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The constitutionality of Sec. 69 and 132 of the Central Goods and Services Act was challenged before the Divisional bench consisting of justice Manmohan Singh and Justice Sanjeev Narula. The said provision empowers the authorities under the Act to arrest any person. The petition was filed by a man who had availed of IGST refund fraudulently. The petitioner claimed that he said provisions are criminal in nature and cannot be enacted by the parliament, which violates Article 246A of the Indian Constitution. The petition also claimed that the prosecution and levy of tax are two different duties and cannot be incidental to each other.
In response, the defense claimed that the parliament is well under its powers to legislate criminal laws under entry 93 List 1 of the constitution. The court presumed in favor of the constitutionality of the provisions and held that an enactment is constitutionally valid until it is proved otherwise and the burden of proves lies on the petitioner.
Further, the court also gave clarity on the scope of Article 246A and stated that the powers under the article are not only limited to collecting and levy of tax by state and center but also to legislate any law suitable for the smooth functioning of the process, including arrests or seizures
The court also made clear that the power to prosecute and arrest are incidental to each other and the legislature has the power to enact laws on such matters. The court also stated that the parliament has powers to criminalize any offense under Entry 93 of List 1 of the Constitution. The Court took note of Gujarat HC’s case of Vimal Yashwantgiri Goswami V. State of Gujarat in which the judgment was against the claims of the portioner.
The court finally held that it was not interested in interfering with the investigation process and upheld the arrest of prima facie. The court was cautious enough to declare that the present observations are prima facie in nature and these opinions will not stand against the final arguments, due on 20th July 2020.
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