Last week, the Supreme Court sought to curb the misuse of provisions allowing officials to arrest persons accused of violating the Customs Act, 1962, and the Central Goods and Services Tax Act, 2017 (CGST Act).
The court ruled in Radhika Agarwal v Union of India that officials under these acts exercise powers “analogous” to the powers of arrest, search and seizure exercised by police, and must be bound by the same restrictions that police officials face under the Code of Criminal Procedure, 1973 (CrPC).
The decision forms a part of the SC’s ongoing effort to limit the broad powers of prosecuting agencies under stringent laws such as the Prevention of Money Laundering Act, 2002 (PMLA). In one of these cases, Arvind Kejriwal v. Directorate of Enforcement (2025), the SC laid down requirements that must be met before the ED can legally arrest someone. The SC has effectively transplanted these requirements and held that they also apply to officers seeking to make arrests under the Customs Act and the CGST Act.
Exercising police powers
According to the SC, while officers under the Customs Act and CGST Act are not police officers, they “enjoy analogous powers such as the power to investigate, arrest, seize, interrogate, etc”. The court said that these officers cannot exercise powers “beyond that of a police officer in charge of the police station” and must be held to the same procedural standards as police officers.
Detailing how Sections 4 and 5 of the CrPC will apply to other laws, the court said that the code will apply “to the extent that there is no contrary provision in the special act or any special provision excluding the jurisdiction and applicability of the Code.” Thus, the restrictions that apply to a police officer’s power to arrest will also apply to a Customs official. These include the right of an arrested person (arrestee) to be presented before a magistrate within 24 hours following an arrest, the obligation upon an officer to inform a family member or friend of the arrest, and the right of an arrestee to have an advocate present in the vicinity during an interrogation.
Power of arrest
Under Section 104(4) of the Customs Act, some select offences have been classified as ‘cognizable,’ such as activities related to prohibited goods or evading customs duty of over Rs. 50 lakhs. So a customs officer (like the police) may arrest someone without a warrant if they are suspected of one of these offences. Section 104(5) says all other offences under the Customs Act will be considered non-cognizable, and a Magistrate must sign a warrant for arrest and investigation to take place. Similarly, Section 132 of the CGST Act classifies certain offences as cognizable and non-cognizable, and provides punishments based on the gravity of the crime.
The SC’s ruling in Kejriwal similarly concerns the issue of arrest without a warrant under other special laws. Arrested by the ED in connection with the Delhi excise scam, Kejriwal argued that his arrest was illegal before the SC. The court released him on bail and made several observations about the ED’s power to arrest someone under Section 19 of the PMLA.
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Speaking on this decision, the SC recalled, “It was held that the power to arrest a person without a warrant and without instituting a criminal case is a drastic and extreme power. Therefore, the legislature had prescribed safeguards in the language of Section 19 itself which act as exacting conditions as to how and when the power is exercisable.” These safeguards include the possession of materials by the officer, a “reason to believe” that a person is guilty of the alleged offence, and informing the arrestee of the grounds for their arrest as soon as possible.
The SC in Kejriwal expanded on each of the above. In Radhika Agarwal, the court explained how these requirements also apply to other officials. It stated, “We have cautioned in Arvind Kejriwal (supra) how the unbridled exercise of the power to arrest without a warrant can result in arbitrariness and errors in decision-making process. A similar error made by a customs officer can lead to a frustration of the constitutional and statutory rights of the arrestee.”
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MATERIAL IN POSSESSION
The court in Kejriwal held that an arrest can be made only when the evidence or the material in an officer’s possession “enables them to form an opinion, by recording reasons in writing that the arrestee is guilty”. The court also clarified that the officer must consider all of the material in the case and cannot ignore material that “exonerates” the arrested person.
Applying this ruling to Radhika Agarwal, the court said customs officers must also have material in their possession and cannot “conclude that an offence has been committed out of thin air or mere suspicion”.
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REASONS TO BELIEVE
The court in Kejriwal held that the officer must record in writing their “reasons to believe” that an arrestee is guilty of an offence based on the material in their possession. Though the court cannot examine the merits of these reasons, it can see if they are clearly connected to the case material. “Doubts will only arise when the reasons recorded by the authority are not clear and lucid, and therefore a deeper and in-depth scrutiny is required. Arrest, after all, cannot be made arbitrarily and on the whims and fancies of the authorities,” the court held.
The court held that there was an implicit need to record reasons even though the Customs Act and CGST Act do not contain such a requirement. It justified this based on the ability of the acts to classify offences as cognizable, with the implication that the officer must provide reasoning for arresting someone and the offence they were arrested for.
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PROVIDING GROUNDS OF ARREST
The court in Kejriwal held that these grounds must include the “reason to believe” that the person arrested is guilty so that the arrestee can effectively challenge the arrest or apply for bail in court. Without this information, the court explained that an arrestee would be on the backfoot, lacking the necessary information to file their case. The court in Radhika Agarwal similarly ruled that the arrestee must be provided with the reasons for their arrest.
Misuse of power of arrest
The court refused to strike down the powers of arrest for CGST and Customs Act officials as sought by the petitioners. However, the court did consider data on the number of GST offence cases instituted since 2017, the amount recovered and the number of arrests made and held that there is “some force in the petitioners’ submission that the assessees are compelled to pay tax as a condition for not being arrested”.
The court ruled that it was illegal and impermissible for tax officials to force or coerce someone into paying overdue taxes by threatening them with arrest. To curb such cases, it held that individuals who were so threatened or coerced “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.”
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It also directs the Central Board of Indirect Taxes and Customs to form guidelines to ensure that no taxpayers are threatened with arrest.