Officers of CGST Delhi North Commissionerate have arrested one Director of a Company for evasion of Service Tax. The Company had collected more than ₹ 3 Crores as Service Tax from its clients but had not deposited the same with the Government Exchequer.

The power to arrest is provided under Section 91 of the Finance Act 1994 for violating the provisions of Section 89 of the Finance Act 1994 read with Section 174 of CGST Act, 2017. He was produced in the Court of Hon’ble CMM, Patiala House Court and has been sent to Judicial Custody for 15 days. Further investigations are being conducted and the amount of Service Tax evaded is bound to increase.

Government wants to assure taxpayers that compliant taxpayers donot run the risk of facing such punitive action in carrying out their day to day operations. The power to arrest is to be exercised where there is deliberate fraud of sizeable magnitude with intent to evade tax. It is meant to serve as a deterrent to unscrupulous elements in trade who may try to defraud the system. There are sufficient checks built into the law to ensure that inadvertent or procedural lapses do not attract severe punitive measures.

Power to arrest for deliberate tax evasion against directors; deters large-scale fraudulent non-deposit of collected tax. Arrest was effected of a company director for alleged withholding of collected service tax and failing to deposit it to the government exchequer, invoking the power to arrest under Section 91 of the Finance Act, 1994 read with Section 174 of the CGST Act, 2017; the director was produced before the magistrate and remanded to judicial custody while further investigation continues.