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Guidelines For Arrest & Bail for Offences under CGST Act 2017

Kusum Gandhi , Last updated: 31 August 2022  
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After examining judgment of Hon'ble Supreme Court of India in Siddharth vs The State of U.P. Criminal Appeal No. 838 of 2021, arising out of SLP (Crl.) No. 544'2/2021, Board issued guidelines with respect to arrest under CGST Act, 2017. & Other legacy laws vide Instruction No. 02/2022-23.

Conditions for arrest

  1. Section 132 (1) of CGST Act, 20 l7 deals with the punishment for offences specified Section 69 (1) gives power to the Commissioner to arrest a person where he has reason to believe that the alleged offender has committed any offence in Section 132 (1) (a), (b), (c), (d) which is punishable u/sec 132 (1)(i), (ii) or sec.132(2) of CGST Act, 2017. so, before placing a person under arrest, legal requirements must be fulfilled. The reasons to believe to arrive at a decision to place an alleged offender under arrest must be unambiguous & amply clear. The reasons to believe must be based on credible material.
  2. As per Sec. 132(1)(i) where the amount of tax evaded / the amount of ITC wrongly availed / utilized / the amount of refund wrongly taken exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five years and with fine;
  3. 132(1)(ii) in cases where the amount of tax evaded / the amount of ITC wrongly availed / utilized / the amount of refund wrongly taken exceeds two hundred lakh rupees but does not exceed five hundred lakh rupees, with imprisonment for a term which may extend to three years and with fine
  4. 132(2) Where any person convicted of an offence under this section is again convicted of an offence under this section, then, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to five years and with fine.
  5. The arrest should not be made in routine & mechanical manner. Even if all the legal conditions precedent to arrest mentioned in Section 132 of the CGST Act, 2017 are fulfilled, that will not, ipso facto, mean that an arrest must be made. Once the legal ingredients of the offence are made out, the Commissioner / competent authority must then determine if the answer to any or some of the following questions is in the affirmative
    • Whether the person was concerned in the non-bailable offence or credible information has been received, / a reasonable suspicion exists, of his having been so concerned?
    • Whether arrest is necessary to ensure proper investigation of the offence?
    • Whether the person, if not restricted, is likely to tamper the course of further investigation or is likely to tamper with evidence or intimidate or influence witnesses?
    • Whether person is mastermind or key operator effecting proxy/ benami transaction in the name of dummy GSTIN or non-existent persons, etc. for passing fraudulent input tax credit etc.?
    • As unless such person is arrested, his presence before investigating officer cannot be ensured.
  6. Arrest should, not be resorted to in cases of technical nature. The prevalent practice of assessment could also be one of the determining factors while ascribing intention to evade tax to the alleged Other factors influencing the decision to arrest could be if the alleged offender is co-operating in the investigation.
Guidelines For Arrest and Bail for Offences under CGST Act 2017

Procedure for arrest

Pr. Commissioner/ Commissioner shall record on file that after considering the nature of offence, role of person involved & evidence available, he has reason to believe that the person has committed an offence as in Section 132 & may authorize an officer of central tax to arrest the concerned person(s).

The arrest memo must be in compliance with the directions of H’b1e Supreme Court in the case of D.K Basu vs State of West Bengal reported in 1997(1) SCC 416 (see paragraph 35).

 

Format of arrest memo prescribed under Board's Circular No. 128/47/ 2019-GST dated 23/12/2019. The arrest memo should indicate relevant section (s) of the CGST Act, 2017/ other laws attracted to the case & to the arrested person & inapplicable provisions should be struck off. In addition, Grounds of arrest must be explained to the arrested person & this fact must be noted in the arrest memo.

A nominated / authorized person (as per the details provided by arrested person} of the arrested person should be informed immediately & this fact shall be mentioned in arrest memo. Date & time of arrest shall be mentioned in the arrest memo & arrest memo should be given to the person arrested under proper acknowledgment.

A separate arrest memo has to be made & provided to each individual/ arrested person. Board's Circular No. 122/41/2019-GST 5/11/2019 which makes generation & quoting of DIN mandatory on communication issued by officers of CBIC to tax payers & other concerned persons for the purpose of investigation. Any lapse in this regard will be viewed seriously.

Modalities to be complied with at the time of arrest & pursuant to an arrest include the following

  1. A woman should be arrested only by a woman officer in accordance with section 46 of Code of Criminal Procedure, 1973.
  2. Medical examination of an arrested person should be conducted by a medical officer in the service of Central / State Government & in case the medical officer is not available, by a registered medical practitioner, soon after the arrest is made. If an arrested person is a female, then such an examination shall be made only by / under supervision of a female medical officer, & in case the female medical officer is not available, by a female registered medical practitioner.
  3. It shall be the duty of the person having the custody of an arrested person to take reasonable care of health & safety of arrested person. Arrest should be made with minimal use of force and publicity, & without violence.
 

Post arrest formalities

1. Procedure for arrest for Offence specified u/sec 132(4) of the CGST Act, 2017

  1. Where a person is arrested for an offence, the Assistant Commissioner / Deputy Commissioner is bound to release a person on bail against a bail. The bail conditions should be informed in writing to the arrested person & also on telephone to the nominated person of the person {s} arrested. The arrested person should also be allowed to talk to the nominated person.
  2. The conditions will relate to, inter alia, execution of a personal bail bond and one surety of like amount given by a local person of repute, appearance before the investigating officer when required & not leaving the country without informing the
  3. If the conditions of the bail are fulfilled by the arrested person, he shall be released by the officer concerned on bail forthwith. BUT where the conditions for granting bail are not fulfilled, arrested person shall be produced before the appropriate Magistrate without unnecessary delay & within twenty-four hours of arrest. If necessary, the arrested person may be handed over to the nearest police station for his safe custody, during the night under a challan, before he is produced before the Court.

2. Offence u/sec 132(5) of CGST ACT 2017

  1. Where a person is arrested, officer authorized to arrest the person shall inform such person of the grounds of arrest & produce him before a Magistrate within 24 hours. In the event of circumstances preventing the production of the arrested person before a Magistrate, the arrested person may be handed over to nearest Police Station for his safe custody under a proper challan & produced before Magistrate on the next day, & nominated person of the arrested person may be
  2. After arrest of the accused, efforts should be made to file prosecution complaint u/ Sec 132 of the Act, before the competent court at the earliest, preferably within 60 days of arrest, where no bail is In all other cases of arrest also, prosecution complaint should be filed within a definite time frame.

Bail Register

Every Commissionerate/Directorate should maintain a Bail Register containing the details of the case, arrested person, bail amount, surety amount etc. The money/ instruments/documents received as surety should be kept in safe custody of a single nominated officer who shall ensure that these instruments/ documents received as surety are kept valid till the bail is discharged.

Reports to be sent

Pr. Director-General (DGGI)/ Pr. Chief Commissioner(s)/Chief Commissioner(s) shall send a report on every arrest to Member (Compliance Management) as well as to the Zonal Member within 24 hours of the arrest.

Disclaimer: The contents of this article are solely for informational purpose. It does not constitute professional advice or a formal recommendation. No part of this article should be distributed or copied without express written permission of the author.

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Kusum Gandhi
(AGM)
Category GST   Report

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