Key Takeaways from Guidelines issued for prosecution under GST

Instruction No. 04/2022-23 [GST-Investigation] issued on 01.09.2022

The CBIC has issued instructions for the GST investigation officers which are to be followed while launching any prosecution proceedings exhibiting criminal charges against any person.

  • CBIC acknowledged that prosecution has serious repercussions for the accused.
  • Standard of proof required in a criminal prosecution is higher. Case has to be established beyond reasonable doubt.
  • Evidence collected against the person should be adequate to establish that the person had guilty mind or fraudulent intention for committing the offence.
  • Prosecution should not be launched in cases of technical nature, or where additional claim of tax is based on a difference of opinion regarding interpretation of law.
  • In the case of public limited companies, prosecution should not be launched indiscriminately against all the Directors of the company.
  • It should be restricted to only persons who oversaw day-to-day operations of the company and have taken active part in committing the tax evasion etc. or had connived at it.
  • The CBIC continues to maintain its stand that decision in adjudication proceedings is not necessary before initiating criminal prosecution. Adjudication proceedings and criminal proceedings can be launched simultaneously.

Key Takeaways from Guidelines issued for prosecution in GST

  • Prosecution should normally be launched where amount of tax evaded is more than Rs. 5crore. However, in cases of habitual evaders or in cases where arrest have been made during course of investigation, prosecution could be initiated irrespective of monetary limit.
  • Habitual evader is defined as “a company/taxpayer who is involved in 2 or more cases of confirmed demand (at 1st adjudication level or above at appellate levels) of tax evasion involving fraud, suppression of facts, in the past 2 years such that the total tax evaded exceeds Rs. 5crore.
  • All efforts should be made to file prosecution complaint in the court within 60 days of arrest.

It is a welcoming step by CBIC that it has come up with detailed guidelines for its officers for launching of prosecution proceedings in GST under section 132 of the CGST Act. The above instructions are binding on the DGGI officers, and Central Tax officers of all zones. Though the above guideline in some areas is not in line with settled jurisprudence in erstwhile laws and CrPC, the department’s actions should now be in consistence with these instructions.

The views expressed herein are personal. For any queries or feedback author could be reached at [email protected]

Author Bio

Qualification: CA in Practice
Company: Hiregange and Associates LLP
Location: Indore, Madhya Pradesh, India
Member Since: 10 Sep 2021 | Total Posts: 2

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