Summary: The 57th GST Council Meeting held on 8 October 2026 recommended significant changes to the arrest and prosecution provisions under Sections 69 and 132 of the CGST Act, 2017, raising important questions about their applicability to pending investigations, criminal complaints, trials and appeals. The proposals include withdrawal of departmental arrest powers under Section 69, an increased prosecution threshold of ₹5 crore, narrowing or omission of certain criminal offences and rationalisation of punishment. However, these recommendations do not automatically amend the existing law or terminate criminal proceedings relating to earlier periods. Section 6 of the General Clauses Act, 1897, ordinarily preserves liabilities, punishments, investigations and legal proceedings arising under repealed legislation unless a different legislative intention appears. Consequently, taxpayers facing prosecution involving amounts below ₹5 crore may seek the benefit of the proposed threshold, while the Department may argue that liabilities incurred under the earlier law remain enforceable. Similarly, the deletion of offences and reduction of imprisonment may provide grounds for relief in appropriate pending proceedings, but automatic discharge, quashing or reopening of concluded cases cannot presently be assumed. The proposed omission of Section 69 raises a separate issue concerning future exercises of arrest powers, without necessarily invalidating arrests lawfully made before commencement. Unlike the proposed ₹10,000 threshold for certain pending GST notices, no equivalent express transitional relief has been announced for all pending Section 132 prosecutions. The final position will depend upon the enacted amendments, their commencement dates, savings provisions and the circumstances of each case.
- 1. Introduction
- 2. Effective Date: When Will the Amendments Become Law?
- 3. Prospective and Retrospective Amendments: The Legal Distinction
- 4. Whether Pending Criminal Cases Will Automatically Be Closed
- 5. Section 6 of the General Clauses Act, 1897: A Major Legal Consideration
- 6. Practical Example: Pending Prosecution Involving ₹3 Crore
- Argument available to the assessee
- Argument available to the department
- Legal position
- 7. Whether Removal of Arrest Powers Under Section 69 Will Apply to Pending Investigations
- Example
- Subsequent development regarding existing arrest cases
- 8. Comparison With the Proposed ₹10,000 Threshold for Pending GST Notices
- 9. Professional View and Legal Interpretation
- 10. What Should Taxpayers and Professionals Do in Pending Cases?
- 11. Conclusion
1. Introduction
The 57th GST Council Meeting, held on 8 October 2026, recommended significant changes to the arrest and prosecution provisions under Sections 69 and 132 of the Central Goods and Services Tax Act, 2017.
In this article, I have discussed whether the proposed amendments to Sections 69 and 132 may affect pending GST investigations, criminal complaints, trials and appeals relating to earlier periods, including the proposed ₹5 crore prosecution threshold and withdrawal of arrest powers. In case you have any doubt after reading this article, or if you feel that any practical aspect requires further discussion, you may contact me at the contact details mentioned at the end of this article.
While the nature and extent of these proposed amendments have already been widely discussed, a more important legal question now arises:
Will the proposed amendments apply only to offences committed after their commencement, or will persons facing investigations, criminal complaints, pending trials and appeals relating to earlier periods also be entitled to their benefit?
This question assumes considerable importance because several taxpayers are already facing criminal proceedings under Section 132 involving amounts below the proposed prosecution threshold of ₹5 crore. Others are being prosecuted under provisions proposed to be deleted or narrowed.
The answer requires examination of the effective date of the amendments, the principles governing beneficial changes in criminal law, Section 6 of the General Clauses Act, 1897, and, most importantly, the language of the final legislation and its transitional provisions.
2. Effective Date: When Will the Amendments Become Law?
The first and most important distinction is between a recommendation of the GST Council and an amendment enacted by Parliament.
The recommendations made on 8 October 2026 do not automatically amend Sections 69 and 132 of the CGST Act.
These provisions form part of primary legislation. Their amendment requires an appropriate Act of Parliament, followed by commencement in accordance with the enacted provisions. Corresponding amendments to the applicable State GST laws may also be necessary.
The Ministry of Finance has clarified that the Council’s recommendations will acquire legal force only through the relevant statutory amendments, notifications or other legally appropriate instruments.
As at 20 October 2026, the proposed amendments to Sections 69 and 132 have not yet become operative law. Although 1 April 2027 has been announced/reported as an implementation target for the wider GST process-reform package, that date should not be treated as the legally operative commencement date of the proposed amendments to Sections 69 and 132 unless and until the necessary legislation is enacted and brought into force.
Consequently, until the respective amendments become operative, the existing provisions continue to govern investigations, prosecution and arrest.
The date of the GST Council recommendation is therefore not the effective date of the proposed amendments.
3. Prospective and Retrospective Amendments: The Legal Distinction
An amendment is prospective when it operates from its commencement date, ordinarily affecting future transactions, conduct or proceedings as directed by the legislation.
A retrospective amendment expressly or by necessary implication alters the legal consequences attached to events that occurred before its commencement.
However, an amendment commencing prospectively may still affect a pending proceeding. Its prospective commencement and its application to earlier cases are two different questions.
In criminal law, an additional principle becomes relevant: a subsequent provision reducing punishment may, in appropriate circumstances, be applied for the benefit of an accused person even where the offence was committed earlier.
This principle is not absolute. Its application depends upon the wording, purpose and transitional provisions of the legislation.
Article 20(1) of the Constitution prohibits retrospective creation of criminal offences and imposition of punishment greater than that permissible when the offence was committed. It does not itself guarantee the retrospective benefit of every subsequent reduction in punishment.
Therefore, merely describing an amendment as beneficial does not conclusively establish that it applies retrospectively.
4. Whether Pending Criminal Cases Will Automatically Be Closed
The official recommendations concerning Section 132 propose an increased monetary threshold, narrowing or omission of certain offences and reduction or rationalisation of punishment.
However, the recommendations do not expressly provide that criminal prosecutions already instituted under the existing provisions shall stand withdrawn, abated or terminated.
The legal position may differ according to the stage of proceedings.
| Stage of proceedings | Possible effect of the amendments |
|---|---|
| Investigation in progress | The amended law may affect future enforcement, subject to preservation of liability for earlier offences. |
| Prosecution sanction pending | The revised provisions may provide grounds for reconsideration, depending upon the final legislation. |
| Complaint already filed before court | The prosecution will not automatically terminate merely because the law is subsequently amended. |
| Criminal trial pending | The accused may raise arguments based upon the beneficial nature of the amendment, subject to statutory savings and judicial interpretation. |
| Conviction recorded, appeal pending | Reduced punishment may be claimed where permitted by the amended law and applicable legal principles. |
| Conviction and proceedings finally concluded | No automatic reopening or cancellation of conviction arises merely from a subsequent amendment. |
The important distinction is that the absence of an express retrospective provision does not necessarily prevent every form of relief, but it makes automatic termination of pending prosecutions legally doubtful.
5. Section 6 of the General Clauses Act, 1897: A Major Legal Consideration
Section 6 of the General Clauses Act provides that where a Central enactment is repealed, unless a different intention appears, such repeal does not ordinarily affect liabilities and punishments already incurred under the earlier law.
It also preserves investigations and legal proceedings relating to those liabilities.
The provision is particularly relevant because the proposed changes to Section 132 include omission of an existing offence provision and deletion of certain expressions defining criminal conduct.
The mere omission of a statutory offence does not necessarily mean that every prosecution relating to conduct committed before its omission automatically comes to an end.
For example, suppose an assessee is being prosecuted under Section 132(1)(i) for an alleged offence committed in 2024.
If clause (i) is subsequently omitted, the assessee may contend that continuation of prosecution would be inconsistent with the Legislature’s decision to remove that offence.
On the other hand, the department may rely upon Section 6 to argue that criminal liability already incurred under the former law survives the omission.
The determination would ultimately depend upon the language of the new legislation, including whether it expresses a different intention or contains specific transitional or savings provisions.
6. Practical Example: Pending Prosecution Involving ₹3 Crore
Consider the following illustrative case.
A company allegedly issued invoices without actual supply during FY 2023–24, involving wrongful ITC of ₹3 crore.
The department filed a criminal complaint under Section 132 in 2025. The trial is pending.
The proposed amendment raises the monetary prosecution threshold to ₹5 crore.
Argument available to the assessee
The subsequent legislative decision to increase the prosecution threshold reflects an intention to restrict criminal proceedings to more serious offences.
It may therefore be argued that continuation of prosecution involving ₹3 crore would be inconsistent with the objective of the beneficial amendment.
The accused may seek the benefit of the new threshold, subject to the final statutory wording.
Argument available to the department
The offence was punishable under the law existing when it was committed.
Section 6 of the General Clauses Act ordinarily preserves previously incurred liabilities and criminal proceedings unless the new legislation expresses a contrary intention.
Consequently, the increase in threshold would not necessarily invalidate a complaint already filed for an earlier offence.
Legal position
The assessee has an arguable basis to seek relief, but an automatic right to discharge or quashing cannot presently be asserted.
The issue will depend substantially upon the language of the enacted amendment, its commencement and transitional or saving provisions.
7. Whether Removal of Arrest Powers Under Section 69 Will Apply to Pending Investigations
A separate distinction must be drawn between the power to arrest and the power to prosecute.
The proposed omission of Section 69 relates to the authority of GST officers to arrest persons under the CGST Act.
Once the omission becomes operative, officers would no longer be entitled to exercise the arrest power conferred by the omitted provision.
Example
Suppose a GST investigation commenced in 2025 and remains pending when Section 69 is omitted.
The fact that the investigation relates to an earlier financial year would not, by itself, authorise an officer to exercise a statutory arrest power that is no longer available.
However, this does not necessarily mean that an arrest lawfully made before the amendment becomes invalid.
Further, persons already in judicial custody would not automatically become entitled to release merely because the GST officers’ arrest power was subsequently withdrawn. Judicial custody, warrants, bail and other criminal procedures require separate legal examination.
Thus, the prospective withdrawal of an enforcement power may affect an existing investigation without retrospectively invalidating previous lawful actions.
Subsequent development regarding existing arrest cases
It has subsequently been reported that the Centre and States are working on a standard operating procedure for treatment of existing GST arrest cases, with a view to ensuring continuity and uniformity during implementation of the proposed reforms.
The legal effect of such an SOP should ultimately be examined together with the enacted amendments and applicable transitional provisions. Until an official SOP or statutory framework is issued, the reported development should not itself be treated as operative law.
8. Comparison With the Proposed ₹10,000 Threshold for Pending GST Notices
A significant distinction arises from another recommendation made at the same GST Council Meeting.
For specified notices and appeals under Sections 73, 74 and 74A involving tax amounts below ₹10,000, the Council expressly recommended that pending proceedings should be decided as though the new threshold had existed when the notice was issued.
This is an example of an express proposal to extend the benefit to certain existing proceedings.
In contrast, no corresponding express transitional provision has been announced for pending criminal prosecutions under Section 132.
This difference is legally significant.
It may be argued that where the Council intended to recommend relief specifically for existing proceedings, it expressly said so.
However, the absence of a similar provision for Section 132 does not conclusively establish that beneficial criminal-law principles can never apply. That question remains subject to the enacted legislation and its interpretation.
9. Professional View and Legal Interpretation
Professional commentary published following the 57th GST Council Meeting has generally treated the proposed amendments as recommendations requiring legislative implementation, rather than amendments that have already become operative.
The treatment of existing investigations, complaints and prosecutions is expected to depend substantially upon the language of the amending legislation, its commencement provisions and any express transitional or saving clauses.
Professional commentary can assist in identifying the practical and legal issues arising from the proposed reforms. However, the final legal position will ultimately depend upon the enacted statutory framework.
On that basis, the position for pending cases may presently be summarised as follows:
| Nature of proposed change | Position for pending cases |
|---|---|
| Increase of prosecution threshold to ₹5 crore | Relief may be argued, but automatic termination of earlier prosecution is not presently established; preservation of earlier liabilities must be considered. |
| Deletion or narrowing of an offence | May support a challenge to pending prosecution, but automatic termination cannot presently be assumed. |
| Reduction in maximum imprisonment | May provide a basis for seeking the benefit of reduced punishment, subject to the enacted legislation and any saving provisions. |
| Introduction of fine-only sentencing | May assist an accused in pending sentencing or appellate proceedings, subject to the final law. |
| Omission of Section 69 arrest power | Would restrict future exercise of that GST arrest power after commencement, including in ongoing investigations. |
| Prosecution already concluded | No general automatic reopening of concluded criminal proceedings. |
10. What Should Taxpayers and Professionals Do in Pending Cases?
Taxpayers facing proceedings under Sections 69 and 132 should carefully examine the stage of their case and identify the particular statutory offence involved.
Where prosecution is pending, the following matters become particularly relevant:
- financial year of the alleged offence;
- exact clause of Section 132 invoked;
- monetary amount involved;
- whether a criminal complaint has been filed;
- whether cognizance has been taken; and
- whether the matter is at the investigation, trial or appellate stage.
Pending the statutory amendment, existing legal defences should continue to be pursued independently.
Once the amendment becomes operative, professionals should examine its commencement provision, retrospective or transitional language, express saving clauses and the possible operation of Section 6 of the General Clauses Act before advising an assessee to seek discharge, quashing or reduced punishment.
In appropriate cases, the new legislation may provide additional grounds for relief.
However, a GST Council recommendation by itself does not confer an enforceable right to termination of an existing criminal prosecution.
11. Conclusion
The proposed amendments to Sections 69 and 132 represent an important shift towards rationalisation of GST criminal enforcement.
Nevertheless, the question of their application to pending prosecutions remains legally unsettled as at 20 October 2026.
The amendments cannot be treated as operative merely from the date of the GST Council Meeting. Their commencement must be determined from the final enacted legislation.
Similarly, the proposed increase in the prosecution threshold to ₹5 crore, narrowing or deletion of specified offences and reduction in punishment may provide substantial grounds for relief in appropriate pending cases, but they cannot presently be assumed to result in automatic termination of existing criminal proceedings.
Section 6 of the General Clauses Act and any express saving or transitional provisions contained in the final legislation will be particularly important in determining the treatment of liabilities and prosecutions arising under the earlier law.
The withdrawal of arrest powers under Section 69 raises a separate issue and would ordinarily affect the future exercise of that statutory power after its omission becomes operative.
In conclusion, the proposed amendments may provide substantial relief to persons involved in pending GST criminal proceedings, but the extent of such relief must ultimately be determined from the final statutory amendments, their commencement and saving provisions, and the facts and procedural stage of each case.
A clear legislative provision specifying the treatment of pending investigations, complaints, trials and appeals would be desirable to avoid inconsistent interpretations and unnecessary litigation.
