pri SC: Challenge Constitutional validity of CGST provisions before HC SC: Challenge Constitutional validity of CGST provisions before HC

Case Law Details

Case Name : Devendra Dwivedi Vs Union Of India (Supreme Court)
Appeal Number : Writ Petition(s)(Criminal) No(s). 272/2020
Date of Judgement/Order : 07/01/2021
Related Assessment Year :

Devendra Dwivedi Vs Union Of India (Supreme Court)

SC: Dismissed Writ challenging constitutional validity of various provisions under CGST Act, directed to pursue the remedies before HC

The Hon’ble Supreme Court of India in Devendra Dwivedi vs Union of India & ors. [Writ Petition(s) (Criminal) No(s). 272/2020, dated January 7, 2021] dismissed writ petition under Article 32 of the Constitution of India, challenging constitutional validity of certain provisions of Central Goods and Services Tax Act, 2017 (CGST Act) pertaining to powers of inspection, search, seizure, arrest and penalties & prosecution. Held that, it would be appropriate to approach High Court for remedy by way of a petition under Article 226 of the Constitution of India, so that the Hon’ble Supreme Court has the benefit of the considered view of the jurisdictional High Court.

Facts:-

The Writ Petition had been filed by Devendra Dwivedi (“Petitioner”) invoking the jurisdiction of the Hon’ble Supreme Court under Article 32 of the Constitution of India wherein, the following reliefs have been sought:

(i) A challenge to the constitutional validity of following provisions of the CGST Act:

a. Section 67(1) of the CGST Act (i.e., power of inspection, search and seizure) and Section 69 (i.e., power to arrest) for being violative of principles of natural justice as they do not provide for recording of reasons to believe in writing;

b. Section 69 and Section 132 (i.e., punishment for certain offences) for being ultra vires to Articles 21 of the Constitution of India;

c. Section 70(1) (i.e., power to summon persons to give evidence and produce documents) for being ultra vires to Articles 20(3) of the Constitution of India;

d. Section 135 (i.e., presumption of culpable mental state) as it requires accused to disprove the reverse burden of proof beyond reasonable doubt;

e. Section 137 (i.e., offences by companies) for being contrary to the settled principles of law, which provide that there can be no fastening of vicarious liability for a criminal offence requiring mens rea, without there being an active role being proved by the prosecution.

ii. A direction for compliance with the procedure for investigation enunciated in Chapter XII of the Code of Criminal Procedure, 1973 (“CrPC”) for valid commencement of investigation into any offence.

iii. Declaring the investigations which have been instituted against the petitioner as illegal

Issue:-

Whether recourse to the jurisdiction under Article 32 of the Constitution of India should be entertained, challenging the constitutional validity of above-mentioned sections of the CGST Act?

Held:-

The Hon’ble Supreme Court of India in Writ Petition(s) (Criminal) No(s). 272/2020, dated January 7, 2021 held as under:

  • Noted that, a Bench of three-Judges declined to entertain Writ Petition (Crl) Nos 107 and 108 of 2019 dated April 10, 2019 and several other petitions which were instituted under Article 32 of the Constitution have eventually been withdrawn, and some were dismissed.
  • Observed that, though the Petitioner has invoked Article 21 of the Constitution of India, the case essentially involves a challenge to revenue legislation. The jurisdiction under Article 32 of the Constitution of India is a salutary constitutional safeguard to protect the fundamental rights of citizens, the recourse to the jurisdiction under Article 32 of the Constitution should be entertained in a particular case is a matter for the ‘calibrated exercise of judicial discretion’.
  • Stated that, besides the fact that the constitutional challenge can be addressed before the High Court, the grievance in regard to the conduct of the investigation can appropriately be addressed before the competent forum, either in exercise of the jurisdiction under Article 226 of the Constitution or Section 482 or analogous provisions of the CrPC. The Petitioners have an efficacious remedy in the form of proceedings under Article 226 of the Constitution to challenge the constitutional validity of the provisions of the CGST Act as mentioned in the facts above.
  • Held that, there is regime of well-established remedies and procedures under the laws of CrPC and revenue legislation also provides its own internal discipline. Hence, it would be appropriate to relegate the Petitioner to the remedy of a petition under Article 226 of the Constitution so that the Hon’ble Supreme Court has the benefit of the considered view of the jurisdictional High Court.

FULL TEXT OF THE SUPREME COURT JUDGEMENT

1. Mr Mukul Rohatgi, learned Senior Counsel appearing on behalf of the petitioners, seeks the permission of the Court to withdraw the petitions with liberty to move the High Court in appropriate proceedings.

2 The writ petitions are dismissed as withdrawn with liberty as prayed.

W.P.(Crl.) No. 298/2020

1 Invoking the jurisdiction of this Court under Article 32 of the Constitution, the following reliefs have been sought by the petitioners in these proceedings:

“1. Issue an appropriate Writ, order(s) or direction(s) declaring Sections 69 & 132 of the Central Goods Service Tax Act, 2017,as unconstitutional and ultra vires to Article 21 of the Constitution of India and hence unconstitutional, illegal and unenforceable;

2. Issue an appropriate Writ, order(s) or direction(s) to the Respondent to comply with the mandatory procedure under Chapter XII of the Code of Criminal Procedure, 1973 including Section 154, 157, 167, 172 etc for valid commencement of investigation into any offence qua the petitioner.

3. Declare the entire investigations erroneously commenced by the Respondents qua the Petitioner as non est, illegal, void ab initio for not following the mandatory procedure under Chapter XII of the Code of Criminal Procedure, 1973 and therefore violative of the “procedure established by law”.

4. Issue an appropriate Writ, order(s) or direction(s) declaring Section 70( 1) of the Central Goods Service Tax Act, 2017, as unconstitutional and ultra vires to Article 20(3) of the Constitution of India and hence unconstitutional, illegal and unenforceable;

5. Issue an appropriate Writ, order(s) or direction(s) declaring Section 67 (1) and S. 69 of the CGST Act are ultra vires and violative of the principles of natural justice, as the said Section does not provide for recording of reasons to believe in writing, unlike other statutes such as Prevention of Money Laundering Act, 2002

6. Issue an appropriate Writ, order(s) or direction(s) declaring provisions of Section 137 of the CGST Act 2017 contrary to the settled principles of law, which provide that there can be no fastening of vicarious liability for a criminal offence requiring mens rea, without there being an active role being proved by the prosecution.

7. Issue an appropriate Writ, order( s) or direction( s) declaring provisions of Section 135 of CGST Act, 2017, unconstitutional as it requires Accused to disprove the reverse burden of proof not by preponderance of probability but beyond reasonable doubt.”

2 The above reliefs would indicate an amalgam of:

(i) A challenge to the constitutional validity of certain provisions of the Central Goods Service Tax Act 2017;

(ii) A direction for compliance with the procedure for investigation enunciated in Chapter XII of the Code of Criminal Procedure 1973; and

(iii) Declaring the investigations which have been instituted against the petitioner as illegal.

3 During the course of the hearing, it has been urged on behalf of the petitioner that it would be necessary for this Court to entertain the present proceedings under Article 32 of the Constitution having regard to some earlier orders issuing notice, where similar issues have been involved. It has been submitted that having regard to these orders and the constitutional issues which have been raised, it would be appropriate for the Court to consider the challenge both to the constitutional validity of the statute and determine the legality of the investigation which has been commenced. It is urged that the right to life under Article 21 of the Constitution is engaged in the challenge.

4 These submissions which have been urged by Mr Vijay Aggarwal have been opposed by Mr K K Venugopal, learned Attorney General for India and Mr Tushar Mehta, learned Solicitor general.

5 From the proceedings before this Court, we find that on 10 April 2019, a Bench of three-Judges declined to entertain Writ Petition (Crl) Nos 107 and 108 of 2019. The record also indicates that several other petitions which were instituted under Article 32 of the Constitution have eventually been withdrawn, including the following:

(i) Writ Petition (Crl) No 260 of 2020 withdrawn on 28 October 2020;

(ii) Writ Petition (Crl) No 167 of 2020 withdrawn on 7 August 2020;

(iii) Writ Petition (Crl) No 241 of 2020 withdrawn on 9 September 2020; and

(iv) Writ Petition (Crl) No 157 of 2020 withdrawn respectively on 14 July 2020 and 20 July 2020 in relation to the two petitioners.

The earlier petition under Article 32 was withdrawn before this Court today after submissions were urged.

6 The petitioners have an efficacious remedy in the form of proceedings under Article 226 of the Constitution to challenge the constitutional validity of the provisions of the statute which are placed in issue. Following this course of action is desirable, for this Court will then have the benefit of a considered view emanating from the High Court. Though the Counsel for the petitioners invokes Article 21, this is a case involving essentially a challenge to revenue legislation. Undoubtedly, the jurisdiction of this Court under Article 32 is a salutary constitutional safeguard to protect the fundamental rights of citizens. The Court must be solicitous in exercising it where a breach of fundamental human rights is in issue. But equally, whether recourse to the jurisdiction under Article 32 should be entertained in a particular case is a matter for the calibrated exercise of judicial discretion. There is regime of well-established remedies and procedures under the laws of criminal procedure. Revenue legislation also provides its own internal discipline. Short circuiting this should not become a ruse for flooding this court with petitions which can, should and must be addressed before the competent fora. Hence we are of the view that it would be appropriate to relegate the petitioner to the remedy of a petition under Article 226 so that this Court has the benefit of the considered view of the jurisdictional High Court.

7 While it has been pointed out that in certain cases, notice was issued by this Court, the learned Attorney General for India has, on the other hand, submitted that this was at the initial stage of hearing and, as indicated above, a three-Judge Bench of this Court has declined to entertain the petitions under Article 32 by the order dated 10 April 2019.

8 Following the orders of the three-Judge Bench of this Court in the above cases, we are of the view that the petitioners must be relegated to pursue the remedies in accordance with law. Besides the fact that the constitutional challenge can be addressed before the High Court, the grievance in regard to the conduct of the investigation can appropriately be addressed before the competent forum, either in exercise of the jurisdiction under Article 226 or, as the case may be, Section 482 or analogous provisions of the Code of Criminal Procedure 1973.

9 On these grounds, we are not inclined to entertain the writ petition under Article 32. The petition is accordingly dismissed. However, we clarify that we have left it open to the petitioners to pursue the remedies which are available in law in respect of the reliefs which have been sought in these proceedings.

10 Pending application, if any, stands disposed of.

*****

DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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