The Supreme Court has once again affirmed the constitutional validity of the power of arrest available to Goods and Services Tax authorities under Section 69 of the Central Goods and Services Tax Act, 2017.

In Rakesh Kumar v. Union of India & Another, Writ Petition (Criminal) No. 439 of 2024, a Division Bench comprising Justice Manmohan and Justice K. Vinod Chandran disposed of a petition primarily challenging the constitutional validity of Section 69. The order was passed on June 29, 2026. The Court observed that the validity of the provision had already been upheld by a three-judge Bench in Radhika Agarwal v. Union of India & Others, reported in (2025) 6 SCC 545. Consequently, the petition was disposed of in terms of that judgment, all pending applications were closed and any interim protection operating in the matter stood vacated.

The latest order does not undertake a fresh examination of Section 69. Instead, it confirms that the constitutional controversy surrounding the provision has already been settled by a larger Bench.

What Was the Rakesh Kumar Case About?

The petitioner had approached the Supreme Court seeking to challenge Section 69 of the CGST Act, which empowers designated GST officers to arrest persons suspected of committing specified GST offences.

The two-page order does not record the underlying transaction, the allegations made during the GST investigation or the precise factual circumstances faced by the petitioner. It would, therefore, be inappropriate to speculate about the alleged tax evasion or input tax credit involved.

What is clear is that the central relief sought was a declaration that Section 69 was constitutionally invalid. The Supreme Court declined to reconsider that question because the three-judge Bench decision in Radhika Agarwal was binding.

How Does Section 69 of the CGST Act Operate?

Section 69 permits the Commissioner to authorise an officer of central tax to arrest a person where the Commissioner has “reasons to believe” that the person has committed specified offences under clauses (a) to (d) of Section 132(1).

These offences broadly cover:

• supplying goods or services without issuing invoices with an intention to evade tax;
• issuing invoices without an actual supply, resulting in wrongful input tax credit or refund;
• fraudulently availing input tax credit through fake invoices or without invoices; and
• collecting tax but failing to deposit it with the Government for more than three months.

Section 69 applies where such offences fall within the punishment thresholds prescribed under Section 132(1)(i) or Section 132(1)(ii), or involve repeat offenders covered by Section 132(2). An offence involving tax evasion, wrongful input tax credit or wrongful refund exceeding ₹5 crore may attract imprisonment of up to five years. Where the amount exceeds ₹2 crore but does not exceed ₹5 crore, imprisonment may extend to three years. Offences exceeding ₹5 crore under clauses (a) to (d) are categorised as cognizable and non-bailable.

The power is therefore linked to specified offences and statutory monetary thresholds. It is not a general power to arrest for every GST dispute.

What Did the Supreme Court Hold in Radhika Agarwal?

The decision in Radhika Agarwal, delivered on February 27, 2025, examined a large batch of petitions concerning arrest powers under the Customs Act and the GST laws.

The petitioners had argued, among other things, that Article 246A of the Constitution authorised Parliament and State Legislatures to levy GST but did not permit them to create criminal offences or confer powers of arrest. The Supreme Court rejected this argument.

The Court held that the legislative power to impose GST necessarily includes ancillary powers to prevent tax evasion, investigate offences, summon persons, prosecute offenders and make arrests in appropriate cases. It consequently upheld the constitutional validity of Sections 69 and 70 of the GST enactments.

However, the Court did not treat the arrest power as unrestricted.

Arrest Cannot Be Based on Suspicion Alone

The Commissioner must record explicit “reasons to believe” based on relevant and sufficient material. The available evidence must support both the alleged commission of the specified offence and the monetary computation that makes the offence cognizable and non-bailable.

The Supreme Court clarified that arrest cannot be used merely to investigate whether an offence has been committed. The statutory conditions must already be supported by material carrying a sufficient degree of certainty.

Prior Adjudication Is Not Always Necessary

The Court rejected an absolute proposition that GST authorities must complete assessment or adjudication proceedings before making an arrest.

Normally, assessment proceedings would help quantify the alleged tax evasion or wrongful credit. Nevertheless, an arrest may precede adjudication where the Department possesses adequate evidence to establish, with sufficient certainty, that the statutory offence and monetary threshold are satisfied. The recorded reasons must clearly refer to the underlying evidence.

Procedural Safeguards Remain Mandatory

The arrested person must be furnished written grounds of arrest. The arrest memo must mention the applicable statutory provisions, date and time of arrest, and other prescribed particulars. A person nominated by the arrestee must also be informed.

The safeguards under criminal procedure and the principles laid down in D.K. Basu continue to apply. The Court further clarified that anticipatory bail may be sought on the basis of a genuine apprehension of arrest even where no First Information Report has been registered.

The judgment also disapproved the use of arrest threats to compel taxpayers to deposit tax during investigations. Any payment during a search or investigation must be genuinely voluntary; recovery ordinarily requires completion of the prescribed adjudication process.

What Does the Latest Supreme Court Order Mean?

For GST authorities, the order confirms that Section 69 remains a constitutionally valid enforcement mechanism. At the same time, every arrest must satisfy the evidentiary, procedural and constitutional standards laid down in Radhika Agarwal.

For taxpayers, a broad challenge to the validity of Section 69 is unlikely to succeed. Future disputes will principally turn on whether the Commissioner had credible material, whether the statutory threshold was properly calculated, whether reasons to believe were objectively recorded and whether written grounds of arrest and other procedural safeguards were provided.

Businesses should therefore strengthen controls concerning vendor verification, input tax credit documentation, invoice authenticity and reconciliation of tax collections with Government deposits. During investigations, cooperation, proper documentation of summons and submissions, and timely legal review can become particularly important.

The position after Rakesh Kumar is consequently clear: the power to arrest under GST survives, but its exercise remains subject to strict judicial scrutiny. Section 69 is constitutionally valid; arbitrary arrest under Section 69 is not.