The Karnataka High Court has held that a person facing a genuine and reasonable apprehension of arrest in connection with proceedings under the Central Goods and Services Tax Act, 2017 (CGST Act) and the Karnataka Goods and Services Tax Act, 2017 (KGST Act) can seek appropriate protection from the competent court, even without registration of an FIR.
The bench of Justice B M Shyam Prasad has relied upon the Supreme Court’s ruling in Radhika Agarwal v. Union of India, which clarified the availability of anticipatory bail where the facts establish a reasonable basis for apprehending arrest.
The petitioners had been served with show cause notices under Sections 73 and 74A of the CGST/KGST Acts. According to their case, the notices were followed by search proceedings and summonses requiring them to produce documents before the authorities. They claimed that they had complied with the summonses and furnished the documents sought by the department.
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The petitioners sought a writ directing the authorities to give them prior intimation of any proposed arrest under Section 132. Their counsel particularly sought a seven-day prior notice, relying upon decisions of the Delhi High Court.
The petitioners contended that their apprehension of arrest was not merely speculative. They pointed to several circumstances arising during the GST proceedings, including the issuance of seven show cause notices, searches, summonses and repeated requests for production of documents. They also stated that documents furnished pursuant to the summonses were not acknowledged by the concerned officer.
The petitioners further submitted that they had been advised to reverse certain Input Tax Credit (ITC), which they claimed to have bona fide accepted. Despite furnishing the requested documents, they alleged that the authorities again issued summonses seeking the same set of documents.
According to the petitioners, the officer allegedly indicated that they could be arrested if they failed to reverse the ITC that the officer was insisting upon. They argued that these circumstances provided a concrete basis for their apprehension of arrest.
The petition therefore raised an important legal issue: whether a taxpayer facing apprehension of arrest in GST proceedings is entitled to a prior notice of arrest and, in the absence of such notice, whether the taxpayer can seek anticipatory protection from the court even before an FIR is registered.
The GST department opposed the petitioners’ request for a mandatory prior notice. Aditya Vikram Bhat, Additional Government Advocate appearing for the State, supported by the Central tax department’s standing counsel, relied upon the Supreme Court’s judgment in Radhika Agarwal v. Union of India and Others.
The respondents submitted that the Supreme Court had clarified that registration of an FIR is not an indispensable prerequisite for a person to seek anticipatory bail. According to the respondents, where the facts demonstrate a reasonable basis for apprehending arrest, the person can approach the competent court for protection.
The State further argued that this principle applies even when the apprehended arrest arises from proceedings under the CGST/KGST Acts, and that contrary decisions in the GST context could no longer be treated as binding precedents.
The Karnataka High Court reproduced the relevant observations from the Supreme Court’s decision in Radhika Agarwal. The Supreme Court had emphasized that the power to grant anticipatory bail arises when there is an apprehension of arrest and is connected with the protection of life and personal liberty under Article 21 of the Constitution.
The Supreme Court had also clarified that an application for anticipatory bail need not necessarily be filed only after registration of an FIR. What is required is that the apprehension should be based on clear facts rather than vague or general allegations and that there should be a reasonable basis for apprehending arrest.
The Karnataka High Court noted that the Supreme Court’s ruling had specifically addressed the GST context. The Supreme Court had indicated that earlier decisions taking a contrary view in relation to GST legislation should not be treated as binding precedents.
Relying on the Supreme Court’s exposition, the Karnataka High Court observed that there was no need to read a mandatory prior-notice requirement into the CGST/KGST Acts.
The Court held that even where the apprehension of arrest arises under the GST Acts, a person can invoke Section 482 of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS). The competent court can examine the apprehension of arrest and consider whether judicial protection is warranted.
The High Court therefore declined to issue a direction requiring the GST authorities to provide prior notice before arrest. It held that the petitioners’ apprehension could instead be examined through the appropriate judicial remedy.
A significant aspect of the ruling is the Court’s refusal to judicially add a procedural requirement that does not appear in the CGST/KGST Acts.
The petitioners had specifically sought a seven-day advance notice before any arrest. However, the High Court held that the statutory framework could not be expanded to incorporate such a requirement merely because the petitioners apprehended arrest.
The Court’s reasoning was that the existence of a judicial remedy against an apprehended arrest made it unnecessary to read an additional prior-notice requirement into the GST legislation.
Although the Court rejected the prayer for mandatory prior notice, it did not foreclose the petitioners from raising their other grievances.
The High Court observed that the present petition was confined to the question of prior notice and did not contain sufficient pleadings and prayers for a complete adjudication of the petitioners’ broader allegations concerning the GST proceedings. Consequently, the Court declined to examine those grievances on merits in the present proceedings.
The petition was accordingly disposed of with liberty to the petitioners to invoke the High Court’s jurisdiction again with appropriate pleadings and a prayer seeking complete adjudication. The Court also clarified that the respondents would remain entitled to raise all available defences in any subsequent proceedings.
The Karnataka High Court has declined to make prior notice a compulsory condition for arrest under the CGST/KGST Acts. However, relying on the Supreme Court’s ruling in Radhika Agarwal, the Court has recognized that anticipatory bail or appropriate judicial protection can be sought against a genuine apprehension of GST arrest even before an FIR is registered.
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