On Wednesday, the Supreme Court issued a directive to the Center, urging it to abstain from employing "threat and coercion" in its search and seizure operations targeting traders for GST recovery. Instead, the Court emphasized the importance of persuading traders to voluntarily settle their outstanding dues.

A bench, comprising Justices Sanjiv Khanna, MM Sundresh, and Bela M Trivedi, currently scrutinizing different sections of the GST Act, underscored the absence of any legal provision empowering authorities to enforce payment of outstanding dues through coercion.

"There is no power under the Act to compel any person to pay the tax liability during the search and seizures. Ask your department that the payment should be voluntarily and there should not be use of any force. You have to give three-four days' time to the alleged offender to consult, think and clear the liability. It should be voluntary and there should not be use of any threat or coercion," , the Bench informed Central.

Additional Solicitor General SV Raju, representing the Center, mentioned the potential for the use of force in the past but highlighted that payments during search and seizure operations are predominantly made voluntarily.

"Yes, there is possibility of both ways but mostly the payment is done voluntarily or after a few days as the alleged offender wanted to consult his advocate for payment of liability. Yes, there may have been some instances in the past but that is not the norm," he said during the day-long hearing.

The bench noted that numerous petitioners have raised concerns regarding the alleged use of threat and coercion by authorities during search and seizure operations.

Senior advocate Sujit Ghosh, representing one of the petitioners, argued that the safeguards provided by the law are not effectively implemented, leading to people being subjected to the threat of arrest to compel payment.

During the hearing on a batch of 281 petitions challenging various provisions of the GST Act, Customs Act, and the Prevention of Money Laundering Act, the bench reminded Mr. Raju that the GST law incorporates checks and balances.

"We agree there cannot be a broad-brush approach but we have to ensure that safeguards are there. There has to be a strict compliance of section 69 (power to arrest) and section 70 (power to summon). When the legislature has enacted safeguard provisions, then they need to be implemented strictly. You have to apply your mind at the time of summon or arrest," the bench told Mr Raju.

The law officer mentioned instances where goods are transported in unconventional vehicles such as oil tankers and auto-rickshaws to evade liability. Senior advocate Kavin Gulati, representing one of the petitioners, expressed that in his nearly three-decade career, he had never witnessed as many arrests and confiscations as those that have occurred in the past five years under the GST regime.

Mr. Raju intervened, arguing that the department doesn't resort to arresting every individual, primarily focusing on cases involving tax fraud. However, Mr. Gulati countered, stating that in many instances, officers threaten individuals summoned under section 70 with arrest if they fail to make payments.

The bench informed Mr. Raju that if the allegation of the same officers conducting the entire proceedings is true, then there could be a possibility of bias, prompting the need to examine this issue.

On May 2, the apex court had directed the Centre to provide information regarding the issuance of notices and arrests made under the provisions of the GST Act. It indicated its willingness to interpret the law and establish suitable guidelines to prevent the harassment of citizens by safeguarding their liberty.

Expressing concern over the ambiguity in section 69 of the GST Act concerning the powers of arrest, the top court emphasized its commitment to interpreting the law in a manner that enhances liberty. It stated its intent to intervene, if necessary, to prevent the harassment of citizens.