OFFENCES AND PENALTIES U/S 89 AND RELATED SECTIONS:-
This section has undergone vital change in Budget, 2013. It has been proposed that the offence where a person collects the service tax but not deposits the same to government exchequer, should be made cognizable and non-bailable. Imprisonment in such cases should also be extended to seven years. Besides this, certain more amendments have been made in the section 89 which are summarized in the following table:-
| S. no. | Offence u/s 89 | Condition | Imprisonment | Imprisonment on second & subsequent defaults | Cognizable or non- cognizable |
| 1 | Knowingly evades payment ofService tax | Amount exceeds Rs. 50 lacs | 3 years ** | 3 years | non- cognizable |
| 2 | Avails & utilizes credit of taxes without actual receipt of inputs/ services, whether partly or fully | Amount exceeds Rs. 50 lacs | 3 years ** | 3 years | non- cognizable |
| 3 | Maintains false books or fails to supply any information or supplies false information | Amount exceeds Rs. 50 lacs | 3 years ** | 3 years | non- cognizable |
| 4 | Collects any amount as service tax but fails to pay the same to government exchequer within 6 months of dUE dATE | Amount exceeds Rs. 50 lacs | 7 years ** | 7 years | Cognizable |
| 5 | Any other offence | - | 1 year | 3 years | non- cognizable |
** Provided that in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the court, such imprisonment shall not be for a term of less than six months;
- Procedure to be followed in case of suspicion:-
(i) If the Commissioner of Central Excise has reason to believe that any person has committed any of the offence listed in above table from serial no. 1 to 4, he may, by general or special order, authorise any officer of Central Excise, not below the rank of Superintendent of Central Excise, to arrest such person.
(ii) Where a person is arrested for any cognizable offence, he should be informed of the grounds of arrest. Also, he should be produced before a magistrate within twenty-four hours.
(iii) Where the arrest is for a non-cognizable and bailable offence, the power on bail or otherwise should be vested in Assistant/Deputy Commissioner. Further, he shall be subject to all the powers and provisions as given to incharge of police station under section 436 of the Code of Criminal Procedure, 1973.
(iv) The provisions related to arrest shall be carried out in accordance with the provisions ofthe Code of Criminal Procedure, 1973.
On perusal of the above provisions, it is observed that Government has considered the offence of collecting the amount as service tax but not depositing the same to the government exchequer in specified cases as the most serious offence. This offence may attract imprisonment to the extent of seven years and further provision of imprisonment to the extent of seven years if the same offence is committed subsequently. Also this offence has been made cognizable and non bailable. It is worth mentioning here that before this provision, the offences under Central Excise, which are inherited toService tax also, were non-cognizable and bailable by virtue of Supreme Court judgment in the case of Om Prakash vs. Union of India [2011 (272) E.L.T. 321 (S.C.)]. By inserting the above referred provisions, the government seeks to nullify the effect of larger bench judgment of Supreme court in this case wherein it was held that the offences under the Central Excise and Customs Act are non-cognizable and bailable.
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