The powers of arrest under the Goods and Services Tax Act and the Customs Act.

The Supreme Court on Thursday(February 27) delivered a significant ruling on the powers of arrest under the Goods and Services Tax Act and the Customs Act.

The Court held that the provisions of the Code of Criminal Procedure (now Bharatiya Nagarik Suraksha Sanhita) on the rights of accused persons are equally applicable to the arrests made both under the Customs Act and the GST Act.

The dictum in the Arvind Kejriwal case that the arrest under the Prevention of Money Laundering Act must be made only if there are "reasons to believe" has been applied in the context of GST and Customs arrests as well. Section 19(1) of the PMLA and Section 104 of the Customs Act are virtually the same, the Court noted. Both provisions deal with the power of arrest. The Court held the same for the arrest provision under the GST Act as well.

The Court also held that the circulars issued by the GST department regarding arrest must be strictly adhered to. The Court also rejected the argument that customs officers are police officers.

Anticipatory bail applicable to GST and Customs Acts.

The Court further held that the provisions relating to anticipatory bail are applicable to the GST Act and the Customs Act, and the parties can approach the Court for relief if there is an apprehension of arrest, without the FIR being registered.

The Court also observed that there was some merit in the allegations of coercion and harassment by the tax officials.

"We have commented on the basis of data with regard to allegations that there was force and coercion in the payment of taxes. We have some said that there may be some merit in it. Wherever a person is disposed to pay, he can go to the writ court and get an order. And the officers will have to be dealt with departmentally also. We have said that this cannot be permitted. This is contrary to the law. We have referred to Nandini Satpathy case in that regard," Chief Justice of India Sanjiv Khanna stated while pronouncing the verdict.

A bench of Chief Justice of India Sanjiv Khanna andJustices MM Sundresh, Bela M Trivedi made the observation while delivering verdict in a batch of 279 petitions challenging the penal provisions in the Customs Act, CGST/SGST Act, etc. as non-compatible with the CrPC and the Constitution. The orders in the case were reserved on May 16, 2024.

There are two judgments- one by CJI Khanna and a concnurring judgment by Justice Trivedi. Justice Trivedi's judgment deals with the powers of judicial review.

Notably, while the matter was being heard, the bench orally made the following key observations: (i) there can be no private complaint under the GST Act (ii) arrest should not be made on mere suspicion, (iii) GST/Customs Officer must have certifiable materialprior to arresting, which can be verified by a Magistrate, (iii) by recent amendments, Parliament whittled down the ratio of Om Prakash v. Union of India(2011), but did not completely do away with it, and (iv) citizens should not be harassed merely because there is ambiguity in arrest provisions.

It also expressed concerns about the ambiguity in Section 69 of the GST Act (dealing with power with arrest) and conveyed that it would interpret the law to "strengthen" liberty, if need be, but not allow citizens to be harassed.

During one hearing, CJI Khanna also observed that the legislation(s) in question conferred restricted powers of arrest: "sometimes we tend to believe that investigation cannot be completed until arrest. That is not the object of the legislation. It restricts the power of arrest". It was further highlighted that an officer's "power to arrest" is different from "necessity of arrest"

Wife Watching Porn Privately Not Cruelty By Itself, Right To Spousal Privacy Includes Various Aspects Of Woman's Sexual Autonomy: Madras HC

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Wife Watching Porn, Engaging In Self Pleasure Not By Itself Cruelty On Husband, Woman Retains Her Individuality Even After Marriage

The Madras High Court has observed that a wife watching pornography or engaging in self pleasure by itself was not cruelty upon the husband unless it was proved that the same affected the matrimonial relationship.

“Thus, the act of the respondent [wife] in merely watching porn privately by itself may not constitute cruelty to the petitioner. It may affect the psychological health of the viewing spouse. That by itself will not amount to treating the other spouse cruelly. Something more is required. If a porn watcher compels the other spouse to join him or her, that would certainly constitute cruelty. If it is shown that on account of this addiction, there is an adverse impact on the discharge of one's conjugal obligations, then it could furnish an actionable ground,” the court noted.

Money Laundering Serious Offence, Courts Can't Grant Bail Casually Without Considering S.45 PMLA Conditions : Supreme Court

The Supreme Court February 13 set aside the bail granted to the individual accused of committing money laundering after noting that the High Court failed to satisfy the twin conditions stipulated under Section 45 of the Prevention of Money Laundering Act, 2002 (“PMLA”).

The Court reiterated that the conditions enumerated in Section 45 will have to be complied with even in respect of application for bail made under Section 439 of Cr.P.C. Also, Section 24 provides that in case of a person charged with the offence of money-laundering under Section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-laundering. Therefore, the burden to proof that proceeds of crime are not involved in money laundering would lie on the person charged with the offence.

Section 45 PMLA mandatory

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The Court reiterated that the twin conditions under Section 45 are "mandatory in nature." Referring to Vijay Madanlal Choudhary and other precedents such as Tarun Kumar v Asst Director ED, the Court observed that "there remains no shadow of doubt that the consideration of the two conditions mentioned in Section 45 is mandatory, and that while considering the bail application, the said rigours of Section 45 have to be reckoned by the court to uphold the objectives of the PMLA."

Allowing the Enforcement Directorate's (ED) appeal against a judgment of the Patna High Court, a bench of Justices Bela M Trivedi and Prasanna B Varale rejected the respondent/accused argument that the Appellant/ED had relied upon the statements of the respondent/accused recorded under Section 50 of the PMLA upon being summoned rendering them inadmissible in evidence.

Compassionate Appointment To Be Granted Only In “Hand-to-Mouth” Cases, Not Due To Mere Fall In Life Standard : Supreme Court

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The Supreme Court, while determining a case related to compassionate appointment, observed that such appointment should be granted only in “hand-to-mouth” cases, provided that all the other conditions are fulfilled. Explaining, the Court said that such situations would include a family 'below the poverty line' and struggling to pay basic expenses.

“It is only in “hand-to-mouth” cases that a claim for compassionate appointment ought to be considered and granted, if at all other conditions are satisfied. Such “hand-to-mouth” cases would include cases where the family of the deceased is 'below poverty line' and struggling to pay basic expenses such as food, rent, utilities, etc., arising out of lack of any steady source of sustenance. This has to be distinguished from a mere fall in standard of life arising out of the death of the bread earner.”

The Court also said that the underlying idea behind compassionate appointment in case of an employee's death is that he/ she was the sole earner for the family. The Court said that there is no straitjacket formula to be applied uniformly in cases of employee dying in harness. Each case has its own peculiar features and the financial condition must be assessed.

Notably, it has been more than two decades since the claim for compassionate appointment was made. 2001. The respondent's father was working for the appellant bank and passed away in the year 2001, before his retirement. Accordingly, the respondent sought an appointment on compassionate grounds under the 1993 scheme. The Appellant's Deputy General Manager rejected the same on the grounds that the respondent's mother was already getting a family pension and that the respondent was overaged for the applied post.

“If, indeed, the respondent's father would have received a pension amount of Rs. 6398/- and burdened to feed himself as well as his two dependants, viz. his spouse and son, the amount of family pension initially sanctioned, i.e., Rs. 4637.92 could not have, by any stretch of imagination, be seen as insufficient or inadequate for feeding two mouths. It is also not in dispute that the net terminal benefits in a sum of Rs. 3.09 lakh paid to the respondent/his mother would have been the same amount which the deceased would have received as terminal benefits after superannuation, had he been alive.,” the Court added.

Building on this, the Court concluded that the present case is not the one where the respondent's father's death caused such severe hardship that could only have been remedied through the compassionate appointment. Placing its reliance on Union of India v. B. Kishore, the Court observed:

“As pertinently held in B. Kishore (supra), indigence of the dependants of the deceased employee is the fundamental condition to be satisfied under any scheme for appointment on compassionate ground and that if such indigence is not proved, grant of relief in furtherance of protective discrimination would result in a sort of reservation for the dependents of the employee dying-in-harness, thereby directly conflicting with the ideal of equality guaranteed under Articles 14 and 16 of the Constitution.”

However, at the same time, the Court, after invoking its inherent power, directed the appellant to make a lump sum payment of Rs.2.5 lakh to the respondent within two months. The same was directed in view of a previous order by a coordinate bench, observing that it would consider directing a lumpsum amount payment to the respondent as a final settlement.

“Though no agreement was reached and whether the respondent is covered under the scheme of 2005 for lumpsum ex-gratia payment has not been examined by us as well as by the High Court, but bearing in mind the approach of the coordinate bench coupled with the circumstance of hope being generated in the mind of the respondent for appointment based on his success before the High Court, we are satisfied that interest of justice would be sufficiently served if the appellant is directed to make a lumpsum payment of Rs.2.5 lakh to the respondent within a period of 2 (two) months from date and the proceedings be closed.,”

In view of this, the Court set aside the impugned orders and dismissed the appeal.

Banks Giving Loans Without Proper Title Search Reports : Supreme Court Flags Issue To RBI; Says Officials Who Approved Loan Be Made Liable

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The Supreme Court recently underscored the significance of comprehensive title search reports in preventing legal disputes and ensuring smooth property transactions.

The Court emphasized the need for the Reserve Bank of India (RBI) and other stakeholders to develop a standardized and practical framework for preparing title search reports before loan sanctioning by banks. The Court said that the framework should also include the determination of liability of the erring bank official who sanctioned the loan based on a faulty title search report.

“we deem it necessary to observe that Banks should remain very careful with inadequate title clearance reports, more particularly, when such reports are obtained cheaply and at times for external reasons. This concerns the protection of public money and is in the larger public interest. Therefore, it is essential for the Reserve Bank of India and other stakeholders to collaborate in developing a standardized and practical approach for preparing title search report before sanctioning loans and also for the purpose of determining liability (including potential criminal action) of the Officer who approves loan. Additionally, there should be standard guidelines for fees and costs associated with title search reports so as to ensure that they maintain high quality.”, the Court said.

Until now, there's no standard mechanism developed by the RBI that regulated the title search report before loan sanctioning by banks. The banks rely on the title search report prepared by the empaneled lawyers, and there's no standardization of title search report preparation.

The bench comprising Justice JB Pardiwala and Justice R Mahadevan highlighted the need to develop such a standard framework in the wake of an instance where the bank-sanctioned loan based on the disputed mortgaged property, later discovered to have title disputes. 

Former Gujarat IAS Officer Gets 5 Years In Jail In 2004 Corruption Case

The court of principal district and sessions judge KM Sojitra convicted him in a case registered by Anti Corruption Bureau (ACB) pertaining to the allotment of a piece of land to Welspun Group at a price that allegedly caused a loss of Rs 1.2 crore to the government exchequer.

A sessions court on Monday sentenced former IAS officer Pradeep Sharma to five years in jail and fined him Rs 75,000 in a corruption case dating back to 2004 when he was the collector of Kutch district in Gujarat.

The court of principal district and sessions judge KM Sojitra convicted him in a case registered by Anti Corruption Bureau (ACB) pertaining to the allotment of a piece of land to Welspun Group at a price that allegedly caused a loss of Rs 1.2 crore to the government exchequer.

The court found Mr Sharma guilty section 13 (2) (criminal misconduct by a public servant) and section 11 (public servants obtaining an undue advantage without consideration) of the Prevention of Corruption Act.

He was sentenced to five years in jail and fined Rs 50,000 fine under section 13(2), and given a three year sentence and fine of Rs 25,000 under section 11, public prosecutor Kalpesh Goswami said, adding both the sentences will run concurrently.

'Punjab Officials Stooped So Low' : Supreme Court Finds Disciplinary Punishment Against Doctor Vengeful, Sets Aside Penalty

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The Supreme Court on Monday (January 20) granted relief to a retired Senior Medical Officer who was in service of the Punjab Government, by setting aside the order of penalty imposed on him in a disciplinary proceeding.

The Court observed that the disciplinary proceedings were nothing but a ruse to wreak vengeance against the appellant for having dragged high officials of the Government of Punjab to the High Court to obtain his legitimate monetary dues.

“This happens to be a case where certain officials of the GoP have stooped too low to punish a senior doctor, on the verge of retirement, for no better reason than that he had dared to take on the mighty executive in a court of law,"observed the Bench of Justices Dipankar Datta and Justice Manmohan.

The Bench made these observations while allowing the appeal filed by a Senior Medical Officer, who was relieved of his duty and made to retire eleven days before his retirement.

For background, disciplinary proceedings were initiated against him for committing misconduct. Among others, the grounds were proceeding on leave without sanction and failing to participate in the pulse polio programme. Consequent to these proceedings, the appellant was made to retire. The Disciplinary Authority ordered a cut of 2% pension with permanent.

Pursuant to this, the Health and Family Welfare Department ordered a pension cut. Subsequently, the Division Bench of the High Court modified this order to a 2% pension cut for a period of five years. Against this background, the matter reached the Apex Court.

At the outset, the Court reiterated that an administrative order punishing a delinquent employee is not reviewed unless there is a violation of natural justice principles or the impugned order is ex facie arbitrary or capricious.

“After all, public servants to whom Article 311 of the Constitution apply do enjoy certain procedural safeguards, enforcement of which by the high court can legitimately be urged by such servants depending upon the extent of breach that is manifestly demonstrated.,” the Court said.

Drawing inspiration from landmark cases, including the recent case ofMadhayamam Broadcasting Ltd. v. Union of India, observed that these principles also include procedural fairness before holding a public servant guilty of misconduct.

“To test whether interference is warranted, this Court has laid down that the scrutiny ought to be confined to finding out whether the disciplinary proceedings have been conducted fairly; if not, an inference can be drawn that this has caused prejudice to the charged employee.”

Building on this, the Court adverted to the facts of this case. While acknowledging that leave is regulated by rules that need to be adhered to by each public servant, the Court found no such circumstance to hold the appellant guilty of serious misconduct. The Court noted the submission of prosecution that the Civil Surgeon had refused to sanction leave. Apart from that, the appellant was also telephonically informed about the same.

However, the Court concluded that there was no record of the Civil Surgeon's refusal to sanction leave. So far as not participating in the pulse polio programme and thus also violating the Election Commission's directions, the Court said:

“It is the clear finding of the Inquiry Officer, based on the evidence on record, that the appellant was not assigned any duty in connection with election duty and pulse polio programme during the period he wished to avail leave to attend court proceedings before the High Court. Insofar as defiance of Election Commission's directions by the appellant are concerned, no such written directions were part of the documentary evidence led before the Inquiry Officer… Rather curiously, the Inquiry Officer resorted to ingenuity to hold the appellant guilty.”

Imperatively, at this stage, the Court pointed out that the appellant had submitted a detailed response to the inquiry report. However, the same was dismissed by a single sentence. Finding the same to be unacceptable, the Court ruled that this was not a fair procedure.

The Court also observed that issuance of limited notice does not fetter the court's powers to enlarge the scope of the petition and grant justice to the parties. Elaborating, the Court said that the observation, while issuing the notice, cannot limit the court's jurisdiction to consider the controversy.

“If the court seized of the petition/appeal considers that the justice of the case before it demands enlargement of the scope, notwithstanding that a limited notice had been issued earlier, the court's powers are not fettered particularly when enforcement of any Fundamental/Constitutional right is urged by the party approaching it.,” 

Moving forward, the Court also highlighted that though the impugned order had clear findings in favour of the appellant, it did not interfere with the charges.

“In our considered opinion, the tenor of the impugned order does suggest that the Division Bench found the appellant to have been wronged and regard being had thereto, the Division Bench ought to have set things right by interfering with the findings and granting full relief that we intend to grant to the appellant.”

Before parting, the Court also brought its attention to an order issued by the Election Commission. It clearly stated that doctors and officers who are due to retire within six months be exempted from election duty. In this regard, the Court observed that disciplinary proceedings should not have been initiated against the appellant.

“The appellant is, therefore, quite right in contending that the disciplinary proceedings culminating in the order of penalty were nothing but a ruse to wreak vengeance for he having dragged high officials of the GoP ((Government of Punjab) to the High Court and in tasting success to obtain his legitimate monetary dues. The Constitutional concept is that not only the country but every State in the country would be a welfare state.”

“This happens to be a case where certain officials of the GoP have stooped too low to punish a senior doctor, on the verge of retirement, for no better reason than that he had dared to take on the mighty executive in a court of law.”

In view of this, the Court directed that the appellant should be compensated with Rs.50,000/. The Government of Punjab was given liberty to recover the cost from the delinquent officers.