Radhika Agarwal: the Supreme Court's 2025 safeguards on GST and customs arrest
The power to arrest survived. The manner of its exercise did not. This is now the first authority in any GST arrest file.
In Radhika Agarwal v. Union of India (Supreme Court, 2025) the Court upheld the constitutional validity of the arrest provisions under the GST and customs legislation, but held that they must be exercised in conformity with the safeguards applicable to arrest generally. Grounds of arrest must be furnished in writing, the reasons to believe must exist on material before the arrest, the safeguards articulated in the money laundering line of authority apply with appropriate modification, and coercion to secure payment during search or summons is impermissible.
Why the case was brought
A batch of petitions challenged the arrest and summons powers under the CGST Act and the Customs Act on the ground that officers were exercising a police like power without the protections that surround a police arrest.
The practical grievances were specific. Arrests made at the conclusion of a search, without a quantified liability. Grounds of arrest read out but not supplied. Custody used to obtain a DRC-03 payment. Summons issued to compel attendance and then converted into a coercive setting.
The Court declined to strike the provisions down. It held that the power to arrest is incidental to the power to levy and collect, and is within legislative competence. It then set about confining its exercise.
What the Court required
Grounds of arrest must be communicated in writing to the arrested person. An oral communication or a recital in an arrest memo that discloses no grounds does not satisfy the requirement.
The reasons to believe that an offence has been committed must exist, on material, before the arrest, and must be recorded. The formation of belief cannot follow the arrest.
The safeguards recognised in the money laundering jurisprudence, including on the furnishing of grounds and on the necessity of arrest, apply to these statutes with appropriate modification, and the Code of Criminal Procedure safeguards are not displaced.
Arrest cannot be used as a means of recovery. Any payment obtained during search or custody without a determination of liability is open to challenge, and the Court disapproved the practice in terms.
The Court also emphasised that the threshold conditions in the arrest provision — the nature of the offence and the monetary limits — are jurisdictional and not discretionary.
How this changes the enforcement file
The first document to demand is the grounds of arrest in writing. Its absence, or its emptiness, is now the strongest single ground in a bail application and in a habeas or writ challenge.
The second is the reasons to believe recorded before the arrest. Ask for it by date and time. Where the record is contemporaneous with or later than the arrest, the arrest is vulnerable.
The third is the DRC-03 file. Where a payment was made during search or custody, the covering letter, the timing, and the absence of any determination become the basis for a refund claim, and the judgment now supports it directly.
The fourth is the summons record. Statements recorded at unreasonable hours, without a copy furnished, and without the presence of counsel within sight, are far easier to challenge after this decision.
What has not changed
The provisions stand. Arrest for the specified offences above the specified thresholds remains available, and a taxpayer who has issued invoices without supply or availed credit on such invoices at scale remains exposed.
Compounding under Section 138 and the prosecution route under Section 132 are unaffected in substance.
The judgment is about legality of process. It does not weaken a case built on documents, statements and money trails. It removes the shortcut.
Authorities relied on
Arrest provisions under the GST and customs statutes are valid, but grounds of arrest must be furnished in writing, reasons to believe must pre exist on material, criminal procedure safeguards apply, and coercive recovery during search or custody is impermissible.
Grounds of arrest must be furnished in writing to the arrested person; the source of the safeguard applied with modification to tax arrests.
Arrest must be necessary and not routine; the necessity must be recorded, a principle the Court applied to the exercise of the tax arrest power.
Laid down guidelines on search, summons and arrest under the GST Act, including on the recording of statements and the treatment of the taxpayer during investigation.
What to do on Monday
Prepare a one page enforcement protocol for the finance team: who is called, who is informed, what is signed, what is not signed, and the number that is dialled first.
In any search, record the start and end time, the officers present, the documents taken and the persons questioned, and have it signed.
Never make a DRC-03 payment during a search without a covering letter recording that it is under protest and without prejudice.
Demand written grounds of arrest and the recorded reasons to believe immediately, and preserve the refusal if any.
Review whether the alleged amount crosses the statutory threshold before conceding that the arrest power was available at all.
This page states the general position. A reader with a specific question on their own facts may write to the GST practice at AMLEGALS.
Write to the GST practiceQuestions we are asked on this
Does the judgment mean no arrests in GST?
No. It upholds the power. It regulates the manner, and it removes arrest as a collection technique.
We were made to pay in DRC-03 during a search. Can we recover it?
There is now direct support for the proposition that a payment obtained without determination is not a voluntary payment. Retrieve the timing, the narration and the correspondence, and pursue a refund.
Can counsel be present during a summons?
The practice recognised is presence within visible but not audible distance. Ask for it in writing at the outset and record any refusal.
What should the first bail application rely on?
The absence or inadequacy of written grounds of arrest, the absence of a pre existing recorded reason to believe, and the absence of necessity, before turning to the merits of the liability.
Does the threshold amount in Section 69 still matter?
It matters more than before, because the Court treated the statutory conditions as jurisdictional. An arrest for an alleged amount below the threshold is without authority.
In this cluster
- GST enforcement: search, seizure, summons, arrest and attachment in one map
- Section 70 summons: your rights, your obligations and your record
- Section 67 search and seizure: the conditions that must be satisfied
- Section 69 arrest under GST: when it is legal and when it is not
- Section 132 prosecution: offences, thresholds and compounding
- Radha Krishan Industries: provisional attachment is draconian, and the conditions are strict
- Bank account attachment: getting it lifted fast
- Anticipatory bail and regular bail in GST offences
- Statements recorded during investigation and their evidentiary value
- Coerced DRC-03 payments during search: recovery and refund
GST Insights is published by AMLEGALS for general information. Law stated as on 3 September 2026. Not advice on any particular set of facts; not an advertisement or a solicitation under Rule 36 of the Bar Council of India Rules. Readers with a question on their own facts may write to the GST practice of their own accord.