Arrest under Customs Act, GST Acts: How Supreme Court aim to balance powers with rights

The bench also addressed concerns that taxpayers were being forced to make voluntary payments under threat of arrest.

The Supreme Court last week upheld the rights of authorised officers to make arrests under the Customs Act and the GST Acts. However, it introduced key judicial safeguards to prevent arbitrary detention and clarified the extent and limits of enforcement under these special statutes.

A bench led by Chief Justice of India Sanjiv Khanna dismissed pleas challenging the constitutional validity of the provisions with elucidation and clarification on the pre-conditions and when and how the power of arrest is to be exercised.

What did the court say?

The top court was delivering the verdict on 281 petitions that criticised the arresting powers under the central and state GST laws and the Customs Act.

According to an Indian Express report, in Radhika Agarwal v Union of India matter, the SC said that officials under these acts exercise powers “analogous” to the powers of arrest, search and seizure exercised by police. The court said officials must be bound by the same restrictions that police officials face under the Code of Criminal Procedure, 1973 (CrPC).

In the Arvind Kejriwal v. Directorate of Enforcement (2025), the SC laid down requirements that must be met before the Director of Enforcement can legally arrest someone. These requirements also apply to officers seeking to make arrests under the Customs Act and the CGST Act.

Addressing arrest woes

The bench also addressed concerns that taxpayers were being forced to make voluntary payments under threat of arrest.

According to Livelaw, the court said that if any person is feeling coerced to pay GST, they can approach the writ court for refund of the tax paid by them under coercion. The court also said that the officers who indulge in such coercion must be dealt with departmentally.

The apex court also referred to Section 104(1) of the Customs Act, which does not explicitly mention possession of material evidence. Hence, a Customs officer cannot conclude that an offence has been committed without substantial justification. “The fact that Section 104(1) does not explicitly require a Customs officer to have ‘material in their possession’ does not imply that a customs officer can conclude that an offence has been committed out of thin air or mere suspicion,” stated the bench as quoted by Hindustan Times.

The court also said that the allegations are made on behalf of the petitioners that the parties are compelled and coerced to admit and make payment of tax. "We would observe that in case there is a breach of law, and the assessees are put under threat by force or coercion, the assessees would be entitled to move the courts and seek a refund of tax deposited by them. The department would also take appropriate action against the officers in such cases," the court said.

In the Radhika Agarwal case, the court said customs officers cannot “conclude that an offence has been committed out of thin air or mere suspicion”. The arrestee must be provided with the reasons for their arrest.

The court also reportedly agreed with the contention that the GST Acts are not a complete code when it comes to the provisions of search and seizure and arrest.

With this ruling, the Supreme Court has tried ensuring that the judgment asserts the constitutional rights of the accused while requiring strict adherence to procedural safeguards.