The power to arrest is one of the most drastic enforcement tools available to GST authorities. Section 69 of the CGST Act, 2017, empowers the Commissioner to authorize the arrest of a person suspected of committing offences specified under Section 132. Given the serious implications for personal liberty, the exercise of this power is subject to strict conditions and constitutional safeguards.
This article explains the grounds for arrest under Section 69, the procedural requirements, and the safeguards available to the person arrested.
Offences That Can Lead to Arrest
Arrest under Section 69 can be authorized for the following offences under Section 132:
- Tax evasion.
- Failure to pay collected tax.
- Falsifying financial documents.
- Fraudulently issuing invoices.
- Fraudulently availing input tax credit.
- Fraudulently obtaining refunds.
- Obstructing an officer in the discharge of duties.
- Tampering with material evidence.
Threshold for Arrest
The GST Council has clarified that arrest should be made only in serious and high-value offences, particularly where the amount of tax evaded exceeds ₹2 crore , and especially beyond ₹5 crore. Arrest is not intended for routine procedural lapses or technical violations.
Procedural Requirements for Arrest
The following procedural requirements must be satisfied before an arrest can be made:
- The Commissioner must have reasons to believe that the person has committed a specified offence under Section 132.
- The reasons to believe must be recorded in writing.
- The Commissioner must also specify the necessity to arrest , in addition to the reasons to believe. The Gauhati High Court has held that merely recording reasons to believe is not sufficient — the necessity to arrest must also be justified.
- The arrest memorandum must be prepared and served on the person arrested.
Constitutional Safeguards
Persons arrested under Section 69 have the following constitutional safeguards:
- Right to be informed of the grounds of arrest: Article 22(1) of the Constitution.
- Right to consult and be defended by a legal practitioner: Article 22(1).
- Right to be produced before a magistrate within 24 hours: Article 22(2).
- Right against self-incrimination: Article 20(3).
- Right to bail: Section 132 provides that offences punishable with imprisonment up to three years are bailable; offences punishable with more than three years are non-bailable.
Bail Provisions Under Section 132
The maximum punishment under Section 132 determines whether the offence is bailable or non-bailable:
- Bailable offences: Where the amount of tax evaded is less than ₹5 crore, the maximum punishment is three years, and the offence is bailable.
- Non-bailable offences: Where the amount exceeds ₹5 crore, the maximum punishment is five years, and the offence is non-bailable.
- Cognizable and non-cognizable: All offences under Section 132 are cognizable and non-bailable, except those punishable with imprisonment up to three years, which are bailable.
Practical Steps If Arrested
- Stay calm and do not resist arrest.
- Ask for the grounds of arrest and a copy of the arrest memorandum.
- Contact a lawyer immediately.
- Do not make any statement without legal counsel.
- Apply for bail before the appropriate court.
- Challenge the arrest if the procedural requirements have not been followed.
Conclusion
Arrest under Section 69 is a serious matter with significant implications for personal liberty. The power is subject to strict procedural requirements and constitutional safeguards. Any arrest that fails to meet these requirements can be challenged before the courts.
At Anuj Desai & Associates, we provide expert representation services for GST arrest and bail matters. Our team can help you protect your rights and challenge any illegal arrest.
For a confidential consultation, contact us at office@anujdesaiassociates.com or call 9619456656. Visit our website at https://anujdesaiassociates.com or connect with our founder on LinkedIn at linkedin.com/in/ca-anuj-desai-122547230.