The party's reaction came after the Enforcement Directorate (ED) arrested Shivakumar in a money laundering case.
Congress General Secretary K. C. Venugopal, slamming the Central government, said: "The arrest is a clear case of political vendetta by the fascist government at the Centre. After P. Chidambaram, yet another leader facing vengeance for standing up against the horse trading and petty politics of the BJP."
Shivakumar, considered party's troubleshooter was arrested by the financial probe agency on Tuesday evening after his questioning on the fourth day in connection with a money laundering case.
The agency has questioned Shivakumar on Friday, Saturday, Monday and Tuesday for over 29 hours.
As soon as the news of his arrest spread, scores of Congress supporters gathered outside the ED headquarters in the upscale Khan Market area in the national capital and protested against his arrest.
Congress Spokesperson Randeep Singh Surjewala also slammed the BJP government and described Shivakumar's arrest as a diversionary tactic from the real issues.
He said to "put a lid on them" and "draw attention from their own misdeeds", the BJP government is taking false action against Congress leaders.
"Shivakumar is innocent and there is not an iota of evidence against him." Surjewala said, adding: "We will fight the arrest legally and in people's court."
Shivakumar first time deposed before the ED on Friday after the Karnataka High Court rejected his plea for interim protection from arrest by the ED.
He was on the radar of the I-T Department and the ED since demonetisation in 2016. An I-T search at his New Delhi flat on August 2, 2017 led to seizure of Rs 8.59 crore unaccounted cash.
The I-T Department lodged cases against him and his four associates under sections 277 and 278 of the I-T Act, 1961 and sections 120(B), 193 and 199 of the Indian Penal Code (IPC).
Based on the I-T Department charge sheet, the ED registered a money laundering case against Shivakumar, Haumanthaiah, an employee at Karnataka Bhavan in New Delhi, and others.
The Congress, as well as Shivakumar has accused Karnataka Chief Minister B.S. Yediyurappa of indulging in vindictive politics by targeting him and other opposition leaders.
( With inputs from IANS )