the special act.

B. Legal Reasoning

The Court’s legal reasoning proceeds in four primary steps:

Legislative Acceptance of Om Prakash Ratio: The Court noted that Om Prakash (2011) had made particular offences under the Customs Act non-cognizable. However, post-Om Prakash amendments in 2012, 2013, and 2019 introduced specified categories of offences that became cognizable as well as treated them, in certain cases, as non-bailable. The legislature thereby effectively recognized Om Prakash but carved out exceptions for higher-value or severe offences (e.g., those exceeding a monetary threshold of evasion) and made them cognizable.
Safeguards: “Reason to Believe” and Grounds of Arrest: The statutory text in Section 104 of the Customs Act and Section 69 of the GST Acts demands that the authorized officer form a bona fide subjective belief, supported by “material,” that certain enumerated offences have been “committed” or that the person is “guilty” of them. This threshold is not mere suspicion; it is anchored to an objective factor which can be tested by courts in subsequent judicial review. The arrested person must also be promptly informed of the grounds, fulfilling both constitutional (Articles 21 and 22) and statutory dictates.
Constitutionality of Sections 69 & 70 of the GST Acts and Customs Act Amendments: The Court rejected arguments that Article 246-A, which confers legislative powers related to GST, does not authorize criminal provisions. Observing that incidental and ancillary powers to prevent tax evasion are integral to the scheme, the Court refused to read these provisions narrowly. Hence, the legislature has competence to criminalize failure to comply with GST laws via mandatory procedures.
Compliance with CrPC: While the Customs Act and GST Acts are special laws, both are supplemented by the CrPC to the extent there is no express exclusion. Hence, provisions on arrest, diaries, and prompt production before a magistrate co-exist to safeguard broader personal liberty. The Court stressed that maintaining diaries, granting legal representation, and following D.K. Basu-style guidelines (such as identifying the arresting officer, promptly notifying a family member, and ensuring medical checks) are critical to mitigate abuse.

C. Impact

The decision creates a clarified framework for how and when individuals can be arrested under Customs and GST legislation. Consequential impacts include:

Refined Threshold for Arrest: Only certain grave offences (particularly those meeting higher monetary thresholds under the Acts) will qualify as cognizable and non-bailable. Officers must articulate a well-founded rationale for the arrest.
Protection of Personal Liberty: The Court has reaffirmed that personal liberty and fundamental rights under Articles 21 and 22 cannot be set aside, even under economic legislation. If an officer arrests someone without following the mandatory “reasons to believe” standard, that arrest could be challenged and struck down.
Greater Accountability for Officers: With the Supreme Court mandating that grounds of arrest be reduced in writing, carefully documented, and furnished, officers face stricter scrutiny on whether their “subjective satisfaction” rests on legitimate evidence.
Limited Room for Coercive Recoveries: The Court disapproved any practice of forcing assessees to pay alleged tax liabilities through threat of arrest. It clarified that while voluntary payment of unassessed liabilities is permissible, forced coercion is constitutionally suspect.
Availability of Judicial Review: The broad principle is that individuals can approach courts to test the validity of an arrest, either via anticipatory bail or, if already arrested, to see whether statutory conditions for arrest were satisfied. The Court extended these protections to Customs and GST offences in line with the PMLA framework.
Scope for Subsequent Guidance: The Court has indicated the possibility that further instructions, guidelines, or clarificatory circulars from the Central Board of Indirect Taxes and Customs (“CBIC”) can be issued to streamline processes and prevent misuse of arrest powers.

IV. Complex Concepts Simplified

Cognizable vs. Non-Cognizable Offences:
• Cognizable offences let officials arrest without a warrant (e.g., serious economic crimes above certain thresholds).
• Non-cognizable offences require either a magistrate’s warrant or special authorization to arrest, generally for lower-value offences.
Bailable vs. Non-Bailable Offences:
• Bailable means the arrested individual has the right to be released on bail upon fulfilling conditions.
• Non-bailable means release is not automatic, and can only be granted at the discretion of the Magistrate or appropriate court.
“Reasons to Believe” vs. “Mere Suspicion”:
“Reasons to believe” requires an officer to form a bona fide, written opinion grounded in evidence that a person has committed an offence. It is a more stringent standard than unfounded suspicion and ensures the arrest is not carried out arbitrarily.
Article 246-A and Criminal Provisions:
The Constitution was amended to introduce Article 246-A, granting the Parliament and States powers to legislate on GST. This also implies the power to penalize violations with criminal sanctions. The Supreme Court has held that such power is incidental and necessary to ensuring tax compliance.
Judicial Review of Arrests:
Courts have the power to review an arrest to check if the legal requirements—such as the presence of “reasons to believe” and compliance with procedural safeguards—were met. However, the judiciary will not conduct a detailed fact-finding inquiry akin to a trial at this stage.

V. Conclusion

This ruling establishes a refined balance: it grants and maintains robust arrest powers for Customs and GST officers (enabling effective enforcement against tax evasion and related economic offences), but reaffirms that these powers are to be strictly policed by constitutional safeguards. The Supreme Court has made it clear that:

The relevant statutory provisions in the Customs Act and GST Acts are constitutional and remain valid.
No arrest can be effected without a demonstrable “reasons to believe” standard, documented in writing.
A person must be informed promptly of the grounds for arrest, fulfilling Articles 21 and 22 of the Constitution.
The CrPC’s protective measures (including diaries, medical examination, legal counsel) remain in force to ensure personal liberty is not trampled.
Coercive means to extract tax under cover of arrest or other threats are forbidden, preserving the cardinal principles of due process.

Ultimately, the decision underscores that a powerful enforcement apparatus against economic crimes need not undermine individual freedoms if the statutory provisions and constitutional mandates are scrupulously followed. The Court’s express mention of D.K. Basu-type protocols, “reasons to believe,” and “material in possession” fosters transparency and accountability in the arrest process.

For future cases under the Customs Act, GST Acts, and other allied economic statutes, this ruling solidifies a robust blueprint for how enforcement agencies can uphold compliance without sacrificing constitutional guarantees.

End of Commentary.