GST is a civil tax law, interspersed with colours of criminal provisions. For taxpayers and tax official, the tax compliance and collection are key provisions. However, in case of confrontation, there are possibilities of using the provisions of Bhartiya Nagarik Suraksha Sanhita (BNSS) along with PMLA with the criminal provisions in the GST law. In this article, let us confine our discussions towards the Arrestil and safeguards under these laws.
Arrest under GST: Arrest gets triggered when the Commissioner has “reason to believe” that a person has committed specified offences of tax evasion above Rs. 5 crores. (Section 69 of CGST Act)
Reason to believe: The Commissioner must record reasons to believe and ensure proportionality — a principle now reinforced by Section 35 of BNSS, which mandates recording reasons before restraint or arrest.
Specified offences: These specified offences, categorized under Section 132, include:
- Issuing invoices without supply of goods/services.
- Availing or passing on fake input tax credit (ITC).
- Suppression or misstatement of taxable turnover.
Pre-Arrest Pre-cautions under BNSS: Here, BNSS can be of some important help and support:
GST authorities must follow these before arrest.
Key safeguards include:
- Section 35 (BNSS): Reasons for arrest must be recorded in writing.
- Section 43: Right to inform a relative or advocate.
- Section 48: Medical examination post-arrest.
- Section 482: Power of anticipatory bail—applies to GST arrests if offences are non-bailable.
- Section 51: Judicial oversight on arrest compliance and remand.
These provisions ensure accountability and proportionality, especially when the investigation is still at the summons or inquiry stage.
GST with PMLA: Very risky situation in case of scheduled offence
A GST investigation can spill into the PMLA domain when the alleged offence qualifies as a scheduled offence under the PMLA schedule.
This typically arises when:
- Fake invoicing or circular trading is alleged,
- The alleged proceeds of tax evasion exceed ₹1 crore,
- Or when GST authorities refer the case to the ED.
Once PMLA is triggered, dual proceedings begin — one under GST, another under PMLA. This can lead to summons and attachment of assets by ED.
Legal Response
In case of GST and PMLA combined case, following structured responses should be followed:
- File detailed, professional replies to summons and inquiries to show cooperation.
- Move anticipatory bail under Section 482 of BNSS or Article 226 (Writ Jurisdiction), citing lack of necessity and procedural violations.
- Any breach of BNSS safeguards (non-recording of reasons, absence of summons compliance) can be grounds for writ challenge.
- Statements under Section 70 of CGST are admissible — ensure they are factual, not interpretative.
- Preserve email trails, invoices, reconciliations, and returns — they form the defence foundation.
- If ED is involved, argue lack of “proceeds of crime” due to disputed tax liability — a strong point recognised in various High Court judgments.
A holistic approach:
- Use the BNSS for any potential procedural lapses on the part of the officer.
- Pre-draft anticipatory bail notes citing Sections 35, 482 BNSS.
- Map possible PMLA exposure early to avoid asset freeze.
- Build documentation and maintain written compliance trail.
- Train client teams on how to respond to GST summons without legal risk.
Conclusion : Navigating this space requires a blend of technical tax insight, procedural vigilance, and strategic legal foresight. Choose your counsel having expertise in BNSS, PMLA, GST combined together.
In case of any query and clarification regarding indirect taxation including GST and Customs, and require any support, you may like to connect with us.
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Abhinarayan Mishra FCA, FCS, LL.B, IP, RV; Partner, KPAM & Associates, Chartered Accountants, SAM Law Associates LLP. New Delhi ; +91 9910744992; ca.abhimishra@gmail.com; samlawassociates18@gmail.com
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