This piece explores how the decision of the Supreme Court in the case of Union of India v. Sunil Biyani has the effect of rendering the arrest power otiose and simultaneously burdening taxpayers with extraneous consideration for anticipatory bail. This article was written by Lovish Goyal from the CTL Editorial team.
The recent decision of the Supreme Court in the case of Union of India v. Sunil Biyani provides for a significant development in the bail regime under the GST laws. The present case stemmed from the DGGI’s investigation of the Assessee for its group entities for wrongful availment and passing of input tax credit without underlying supply, circular invoicing and non-payment of GST on imported services. The Respondent was issued three summons under Section 70 of the CGST Act. Rather than appearing, he sought adjournments and moved for anticipatory bail which was rejected by the Sessions Court. Subsequently, he approached the Bombay High Court, which also rejected the anticipatory bail, reasoning that in the absence of an order under Section 69 there could be no apprehension of arrest and the application was therefore not entertainable. Having so held, it nonetheless directed that the Respondent not be arrested for one week from the date of intimation of any future Section 69 order. The Union appealed only against that protective direction.
The Court decided two things. First, on the main issue, it applied the settled rule that interim relief is ancillary to and in aid of the main relief. It held that once a pre-arrest bail application is dismissed as not maintainable, whatever the ground, the High Court or Sessions Court cannot grant or extend protection from arrest.
Secondly, it held that an order under Section 69 authorising arrest must be communicated to the person sought to be arrested. The Court reasoned out that issuance of the order under Section 69 is a sine qua non for a maintainable anticipatory bail application. If it need not be communicated, or is communicated only after arrest, the assessee is caught in a bind where he can neither seek pre-arrest bail nor test the reasons to believe in judicial review. Reading in principles of natural justice and fairness in administrative action, the Court directed communication by electronic and other permissible modes, and stated that without such communication the question of arrest would not arise.
This judgment while providing the assesses a sense of relief, seems to be inappropriate and has the effect of absolutely swallowing the power of arrest. Making the communication of the Section 69 order mandatory means giving the target advance notice that his arrest has been authorised. Section 132(1)(a) to (d) offences are economic offences in which the evidence is documentary and digital, and therefore easy to destroy, and the accused can also leave the jurisdiction. The predictable response is that the Commissioner will simply defer passing the Section 69 order until arrest is operationally imminent, which turns a reasoned safeguard into an exercise in timing.
Most importantly, the Court quotes Gurbaksh Singh Sibbia to warn against reading unreasonable restrictions into the anticipatory bail provision and then imposes precisely such a restriction. Sibbia held that a person may seek anticipatory bail without an FIR having been registered and a reasonable belief of arrest on an accusation of a non-bailable offence suffices. If the trigger can precede an FIR under the general scheme, it is hard to justify why under the GST scheme it must post-date the Section 69 authorisation, at a point where investigation has plainly commenced, summons have issued, premises have been inspected and statements recorded. The better test is a factual inquiry as to whether, on the material the applicant places on record, the nature and quantum of the allegation, the department’s conduct, comparable arrests, and prior coercive steps generate a reasonable apprehension of arrest.
Assessees facing months of summonses with a genuine apprehension are told their plea is premature, while the department, when it finally acts, must telegraph the arrest. A more nuanced course was available. Entertain anticipatory bail on a demonstrated subjective apprehension even at the summons stage, and correspondingly require that the Section 69 order and its reasons be furnished at the point of arrest and remain fully open to judicial review, rather than mandating prior communication. Liberty is better served by widening access to the remedy than by making the power of arrest practically unusable.
