The Commissioner (GST-Investigation), CBIC, had recently issued instruction no. 04/2022 dated 01.09.22 laying down guidelines to be followed by the department for launching prosecution under the CGST Act.
The guidelines are summarized as follows
1. Prosecution should not be filed merely because a demand has been confirmed in the adjudicating proceedings.
2. Prosecution should not be launched in cases of technical nature or where additional claim of tax is based on a difference of opinion regarding interpretation of law.
3. The evidence collected should be adequate to establish beyond reasonable doubt that the person had the intention for committing an offense under the Act.
4. In the case of public limited companies, prosecution should not be launched indiscriminately against all the directors of the Company but should be restricted to only persons who oversaw day-to-day operations of the Company and have taken active part in committing the tax evasion or had connived at it.
5. Prosecution should normally be launched if the amount of tax evaded or misuse of ITC or fraudulent refund is nor than Rs. 5 crores.
6. The monetary limit of Rs. 5 crores will not be applicable in the case of a habitual offender or arrest made in the course of investigation.
7. 'habitual offender' means a person who has been involved in 2 or more cases of confirmed demand of tax evasion/fraudulent refund or misuse of ITC involving fraud, suppression of acts etc., in the past 2 years such that the total tax evaded and/or total ITC misused and/or fraudulently obtained refund exceeds Rs. 5 crores.
8. The prosecution complaint should be filed only after obtaining the sanction of the Principal Commissioner/Commissioner of CGST in terms of section 132(6) of the CGST Act.
9. Once the sanction for prosecution has been obtained, prosecution in the Court of law should be filed as early as possible, but not beyond a period of 60 days by the duly authorised officer.
10. In the case of delay beyond 60 days, the reason for the delay should be brought to the notice of the sanctioning authority by the officer authorised for filing of the complaint.
11. The filing of prosecution need not be kept in abeyance on the ground that the taxpayer has gone on appeal/revision.
12. The provisions regarding compounding of offences should be brought to the notice of person being prosecuted and such person be given an offer of compounding by the Principal Commissioner/Commissioner, as the case maybe.
13. Withdrawal of complaint is possible if it is found on merit that there is not contravention of the provisions of the Act in the adjudication proceedings and such order has attained finality. The principal Commissioner/Commissioner after taking approval of the Principal Chief Commissioner/Chief Commissioner would ensure filing of an application through the Public Prosecutor in the Court to allow withdrawal of prosecution in accordance with law.