The Central Board of Indirect Taxes and Customs (CBIC) has issued the guidelines for arrest and bail in relation to offences punishable under the CGST ACT, 2017.
The board while taking note of the Judgement passed by the Supreme Court in the case of Siddharth vs The State Of Uttar Pradesh Criminal Appeal No. 838 of 2021, arising out of SLP (Crl.) No. 5442/2021 in which it was held that The occasion to arrest an accused during investigation arises when custodial investigation becomes necessary or it is a heinous crime or where there is a possibility of influencing the witnesses or accused may abscond. Merely because an arrest can be made because it is lawful does not mandate that arrest must be made. A distinction must be made between the existence of the power to arrest and the justification for exercise of it.
“If arrest is made routine, it can cause incalculable harm to the reputation and self-esteem of a person. If the Investigating Officer has no reason to believe that the accused will abscond or disobey summons and has, in fact, throughout cooperated with the investigation we fail to appreciate why there should be a compulsion on the officer to arrest the accused,” the Supreme Court said.
CBIC’s Guidelines On Conditions precedent to arrest
Sub-section (1) of Section 132 of CGST Act, 2017 deals with the punishment for offences specified therein. Sub-section (1) of Section 69 gives the power to the Commissioner to arrest a person where he has reason to believe that the alleged offender has committed any offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of Section 132 which is punishable under clause (i) or clause (ii) of sub-section (1), or sub-section (2) of the Section 132 of CGST Act, 2017.
Therefore, before placing a person under arrest, the legal requirements must be fulfilled. The reasons to believe to arrive at a decision to place an alleged offender under arrest must be unambiguous and amply clear. The reasons to believe must be based on credible material.
Since arrest impinges on the personal liberty of an individual, the power to arrest must be exercised carefully. The arrest should not be made in routine and 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 or the competent authority must then determine if the answer to any or some of the four questions is in the affirmative.
Firstly, whether the person was concerned in the non-bailable offence or credible information has been received, or a reasonable suspicion exists, of his having been so concerned.
Secondly, whether arrest is necessary to ensure proper investigation of the offence? 3.2.3 Whether the person, if not restricted, is likely to tamper the course offurther investigation or is likely to tamper with evidence or intimidate or influence witnesses?
Thirdly, 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.?
Lastly, unless such a person is arrested, his presence before the investigating officer cannot be ensured.
Approval to arrest should be granted only where the intent to evade tax or commit
acts leading to availment or utilization of wrongful Input Tax Credit or fraudulent refund of tax or failure to pay amount collected as tax as specified in sub-section (1) ofSection
132 of the CGST Act 2017, is evident and element of mens rea / guilty mind is palpable.
Thus, the relevant factors before deciding to arrest a person, apart from fulfillment of the legal requirements, must be that the need to ensure proper investigation and prevent the possibility of tampering with evidence or intimidating or influencing witnesses exists.
Arrest Can’t Be resorted technically: CBIC
The Board has stated that Arrest should, however, not be resorted to in cases of technical nature i.e. where the demand of tax is based on a difference of opinion regarding interpretation ofLaw.
The prevalent practice of assessment could also be one of the determining factors while ascribing intention to evade tax to the alleged offender. Other factors influencing the decision to arrest could be ifthe alleged offender is co-operating in the investigation, viz. compliance to summons, furnishing of documents called for, not giving evasive replies, voluntary payment of tax etc.
Procedure for arrest
Pr. Commissioner/Commissioner shall record on file that after considering the nature of offence, the role of person involved and evidence available, he has reason to believe that the person has committed an offence as mentioned in Section 132 and may authorize an officer ofcentral tax to arrest the concerned person(s). The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) read with section 69(3) of CGST Act relating to arrest and the procedure thereof, must be adhered to. It is, therefore, advised that the Pr. Commissioner/Commissionershould ensure that allofficers are fully familiar with the provisions of the Code of Criminal Procedure, 1973 (2 of 1974).
The arrest memo must be in compliance with the directions of 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 has been prescribed under Board’s Circular No. 128/47/2019-GST dated 23rd December, 2019. The arrest memo should indicate relevant
section (s) of the CGST Act, 2017 or other laws attracted to the case and to the arrested person and inapplicable provisions should be struck off.
Post arrest formalities
After arrest of the accused, efforts should be made to file prosecution complaint
under Section 132 of the Act, before the competent court at the earliest, preferably within sixty days of arrest, where no bail is granted. In all other cases of arrest also, prosecution
complaint should be filed within a definite time frame.
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 Commissioners)/Chief Commissioners) shall send a report on every arrest to Member (Compliance Management) as well as to the Zonal Member within 24 hours of the arrest.
The monthly reports received from the formations shall be compiled by DGGI, Hars. and a compiled Zone wise report shall be sent to Commissioner (GST-Investigation), CBIC by 10th of every month.
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Instruction Details
Instruction No. 02/2022-23
