Safeguards and Guidelines for Avoiding Arrest under GST

This article will give you the insight about the safeguards to avoid the arrest under GST. If you are doing or have committed any of the below practices while maintaining the GST Registration, then you must be aware about the legal consequences, along with fine and penalty, and the facts that you may also get arrested due to the acts mentioned below. For your awareness, we have summed up few safeguards to avoid the arrest by the officer in case of search or inspection at your workplace.

First, let’s understand the provision of arrest in the GST, Under GST, a commissioner may arrest or authorise any officer to arrest the person if he has ‘reason to believe’ that the concerned person has committed an offence for following else:

• Supplied goods or services or both without invoice
• Issued any invoice without supply of goods or services or both leading to wrongful availment and utilisation of input tax credit or refund of tax
• Wrongfully or fraudulently availed input tax credit
• Failed to deposit the collected tax beyond three months

These offenses are cognizable and non-bailable if the tax amount involved exceeds Rs 5 crore. Otherwise are non-cognizable and bailable under the Act.

In order to avoid arrest, first try to avoid any of the above practices being followed and if already doing, then to either rectify the same by issuing the correct invoice and submitting the tax along with interest within the due timelines, and to only avail the eligible ITC based upon the genuine transactions and to reverse the ineligible ITC, if applicable.

Further, be ensure to follow the following safeguards to avoid arrest in case of raid at your premise:-

1. Maintain the proper records of the sale, purchase and expenses and ensure proper accounting of the ITC availed.
2. Never accept or deposit any tax liability in case of raid at your business premise, if there is no concrete evidence to ascertain the amount of the same.
3. As we discussed that the person may get arrested if the officer has reason to believe. So, it is not mandatory for the officer to arrest in case of any of the event specified above. Still, the taxpayer has chance to avoid arrest. If he accept the genuine ineligible ITC he has availed and to deposit or pay the same as per the direction of the officer. As the general principal is that when any person voluntarily discloses a breach of law, the tax authority may use this fact to reduce the penalty.
4. In case of arrest for the non-cognizable and bailable offence, the taxpayer will have an option to get a bail from the judicial magistrate.

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Disclaimer:-  The above information is purely and solely for informative purposes. This in no way should be construed to be any professional advice, as these are merely general information and our interpretations of the laws and the Act. Viewers are requested to consult us before taking any action based on our interpretations. Circulation of any information in our name without our permission is not allowed.

The author may be reached at: csmalkitsingh@gmail.com or +91-9711975109