The GST investigation wing of the Central Board of Indirect Taxes and Customs (CBIC) has asked field officers not to exercise the power to arrest in a mechanical manner and also refrain from routinely summoning senior management officials like Chairman and Managing Directors (CMDs) or Chief Executives of companies, unless they are handling the day-to-day function. The GST investigation wing had issued 2 Instructions directed to its officers on these two very important issues in August 2022. These guidelines to field officers are on issuing summons and provision of arrest and bail under the GST law.
The Instructions for arrest and bail under the GST law mentions that the arrest should not be made in routine and mechanical manner. Since arrest impinges on the personal liberty of an individual, such a measure should be based on credible material. As per GST laws, the Commissioner has the power to arrest a person only where he has “reason to believe” that the alleged offender has committed any offence. It has been clarified that the “reason to believe” must be unambiguous and amply clear and must be based on credible material. It has also been clarified that even if all the legal requirements are met, it does not mean that arrest has to be necessarily done. The Commissioner should ensure that without arrest the presence of the accused cannot be ensured, he may tamper with the evidence, etc. and only if it is absolutely necessary, arrest the accused.
The Board has clarified that arrest should be done only in case of wrongfully availing or utilising input tax credit, fraudulent refund of tax or failure to pay tax which has been collected is evident and element of guilty mind is obvious. The Board has also clarified that no arrest should be done where the demand is based on difference of opinion regarding interpretation of law. In such cases, the normal practice of assessment should be resorted to.
The Board has prescribed procedure for arrest which needs to be followed by the Departmental officers. This includes recording the grounds of arrest in file, drawing up the arrest memo as per provisions of Code of Criminal Procedure, 1973, in compliance with the D.K.Basu case, informing another authorised person of the arrest and mentioning the date and time of arrest. It may be noted that DIN even on Arrest Memo is mandatory as per the Board’s Circular of 2019 and reiterated in this Instruction.
The Board has prescribed procedure for post-arrest formalities too i.e. release of a person for bailable offences against bail bond, etc. The Board has directed its officers to complete investigation and file the report within 60 days of arrest in case bail is not granted and in all other cases too, within a definite time frame. The Board has also prescribed formats of reports that need to be sent regularly by the officers on cases of arrest and bail to the higher-ups.
The Instruction w.r.t. Summons meets long pending demands by the industry representatives. It clarifies that summons should not be issued to demand statutory documents already available in the online GST portal. It also clarifies that senior officials such as CMD, CEO, and CFO should be called only in exceptional circumstances. Repeated summons should be not issued unless the earlier ones have remained undelivered. The Industry was quiet upset with the Department calling for voluminous documents that was required to be downloaded by the assessee, and sometimes in hard copy, when the same was already available on the GST portal. Similarly repeated summons were being issued asking for documents, taking statements and calling senior officers, who were not involved in the day-to-day functioning.
The Board has clarified that in case summons are issued by Superintendents, it should have a proper approval from an officer not below the rank of Assistant Commissioner/ Deputy Commissioner. It has also been clarified that in case of non-appearance of a person against whom summons have been issued, the concerned officer should generally issue three summons. In case the person still does not appear, the officer may file a complaint with the jurisdictional magistrate under the relevant provisions of Indian Penal Code (IPC).
These Instructions have now settled some important points and the Industry hopes that these will be followed in letter and spirit by the Departmental officers. The Instructions have also brought some certainty on important matters related to the arrest, bail and summons, which is a welcome step.
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