Like earlier provision of Indirect Tax law i.e. Central Excise Act, 1944 and Finance Act, 1994, the Goods and Service Tax Act, 2017 also provides provision of arrest and bail. In tax law, provision of arrest appears to harsh but it is necessary to protect the revenue of the government. The present article is an attempt to highlight provisions related to “arrest and bail” under Goods and Service Tax Law.
Section 69 of the Central Goods and Service Tax provide provision for arrest. This Section empowered officer of Central Tax to arrest a person who has committed any offence specified in clause (a) or clause (b) or clause (c) or clause (d) of Sub-Section (1) of Section 132 of Act subject to approval of Commissioner.
Before examination of Section 69 of the Act, it is necessary to examine Section 132 of the Central Goods and Service Tax Act, 1944. The intent to “arrest” by the authority is based upon contravention of certain provisions of law or upon indulgence in some activities which are described as offence under Goods and Service Tax. Section 132 has provision for punishment for commitment of any offence described in the section. Section 132 reads as under:
Section 132. Punishment for Certain Offences – (1) Whoever commits any of the following offences, namely:—
(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;
(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;
(c) avails input tax credit using such invoice or bill referred to in clause (b);
(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;
(e) evades tax, fraudulently avails input tax credit or fraudulently obtains refund and where such offence is not covered under clauses (a) to (d);
(f) …………
(g) ………..
(h) ………..
(j) …………
(k) ………..
(l) ………….
shall be punishable–
(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;
(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;
(iii) in the case of any other offence 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 one hundred lakh rupees but does not exceed two hundred lakh rupees, with imprisonment for a term which may extend to one year and with fine;
(iv) in cases where he commits or abets the commission of an offence specified in clause (f) or clause (g) or clause (j), he shall be punishable with imprisonment for a term which may extend to six months or with fine or with both.
(2) 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.
A bare perusal of the Sub-Section (1) of Section 132 of the Central Goods and Service Tax, it is clear that this section provides provisions regarding offences and their punishment. The first part of sub-section (1) of Section 132 talks about offences for which department can launch the prosecution and second part gives extent of punishment for the offences.
Arrest:
Now, we can examine the provisions of arrest. Section 69 of Central Goods and Service Tax Act, 2017 reads as under:
Section 69. Power to Arrest –
(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 sub-section (2) of the said section, he may, by order, authorise any officer of central tax to arrest such person.
(2) Where a person is arrested under sub-section (1) for an offence specified under subsection (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.
From the perusal of Sub-Section (1) of Section 69 of CGST, it is clear that a person can be arrested only if committed an offence specified in clause (a), (b), (c) and (d) of Sub-Section (1) of Section 132 which is punishable under clause (i) or (ii) of Sub-section (1) or sub-section (2) of the Section 132. It means, if a person committed offence other than aforesaid clauses cannot be arrested.
BAILABLE OR NON BAILABLE.
Before discussion of this issue, it is required to make it clear that the “Arrest” and “Bail” both are different parlance of law. It cannot be mixed. The provisions for both terms are different in law.
Clause (a) of sub-section (3) of Section 69 provides provision of default bail if a person arrested for any offence specified under sub-section (4) of Section 132 of the Central Goods and Service Tax Act, 2017. Sub-Section (4) of Section 132 reads as under:
(4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, all offences under this Act, except the offences referred to in sub-section (5) shall be noncognizable and bailable.
So, except the offences referred in sub-section (5), all offences are bailable and non-cognizable. Sub-Section (5) of Section 132 reads as under:
(5) The offences specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) and punishable under clause (i) of that sub-section shall be cognizable and non-bailable.
Clause 5 of sub-section (1) of Section 132 clearly says that offences specified in clause (a), (b), (c) (d) and punishable under clause (i) shall be cognizable and non-bailable. As per clause (i) of Sub-Section (1) of Section 132 cases where amount of tax evaded exceeds five hundred lakh rupees are cognizable and non-bailable, except this all are bailable and non-cognizable. To better understanding, please read the table mentioned as under:
| Sl No. | Arrest | Punishment | Bailable or non-bailable |
| 1. | any offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of 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; | Cognizable and non-bailable |
| 2. | any offence specified in clause (a) or clause (b) or clause (c) or clause (d) 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. | Bailable and non-cognizable. |
A person can be arrested only in the aforesaid two situations. The offence is cognizable and non-bailable only in the case of serial No. 1 of aforesaid table. The offence at the serial no. 2 of table is bailable and non-cognizable. In this case, person can be arrested but entitled for default bail as mandated in Section 69 (3) (a) of the Goods and Service Tax Act, 2017.
R P Singh, Advocate
Author Bio
Very helpful post.