ARREST PROVISIONS UNDER GST LAW

Meaning of arrest

While the term ‘arrest’ has not been defined in GST law, based on judicial pronouncements, ‘arrest’ implies ‘the taking into custody of a person under some lawful command or authority’. In other words, a person is said to be arrested when he is taken into custody and restrained of his liberty, by power or colour of lawful warrant.

Power to arrest

In case of CGST, the Commissioner may authorize any officer of Central Tax to arrest any person who has committed punishable offences liable for arrest. Such authorization has to be by way of a written order and only to Central Tax officers.

The power to arrest comes with a very important rider that the Commissioner ordering or authorizing for arrest to any person should have ‘reason to believe’ that such person has committed specified offences under section 132 of CGST Act, 2017.

The Commissioner by order, can authorize any CGST officer to arrest any person, if he has reasons to believe that such person has committed an offence specified in clause (a) or (b) or (c) or (d) of section 132(1) which is punishable under clause (i) or (ii) of section 132(1) or section 132(2) of the Act. This essentially means that a person can be arrested only when the amount of tax evaded or the amount of input tax credit wrongly availed or utilized or the amount of refund wrongly taken exceeds Rs. 2 Crores or where a person has earlier been convicted for an offence under section 132 of the CGST Act, 2017.

Reason to believe

Reason to believe is to have knowledge of facts which, although not amounting to direct knowledge, would cause a reasonable person, knowing the same facts, to reasonably conclude the same thing. As per section 26 of the Indian Penal Code, 1860 (IPC), “A person is said to have ‘reason to believe’ a thing, if he has sufficient cause to believe that thing but not otherwise.”

‘Reason to believe’ contemplates an objective determination based on intelligent care and evaluation as distinguished from a purely subjective consideration. It has to be and must be that of an honest and reasonable person based on relevant material and circumstances.

Offences punishable with arrest

In terms of section 69(2) of CGST Act, 2017, where a person is arrested for any cognizable offence, every officer authorised to arrest a person, shall inform such person, of the grounds of arrest and produce him before a magistrate within twenty-four hours.

This section requires the following actions to be taken:

1. Arrest in case of cognizable offence under section 132(5) of the CGST Act, 2017
2. Officer to inform grounds of arrest to person being arrested (of course, before actual arrest)
3. Produce the arrested person before the Magistrate within twenty-four hours.

Under section 132(1), arrest provisions are attracted where an offence has been committed which is punishable under sub-section (1) [clauses (a) to (d)] or sub-section (2) of section 132 of the CGST Act, 2017. Accordingly, following offences attract arrest provisions:

1. Sub-section (1) lists the offences punishable with arrest subject to term of imprisonment linked to amount involved in the offence.
2. Sub-section (2) provides for arrest in case of a repeat offence ie second or subsequent offence, in cases where he was convicted for first such offence. Punishment for second or subsequent offence be imprisonment which may extend upto five years and with fine.

Who can arrest?

The Commissioner can authorise through an order, any officer to arrest a person who has committed specific offences given he has reasons to believe that such persons has committed the specified offences.

Who can be arrested?

Any person committing an offence as prescribed in section 132(1) clause (i) i.e. tax evasion or wrongly availed/utilised ITC or refund wrongly taken above Rs. 500 lakhs attracting imprisonment for a term which may extend to five years and fine, or clause (ii) i.e. tax evasion or wrongly availed/utilised ITC or refund wrongly taken above Rs. 200 lakhs but upto Rs. 500 lakhs, attracting imprisonment for a term which may extend to three years and fine, or clause (iii) i.e. any offence specified in Section 132(1)(b) were amount of tax evasion or wrongly availed/utilised ITC or refund wrongly taken above Rs. 100 lakhs but upto Rs. 200 lakhs, attracting imprisonment for a term which may extend to one year and fine, or clause (iv) i.e. any offence specified in Section 132(1)(f) attracting imprisonment for a term which may extend to six months or fine or with both, or offence under section 132(2) i.e. repeated offence under section 132(1) attracting imprisonment for a term which may extend to five years and fine, can be  arrested by authorised officer.

Rights of arrested person

Article 22 of the Constitution of India provides the following fundamental rights to every person:

(a)  Right to be informed, as soon as may be, of the grounds for such arrest;

(b)  Right to consult and to be defended by a legal practitioner of his choice;

(c)  Right to be produced before the nearest Magistrate within twenty-four hours of his arrest excluding the time necessary for the journey from the place of arrest to court of Magistrate;

(d) Right to not be detained in police custody beyond the period of twenty-four hours without the authority of the Magistrate.

Safeguards under GST Act for arrested person

There are certain safeguards provided under section 69 for a person who is placed under arrest. These are:

1. If a person is arrested for a cognizable offence, he must be informed in writing of the grounds of arrest and he must be produced before a magistrate within 24 hours of his arrest.
2. If a person is arrested for a non-cognizable and bailable offence, the Deputy/Assistant Commissioner of CGST/SGST can release him on bail and he will be subject to the same provisions as an officer in-charge of a police station under section 436 of the Code of Criminal Procedure, 1973; (CrPC)
3. All arrest must be in accordance with the provisions of the Code of Criminal Procedure, 1973 (CrPC) relating to arrest.

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