YOU CAN RUN, YOU CAN HIDE BUT YOU CANNOT ESCAPE. This is the motto of Section 69 read with Section 132 (1) (a) to (k).
What is Section 69?
Section 69 empowers the Commissioner to arrest any person who has committed any offence mentioned u/s 132 (1) specified in clause (a) or clause (b) or clause (c) or clause (d).
For better under standing the extract of Section 69 is mentioned below:
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.
Power to arrest is granted to Commissioner and merely on the basis of reason to believe he can arrest any person who has committed an offence mentioned in Section 132 of CGST Act.
Let’s check what are those offences which warrants the criminal proceedings and prosecution:
a. Making a supply without issuing an invoice or upon issuance of a false/incorrect t invoice;
b. Issuing an invoice without making supply;
c. Not paying any amount collected as tax for a period exceeding 3 months;
d. Availing or utilizing credit of input tax without actual receipt of goods and/or services;
e. Obtaining any fraudulent refund
f. evades tax, fraudulently avails ITC or obtains refund by an offence not covered under clause (a) to (e);
g. Furnishing false information or falsification of financial records or furnishing of fake accounts/documents with intent to evade payment of tax;
h. Obstructing or preventing any official in the discharge of his duty;
i. Dealing with goods liable to confiscation i.e. receipt, supply, storage or transportation of goods liable to confiscation;
j. Receiving/dealing with supply of services in contravention of the Act;
k. tampers with or destroys any material evidence or documents
l. Failing to supply any information required of him under the Act/Rules or supplying false information;
m. Attempting to commit or abetting the commission of any of the offences at (a) to (l) above.
These are 12 major offences which can trigger the Commissioner to use his power granted u/s 69. (Arrest the Culprit).
When a person is convicted for any abovementioned offence, prosecution is dependent on the intensity of the crime he has committed (basically it depends upon how hard he had hit the Commissioner’s GST collection target).
As Section 132 informs about the Punishment of offences so what are those punishments and what is the criteria to put any person behind the bars. (Ab toh jail mei jana padega, jail ka pani pena padega).
Section 132 (1)
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.
Offence and its punishment in simplified form:
|Tax evasion between Rs.1 crore to Rs.2 crore||Imprisonment upto 1 year and fine|
|Tax evasion between Rs.2 crore to Rs.5 crore||Imprisonment upto 3 year and fine|
|Tax evasion exceeding Rs.5 crore or 2nd offense u/s 132 (earlier convicted)||Imprisonment upto 5 year and fine|
|False record, tempering with records and obstructing the officer in discharging his duties||Imprisonment upto 6 months or fine or both|
Now there are some offences which are cognizable and non-bailable offence and some are non-cognizable and bailable offence.
According to provisions of Section 132 (4) all offences where the evasion of tax is less than Rs.5 crores shall be non-cognizable and bailable, as per provision (5) all offences where the evasion of tax exceeds Rs.5 crores shall be cognizable and non- bailable.
Power to arrest in GST cases is a very sensitive issue because Commissioner is vested with such power which can actually make or break the person, a person can be an actual offender or he may be a person who has been a scapegoat for a foul person. So before sending any person behind the bars it is really important for a Commissioner to identify whether he is catching the right person or just a scapegoat.
Further, it is also important to quantify the numbers because if during the course of investigation numbers are more and on final conclusion numbers are less then the officers of department are not losing anything but the person who is behind the bars has lost a lot.
So, the burden on the Commissioner’s shoulder is really heavy and he has to use his powers very wisely because either he can be a creator of next big business house or a destructor of an already established business.