With diverse pronouncement made by High Courts in respect of inherent powers given to GST officers under the Central Goods and Services Tax Act, 2017 (here-in-after referred to as “CGST”) towards powers to arrest, Hon’ble Supreme Court finally settles the divergent views. This article discusses about relevant GST provisions, interpretation made by Courts and conclusion drawn by the Apex Court.
Section 69 of the CGST empowers the Commissioner to authorize any GST officers to arrest a person for following offences:
- Supply of goods/ services without actual issuance of Invoice
- Issuance of bogus invoices without any supply of goods/ services
- Availment of ITC of bogus tax invoice
- Collection of GST from recipient but fails to pay to the Government
The abovementioned offences are cognizable and non-bailable where the amount of tax evaded or ITC wrongly availed exceeds Rs. 5 crores and punishment may extend to 5 years of imprisonment with fine.
The Division bench of the Telangana High Court had dismissed a batch of writ petitions seeking protection from arrest for tax evaders. The writ petitions filed were against the summons issued by Superintendent of the Hyderabad GST Commissionerate under CGST. The Hon’ble Divisional Bench of Telangana High Court held that provisions of the Act empower the Commissioner to order the arrest of a person, if it falls under the above-mentioned offences.
On the contrary, the Bombay High Court gave an interim relief to person against arrest for GST evasion, that no coercive action will be taken against a person charged with issuing fake invoices and bogus trading. The Bombay High Court granted pre-arrest bail on the ground that the CGST officials had not registered any FIR as warranted under the Code of Criminal Procedure.
Keeping in mind the contradictory orders, the Central Government approached the Apex court with a Special Leave Petition (SLP) against the Bombay High Court order.
Arguments placed before the Supreme Court
Central Government (CG) challenged the Bombay High Court judgment on the ground that the procedure entailed under the Code of Criminal Procedure is for police officers and not for officers of the GST Commissionerate.
Supreme Court Decision
The SLP filed by the CG against the verdict of the Bombay High Court has been deferred and will be heard by a Larger Bench of the Supreme Court. However, the Apex Court suggested that all the High Courts should keep in mind the verdict of the Telangana High Court which had said that person can't be given protection from arrest in GST evasion matters as the Apex Court had earlier dismissed the SLP which was filed against the Telangana High Court judgment.
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