Power to Arrest - Section 69 - GST Ready Reckoner - GST

Power to Arrest Introduction The Commissioner of CGST/SGST can authorize a CGST/SGST officer to arrest a person if he has reasons to believe that the person has committed an offence attracting a punishment prescribed under section 132(1) (a), (b), (c), (d) or Sec 132(2) of the CGST/SGST Act. Thus, the provisions of arrest are highly restricted in GST. The power can be exercised only where combined evasion of duty is ₹ 2 crore or more and where offence is very severe (only five offences) namely where supplies have been made without any invoice; invoice made without any supply; tax collected but not paid to the Government; tax collected in contravention of provisions of the GST Act but not paid to the Government and taking input tax credit without receiving goods and services. Furthermore, the arrest made for duty evasion ranging from ₹ 2 crores to ₹ 5 crores are bailable and those beyond ₹ 5 crores are non-bailable . As Per Section 69(1) The Commissioner of CGST/SGST can authorise an officer to arrest a person if he has reasons to believe that the person has committed an offence prescribed in (a) Supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made thereunder,with the intention to evade tax; [ clause (a) of sub-section (1) of section 132 ] (b) Issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax; [ clause (b) of sub-section (1) of section 132 ] (c) Avails input tax credit using such invoice or bill referred to in clause (b) [ clause (c) of sub-section (1) of section 132 ] (d) Collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due [ clause (d) of sub-section (1) of section 132 ] which is punishable under clause (i) or (ii) of sub-section (1) of section 132 , or sub-section (2) of the section 132 (i) 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 five hundred lakh rupees, with imprisonment for a term which may extend to five years and with fine;[ clause (i) of sub-section (1) of section 132 ] (ii) 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 two hundred lakh rupees but does not exceed five hundred lakh rupees, with imprisonment for a term which may extend to three years and with fine; [ clause (ii) of sub-section (1) of section 132 ] (iii) Where any person convicted of an offence under this section is again convicted of an offence under this section, then, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to five years and with fine. [ sub-section (2) of section 132 ] Safeguards provided under CGST /SGST Act for a person who is placed under arrest There are certain safeguards provided under section 69 for a person who is placed under arrest. These are: i. Where a person is arrested under sub-section (1) for an offences specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of section 132 and punishable under clause (i) of sub section (1) of section 132, of that sub-section shall be cognizable and non-bailable., 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 . [ Section 69(2) ] ii. If a person is arrested for a non-cognizable and bailable offence, the Deputy/ Assistant Commissioner of CGST/SGST can release him on bail and he will be subject to the same provisions as an officer in charge of a police station under section 436 of the Code of Criminal Procedure, 1973; iii. All arrests must be in accordance with the provisions of the Code of Criminal Procedure, 1973 relating to arrest. Cognizable offence 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. However, GST being a special legislation, only the officers, duly empowered under the Act can act as above. Non-cognizable offence 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, except as may be authorized under special legislation. Cognizable and Non-cognizable offences under CGST Act In section 132 of CGST Act, it is provided that the offences relating to taxable goods and /or services where the amount of tax evaded or the amount of input tax credit wrongly availed or the amount of refund wrongly taken exceeds ₹ 5 crores, shall be cognizable and nonbailable. Other offences under the act are non-cognizable and bailable. Relevant Guidelines Guidelines for launching of prosecution under the CGST, 2017 [ Instruction No. 04/2022-23 [GST Investigation] Dated 01.09.2022 ] Guidelines for arrest and bail in relation to offences punishable under the CGST act, 2017 [ Instruction No. 02/2022-23 (GST-Investigation) Dated 17.08.2022 ] Format of Arrest Memo Circular No. 128/47/2019-GST dated 23.12.2019 The broad guidelines for arrest followed in CBIC Decision to arrest needs to be taken on case-to- case basis considering various factors, such as, nature and gravity of offence, quantum of duty evaded or credit wrongfully availed, nature and quality of evidence, possibility of evidences being tampered with or witnesses being influenced, cooperation with the investigation, etc. Power to arrest has to be exercised after careful consideration of the facts of the case which may include: to ensure proper investigation of the offence; to prevent such person from absconding; cases involving organized smuggling of goods or evasion of customs duty by way of concealment; master minds or key operators effecting proxy/ benami imports/exports in the name of dummy or non-existent persons/IECs, etc.; where the intent to evade duty is evident and element of mensrea/guilty mind is palpable; prevention of the possibility of tampering with evidence; intimidating or influencing witnesses; and large amounts of evasion of duty or service tax at least exceeding one crore rupees. Guidelines/precaution To Be followed during Arrest The provisions of the Code of Criminal Procedure, 1973 relating to arrest and the procedure thereof must be adhered to. It is therefore necessary that all field officers of CGST/SGST be fully familiar with the provisions of the Code of Criminal Procedure, 1973. One important provision to be taken note of is section 57 of Cr.P.C.,1973 which provides that a person arrested without warrant shall not be detained for a longer period than, under the circumstances of the case, is reasonable but this shall not exceed twenty-four hours (excluding the journey time from place of arrest to the Magistrate s court). Within this period, as provided under section 56 of Cr.PC. the person making the arrest shall send the person arrested without warrant before a Magistrate having jurisdiction in the case. In a landmark judgment in the case of D.K. Basu v. State of West Bengal reported in 1997 (1) SCC 416 = 1996 (12) TMI 350 - SUPREME COURT , the Hon ble Supreme Court has laid down specific guidelines required to be followed while making arrests. While this is in relation to police, it needs to be followed by all departments having power of arrest. These are as under: i. The police personnel carrying out the arrest and handling the interrogation of the arrestee should bear accurate, visible and clear identification and name tags with their designations. The particulars of all such police personnel who handle interrogation of the arrestee must be recorded in a register. ii. The police officer carrying out the arrest shall prepare a memo of arrest at the time of arrest and such memo shall be attested by at least one witness, who may be either a member of the family of the arrestee or a respectable person of the locality from where the arrest is made. It shall also be counter signed by the arrestee and shall contain the time and date of arrest. iii. A person who has been arrested or detained and is being held in custody in a police station or interrogation center or other lock up, shall be entitled to have one friend or relative or other person known to him or having interest in his welfare being informed, as soon as practicable, that he has been arrested and is being detained at the particular place, unless the attesting witness of the memo of arrest is himself such a friend or a relative of the arrestee. iv. The time, place of arrest and venue of custody of an arrestee must be notified by the police where the next friend or relative of the arrestee lives outside the district or town through the Legal Aid Organization in the District and the police station of the area concerned telegraphically within a period of 8 to 12 hours after the arrest. v. An entry must be made in the diary at the place of detention regarding the arrest of the person which shall also disclose the name of the next friend of the person who has been informed of the arrest and the names and particulars of the police officials in whose custody the arrestee is. vi. The arrestee should, where he so requests, be also examined at the time of his arrest and major and minor injuries, if any present on his/her body, must be recorded at that time. The Inspection Memo must be signed both by the arrestee and the police officer effecting the arrest and its copy provided to the arrestee. vii. The arrestee should be subjected to medical examination by the trained doctor every 48 hours during his detention in custody by a doctor on the panel of approved doctors appointed by Director, Health Services of the concerned State or Union Territory, Director, Health Services should prepare such a panel for all Tehsils and Districts as well. viii. Copies of all the documents including the memo of arrest, referred to above, should be sent to the Magistrate for his record. ix. The arrestee may be permitted to meet his lawyer during interrogation, though not throughout the interrogation. x. A police control room should be provided at all district and State headquarters where information regarding the arrest and the place of custody of the arrestee shall be communicated by the officer causing the arrest, within 12 hours of effecting the arrest and at the police control room it should be displayed on a conspicuous notice board. Bail / Custody of the person arrested, Case study In a recent judgement the Hon‟ble High Court of Telangana in the Case of P.V.Ramana Reddy v. UOI- reported in 2019 (4) TMI 1320 - TELANGANA AND ANDHRA PRADESH HIGH COURT , held that the arrested person should be produced by the authorized officer before the Magistrate within 24 hours who may either remand him to judicial custody or release him on bail. The question of giving such person to police custody or custody to proper officer does not arise. The contention that the proper officer not being a police officer could not seek custody of arrested person, was held to be not tenable. This view was approved by the Apex Court reported in 2019(26) G.S.T.L.j175 (S.C.).