ARREST PROVISIONS UNDER GST (PART-1)

[Dr. Sanjiv Agarwal]

The provisions relating to ‘power to arrest’ are contained in following sections of the CGST Act, 2017:

Sections	Relating to
69	Power to arrest
132	Prosecution
436	Manner of arrest (Code of Criminal Procedure, 1973)

Objectives of arrest provisions

In the administration of taxation the provisions for arrests are created to tackle the situations created by some unscrupulous tax evaders. To some these may appear very harsh but these are necessary for efficient tax administration and also act as a deterrent and instil a sense of discipline. The provisions for arrests under GST Law have sufficient inbuilt safeguards to ensure that these are used only under authorisation from the Commissioner. Besides this, the GST Law also stipulates that arrests can be made only in those cases where the person is involved in offences specified for the purposes of arrest and the tax amount involved in such offence is more than the specified limit. The salient points of these provisions are:

Provisions for arrests are used in exceptional circumstance and only with prior authorisation from the Commissioner.

Meaning of arrest

While the term ‘arrest’ has not been defined in GST law, based on judicial pronouncements, ‘arrest’ implies ‘the taking into custody of a person under some lawful command or authority’. In other words, a person is said to be arrested when he is taken into custody and restrained of his liberty, by power or colour of lawful warrant.

Powers to arrest any person

Section 69 empowers the Commissioner of CGST or SGST to arrest any person where he has reasons to believe that such person has committed an offence under sec 132 (1) (a, b, c, d) and punishable under sec 132(1) (i, ii) or 131 (2).

Reason to believe is to have knowledge of facts which, although not amounting to direct knowledge, would cause a reasonable person, knowing the same facts, to reasonably conclude the same thing. As per section 26 of the IPC, 1860, “A person is said to have ‘reason to believe’ a thing, if he has sufficient cause to believe that thing but not otherwise.”‘Reason to believe’ contemplates an objective determination based on intelligent care and evaluation as distinguished from a purely subjective consideration. It has to be and must be that of an honest and reasonable person based on relevant material and circumstances.

Who can arrest

In case of CGST, the Commissioner may authorize any officer of Central Tax to arrest any person who has committed punishable offences liable for arrest. Such authorization has to be by way of a written order and only to Central Tax officers.

Offences punishable with arrest

Under section 132(1), arrest provisions are attracted where an offence has been committed which is punishable under sub-section (1) [clauses (a) to (d)] or sub-section (2) of sec 132 of the GST Act, 2017. Accordingly, following offences attract arrest provisions:

(a)   Sub-section (1) lists the offences punishable with arrest subject to term of imprisonment linked to amount involved in the offence.

(b)  Sub-section (2) provides for arrest in case of a repeat offence i.e. second or subsequent offence, in cases where he was convicted for first such offence. Punishment for second or subsequent offence be imprisonment which may extend upto five years and with fine.

Offences are divided into two categories, viz:

• Cognizable offences, i.e. where the person can be arrested without ‘warrant’ and
• Non-cognizable offences, i.e. offences other than above

Cognizable offence and non-cognizable offence

Generally, cognizable offence means serious category of offences in respect of which a police officer has the authority to make an arrest without a warrant and to start an investigation with or without the permission of a court. In terms of sub-section (5) read with sub-section (4) of sec 132, the offences specified in sec 132(1)(a, b, c, d) and punishable under clause (i) of sub-section (1) shall be cognizable and non- bailable.

Non-cognizable offence means relatively less serious offences in respect of which a police officer does not have the authority to make an arrest without a warrant and an investigation cannot be initiated without a court order. All offences under GST law except offences under sec 132(4) shall be non-cognizable and bailable i.e. offences involving tax upto INR 5 crore. In other words, offences which are cognizable are non-bailable and non-congnizable are bailable. To be a cognizable offence, the amount of tax evaded shall exceed INR 5 crores.

Bailable Offence

The offences from ‘bail’ point of view can be categorized into two types – bailable and non-bailable. While in a bailable offence, granting of bail is done in normal course whereas in case of non-bailable offence, an arrest can be effected, even for the purpose of investigation, implying that offender’s detention is non- discretionary. Non-bailable offence means where arrested person may be released on bail only by the Magistrate.

Bail is basically a concept used to ensure offender’s appearance to answer the charges pressed on him. The criminal offences where detention of the accused is deemed necessary to ensure his or her appearance for investigation and trial are termed as ‘non bailable’. The offences where detention may not be warranted are bailable offences.

Release of person in case of non-cognizable offence and bailable offence

Section 69(3) of the GST Act, 2017 law empowers the Deputy Commissioner or the Assistant Commissioner of GST to release the person so arrested on bail in case of non-cognizable and bailable offences, and for this purpose they have the same power as that of an officer-in-charge of a police station but subject to provision under sec 436 of the Code of Criminal Procedure, 1973.

Thus, a person may be released subject to the following:

(a)   Release may be on bail or otherwise;

(b)  Release of arrested person is allowed only in case of a non-cognizable offence and bailable offence;

(c)   Release can be made by the Deputy Commissioner or Assistant Commissioner of CGST/SGST;

(d)  The officer has the same powers and subject to same powers as that of an officer-in-charge of police station;

(e)   Provision of release is subject to provisions of Code of Criminal Procedure, 1973 (Sec 436).

Grounds of arrest

Sec 69(2), where a person is arrested for any cognizable offence, every officer authorised to arrest a person, shall inform such person, of the grounds of arrest and produce him before a magistrate within twenty four hours.

This section requires the following actions:

(a)   Arrest in case of cognizable offence u/s 132(5) of the GST Act, 2017

(b)  Officer to inform grounds of arrest to person being arrested (of course, before actual arrest),

(c)   Produce the arrested person before the Magistrate within twenty-four hours.

 

(To be continued .....)