Power to Arrest under GST

The GST law lays down stringent criteria and procedure to be followed for arresting a person. The arrest provisions are made applicable only under the exceptional circumstance and with prior authorization of the Commissioner. The current article briefly explains all the provisions relating to arrest under GST.

Power to arrest [Section 69]-

Provisions of section 69 of the CGST Act bestows the arresting powers to the Commissioner under GST. The provisions state as under-

• The Commissioner believes that the person has committed a punishable offence as specified under section 132 of the CGST Act.
• The Commissioner, by order, can authorize any Central Tax officer to arrest the person.
• The authorized officer will inform the grounds of arrest to the person.
• In case of a cognizable offence, the authorized officer will produce the person before a Magistrate within 24 hours.
• In case of a non-cognizable offence, the Deputy/ Assistant Commissioner shall have the power to release the person on bail.

From the above, it is clear that the arrest is possible only when the person has committed an offence specified under section 132. The same is explained hereunder.

Offences under section 132 accountable to arrest [Section 132]-

Following offences stated under section 132 are liable to arrest under GST-

• The person supplies the goods or services or both without the actual issue of the invoice.
• The person issues the invoice/ bill without actual supply of goods or services or both.
• The person avails input tax credit on the basis of the invoice/ bill issued without actual supply of goods or services or both.
• The person fraudulently avails input tax credit without any invoice/ bill.
• The person collects the amount as tax, however, fails to deposit the same to the Government beyond the period of 3 months from the date on which the payment becomes due.
• The person is for the second time convicted for the offence under section 132.

Punishment for the offences [section 132(i), Section 132(ii) and Section 132(iii)]-

Provisions of section 132(i), 132(ii) and 132(iii) define the punishment of the above offences. The same is simplified in the table below-

Notably, none of the above limits will be applicable in case the person commits an offence for the second time. In such case, as per section 132(2), the person will be punishable for a maximum imprisonment of five years along with a fine.

Types of offence and availability of bail thereof-

From the above table, it is evidenced that there are following two types of offences-

1. Cognizable offence; and
2. Non-cognizable offence.

Putting in simple terms, Cognizable offence is a serious offence in which the police can arrest the person without any warrant. Whereas, non-cognizable offence are offences where the officer cannot arrest the person without a warrant issued by the competent authority.

Reading together both the provisions of section 69 and section 132(4), the offences vis-à-vis bail will be as under-

Procedure of Arrest-

The procedure of arrest under GST must be in accordance with the provisions prescribed under the Code of Criminal Procedure, 1973. On read-through the provisions along with the GST provisions, the following points are worth noticing-

1. The power to issue an order for arrest is only with the Commissioner or the Magistrate.
2. The Commissioner should have the ‘reason to believe’ that the person has committed an offence.
3. Arrest under GST is possible only when the person commits the offences listed down in section 132(1)(a); section 132(1)(b); section 132(1)(c) and section 132(1)(d) and the evasion exceeds the specified limit (i.e., INR 100 Lakhs).

Notably, the specified limit criteria don’t apply when the person commits the offence for the second time.

4. The arrested person should be informed the grounds on the basis of which he is arrested. The person should be taken to the magistrate court.
5. In case of a non-cognizable offence, the Deputy/ Assistant Commissioner will discharge the duties of releasing the person on bail.

Gist of arrest provisions-

1. Circumstances under which arrest is possible-
   • Supplies of goods or services or both without the actual issue of the invoice.
   • Issuance of the invoice or bill without the actual supply of goods or services or both.
   • Availment of an input tax credit on the basis of the invoice or bill issued without actual supply of goods or services or both.
   • Availment of input tax credit without any invoice/ bill.
   • Failure of depositing of the tax amount within a period of 3 months from the date on which the payment becomes due.
2. An arrest is possible only when the evasion exceeds INR 100 Lakhs.
3. Evasion above INR 500 Lakhs will amount to cognizable offence. Accordingly, bail is not possible in such a case.
4. In case the person commits an offence for the second time, without considering the specified limit, he will be punishable with imprisonment for a maximum of five year along with a fine.

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