Section 69 of GST – Power to arrest as per GST Act

(1) Where the Commissioner has reasons to believe that a person has committed any offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of section 132 which is punishable under clause (i) or (ii) of sub-section (1), or under sub-section (2) of the said section, he may, by order, authorise any officer of the central tax to arrest such person. (2) Where a person is arrested under sub-section (1) for an offence specified under sub-section (5) of section 132, the officer authorised to arrest the person shall inform such person of the grounds of arrest and produce him before a magistrate within twenty-four hours. (3) Subject to the provisions of the Code of Criminal Procedure, 1973, ––

(a) where a person is arrested under sub-section (1) for any offence specified under sub-section (4) of section 132, he shall be admitted to bail or in default of bail, forwarded to the custody of the Magistrate;(b) in the case of a non-cognizable and bailable offence, the Deputy Commissioner or the Assistant Commissioner shall, for the purpose of releasing an arrested person on bail or otherwise, have the same powers and be subject to the same provisions as an officer-in-charge of a police station.

Related provisions of the Statute

Analysis of this section

Introduction

This section deals with power of arrest when one commits any of the following offences which is punishable under clause (i) or (ii) of sub-section (1), or under sub-section (2) of sec 132 of CGST Act. Analysis The Commissioner is vested with the power to authorise, by an order, any Officer to arrest a person, where there is a reason to believe that such person has committed the specified offences – in (1) and (2) below: (1) Offences of the kind specified in Section 132(1) (a),(b),(c) and (d):

(a) Supplies any goods or services or both without issue of invoice with the intention to evade tax(b) Issues any invoice or bill without supplies leading to wrongful availment or utilisation of input tax credit or refund of tax(c) Avails input tax credit using invoice or bill referred to in b) above(d) Collects any amount as tax but fails to pay the same beyond the period of 3 months from the date on which payment becomes due.

AND when such offences (specified above) are punishable under Section 132(1)(i) and (ii) or section 132(2) as follows: In cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken: Exceeds: Rs. 500 Lakhs: Punishable with imprisonment for a term which may extend to 5 years and with fine under section 132(1)(i); or Exceeds Rs 250 Lakhs but does not exceed Rs 500 Lakhs: Punishable with imprisonment for a term which may extend to 3 years and with fine under section 132(1)(ii) Section 132(2): A second and every subsequent conviction on account of any of the offences specified under Section 132 – punishable with imprisonment for a term which may extend to 5 years and with fine. If an offence involves an amount exceeding Rs. 500 lakhs and as such punishable for a term which may extend to 5 years and fine under section 132(1)(i), then such an offence shall be cognizable and non-bailable under section 132(5). The officer arresting such person is required to inform him of the grounds of arrest and produce him before the Magistrate within 24 hours. All other offences under GST law shall be non-cognizable and bailable under section 132(4). In case of such offences, subject to the provisions of the Code of Criminal Procedure, 1973, the arrested person shall be admitted to bail or in default of bail, forwarded to the custody of the Magistrate. The Assistant/Deputy Commissioner can grant the bail and is conferred powers of an officer-incharge of a police station. All arrests should be made as per the provisions of Code of Criminal Procedure, 1973. Please note that relief of section 24 to 30 of Evidence Act may be availed in respect of statements made by the accused. It is not clear if the Proper Officer is equivalent to a Police Officer, in as much as, whether the Proper Officer will file a Police Report under section 173 of Cr. P.C before a Magistrate (read as Commissioner as provided in section 67(10) or limited only to that section) or only a complaint is filed under 190(a) of Cr. P.C. to take congnizance.

Comparative review

Similar power of arrest of tax evaders by officer is present in most of the indirect tax legislations. However, under the Finance Act, 1994 the power to arrest can be exercised only in cases where taxes collected and not deposited for an amount exceeding ` 200 lakhs.

Issues and concerns

  1. While the law provides a threshold limit exceeding which the offence would be considered to be an offence by which a person may be arrested, the law does not specify any time-period in respect of the same. Therefore, consider a case where the Commissioner has reason to believe that a person has failed to issue tax invoices in respect of supplies effected during a period of 3 years, wherein the tax evaded exceeds Rs.250 lakhs. Even in such a case it appears that the Commissioner has the powers to arrest such person.
  2. There is no indication as to whether the reference is made to a taxable person / registered person (GSTIN) / or any person (PAN) in the language employed in Section 132(1) that specifies the offences, being “Whoever commits any of the following offences, namely”.
  3. It is pertinent to note that the onus to prove that the allegations for arrest, levelled by the Commissioner or any officer authorised by him, is falsified and baseless is totally on the accused person and the officer merely needs to have a reason to believe. For instance: The officer may allege that the taxable person has availed Input Tax Credit on the basis of Invoice without actual supply of goods (that is without actually receiving the goods). Here a mere statement / record showing GRN details may not suffice and actual movement of goods and vehicles may be required to be justified by the accused by way of toll receipts and camera footage at the factory gate for instance. Recommended Articles –

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