Power to Arrest – Section 69 of GST

The GST law in India empowers tax authorities with significant enforcement mechanisms to combat tax evasion and ensure compliance. One such provision is Section 69 of the CGST Act, 2017, which grants the Commissioner the authority to arrest individuals involved in serious tax offences. This section must be read in conjunction with Section 132 of the CGST Act, which outlines the nature and classification of GST-related offences.

In this article, we will explore Section 69 in detail, discussing its provisions, related procedures, and legal safeguards.

Legal Text of Section 69: Power to Arrest

Section 69 of the CGST Act empowers the Commissioner to authorize the arrest of a person under certain circumstances. The section is divided into three subsections:

Sub-section (1): Authorization to Arrest

Under this provision, the Commissioner may authorize any Central Tax officer to arrest a person if there is a reasonable belief that the individual has committed any of the following offences under Section 132(1), clauses (a) to (d):

• Clause (a): Supply of goods or services without issuing an invoice to evade tax.

• Clause (b): Issuance of invoices without actual supply of goods or services, leading to wrongful input tax credit.

• Clause (c): Availing input tax credit using invoices that do not reflect genuine supply.

• Clause (d): Collection of tax but failure to remit it to the government beyond three months.

However, arrest can only be authorized if such offences are punishable under clause (i) or (ii) of sub-section (1) or under sub-section (2) of Section 132, i.e., where the tax evasion exceeds Rs. 2 crore and is classified as cognizable and non-bailable offences.

Sub-section (2): Procedure after Arrest

When a person is arrested under sub-section (1) for an offence punishable under Section 132(5) (which deals with more serious or repeated offences), the arresting officer must:

• Inform the arrested person of the grounds of arrest, and

• Produce the person before a Magistrate within 24 hours, excluding travel time.

This provision ensures that the rights of the arrested individual are protected in accordance with Article 22 of the Constitution of India and the Code of Criminal Procedure, 1973 (CrPC).

Sub-section (3): Bail and Custody

This subsection outlines the procedures following the arrest, based on the nature of the offence:

• Clause (a): If the offence falls under Section 132(4), which includes non-cognizable and bailable offences, the individual:

  • Shall be granted bail, or

  • In default of bail, forwarded to judicial custody.

• Clause (b): For non-cognizable and bailable offences, the Deputy Commissioner or Assistant Commissioner has the powers akin to an officer-in-charge of a police station. This includes the authority to grant bail or take other measures as per standard criminal law procedures.

Relationship Between Section 69 and Section 132 of CGST Act

To fully understand the scope of Section 69, it is crucial to read it with Section 132 of the CGST Act, which classifies offences based on the amount of tax evasion and the nature of the act. Section 132 also lays down the quantum of punishment, which ranges from six months to five years, depending on the severity of the offence.

Only those offences where the amount involved exceeds the specified threshold (generally Rs. 2 crore or more) and where the offence is intentional are eligible for arrest under Section 69.

Key Takeaways

• Section 69 empowers the GST Commissioner to authorize arrests for serious tax offences.

• Arrests are only applicable in cases of major tax frauds or wilful tax evasion, especially where input tax credit is fraudulently availed or tax is collected but not deposited.

• Legal safeguards are in place to ensure the rights of the arrested individual, including the right to be informed and presented before a Magistrate.

• The bail provisions and the role of officers mirror the procedures laid out under the Criminal Procedure Code.

• This provision is applicable since 1st July 2017, with the enforcement of GST.

Conclusion

Section 69 of the CGST Act serves as a strong deterrent against tax evasion by granting arrest powers in serious cases. However, these powers must be exercised judiciously and in strict compliance with procedural safeguards to prevent misuse. Businesses and tax professionals must be aware of these legal provisions to ensure compliance and avoid severe penal consequences.

For businesses, maintaining accurate records, issuing proper tax invoices, and timely remittance of GST collected are essential practices to stay compliant and steer clear of prosecution under Section 69.

FAQs

1. Who has the authority to arrest under Section 69?
Only a Central Tax officer authorized by the GST Commissioner can arrest an individual under this section.

2. Can a person be arrested for any GST violation?
No, arrest is only applicable in cases involving serious and intentional tax fraud, especially those listed under clauses (a) to (d) of Section 132(1).

3. What happens after an arrest is made?
The person must be informed of the arrest reasons and produced before a Magistrate within 24 hours. Bail procedures also apply as per the nature of the offence.

4. Is bail available under Section 69?
Yes, for non-cognizable and bailable offences, bail can be granted by the Deputy/Assistant Commissioner. For cognizable offences, the decision lies with the Magistrate.

If you need professional help with GST compliance, audits, or handling GST litigation, consult a qualified Chartered Accountant to ensure your business stays on the right side of the law.