It could be truly acknowledged that the year 2020 is a year of reformations and “Ease of Business” for the Indian masses. Starting from decriminalisation of various offences under Companies Act 2013 in Feb 2020 to new GST portal changes and the “Transparent Taxation and immunity from Prosecution” in August 2020.

Similarly, most of the Government Departments are looking for ways to decriminalize other laws under various legislation. The department of financial services lately has proposed amendments in as many as 19 legislations including the Negotiable Instruments Act, SARFAESI Act, LIC Act, PFRDA Act, RBI Act, NHB Act, Banking Regulation Act, Chit Funds, Insurance Act, Payment and Settlements Act and NABARD Act thereby decriminalizing minor offences.

The Ministry of Finance has further considering a comprehensive review of similar alterations in the review process of GST laws focusing on the reduction in tax-related wrongdoings with a view to improving “Ease of Business” and reducing law reports.

No more physical or verbal offence

Various provisions under section 132 (1) of the Central GST Act contains various offences like falsification of documents for obtaining refunds, dealing in confiscated goods, abetment to committing the offences in the section and obstructing them from discharging their duties that are punishable up to imprisonment up to five years in have been proposed to be decriminalised under GST laws.

The Central government is assessing the probabilities and outcomes of removing various provisions of laws which authorize the officers to arrest taxpayers on the probable suspicion of tax evasion.

Additionally, they are also considering the idea to withdraw powers of arrest for claiming improper ITCs or for want of actual invoices. And granting exemptions towards the bank accounts from attaching assets and regulating the scope of a criminal offence to only high-end transactions for the purposes of “fraud”.

Why are such changes required to be made?

According to an estimate, the provisions related to arrests and prosecutions have been invoked in multiple cases but the prosecution actually takes place in a limited number of cases. Such provisions prescribe imprisonment period without expressing any difference between intentional frauds committed and genuine mistakes by businessmen.

Therefore, the Central Board of Indirect Taxes and Customs is of the opinion that minor offences like the supply of goods without the issue of invoice, issue of fake invoice for wrongful availing of an input tax credit, default in tax payments up to three months of tax collection etc. should be struck down as non-bailable and cognizable offence. For the reason that not only these have been ineffective to curb corruption but have also shaped an atmosphere of terror in the trade and industry.

Additionally, in absence of express provisions for certain offences under the Act, they become a source of harassment and misuse by the tax officers. Therefore, the business industry has recommended a comprehensive overhaul of the provisions under section 138 which is associated with compounding of offences. Similarly, Section 83 of the GST Act permits tax authorities to provisionally attach properties of taxpayers, including the bank accounts for a year as an anti-evasive method, which the industry has made representations to be removed for.

Thus, the Union Finance Minister has quoted “For long there has been a debate for making changes in statutes thereby decriminalizing criminal liabilities for acts that are civic in nature. Hence, there have been made certain changed under the Companies Act, with a view to correct this problem. Similarly, other laws would also be reviewed where such provisions do occur and further attempts will be made for relevant rectifications.

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