Gst Body Issues Summons, Arrest and Bail Guidelines – Experts Welcome Movement


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The GST investigative authority instructed the field officers not to exercise the power of arrest mechanically and also to refrain from summoning senior officials like CMDs and CEOs.

In a big reprieve for India Inc, the Narendra Modi government on August 17 issued guidelines for field offices regarding investigations, summonses, arrests and bail procedures under the Tax Act. goods and services (GST).

The TPS investigative authority instructed officers not to exercise the power of arrest mechanically and also to refrain from summoning senior executives like CMDs and CEOs.

The guidelines also provided a checklist for officers wishing to arrest a suspected GST violator. The list includes questions such as whether the alleged perpetrator is likely to tamper with evidence or intimidate witnesses, and whether the person is the mastermind of the offense committed.

The arrest guidelines take into account the Supreme Court judgment in which it was observed that “the mere fact that an arrest can be made because it is lawful does not require that an arrest be made” .

Here are the important principles to be kept in mind by the department when issuing summonses

1. The summons by the superintendent must be issued after written authorization from a superior officer.

2. The summons must state the name of the offender against whom the matter is being investigated.

3. The summons can be avoided to call the statutory documents available on the GST portal.

4. The subpoena should not be issued to senior officials such as CMD/MD/CEO/CFO to present evidence or documents in the first instance.

5. All persons cited are required to appear before the officers concerned.

6. The summoning officer must be present at the time and date for which the summons is issued.

seven. Care should be taken not to issue repeated summonses without adequate assurance that they are served correctly.

8. Alternatively, the department can resort to the possibility of issuing a letter of requisition of information instead of a summons.

Here are the important principles for the department to keep in mind during arrest and bail proceedings

1. Section 69(1) empowers the Commissioner to arrest a person who commits certain offenses under Section 132 of the CGST Act.

2. However, before arresting a person, the commissioner must determine whether the arrest is essential to ensure a proper investigation, or whether the person is likely to tamper with the investigation or the evidence, or whether the person is involved in the fraudulent passage input tax credit, etc. .

3. Arrest should be made in cases where there is intent to evade tax or to benefit from or use an erroneous input tax credit, etc. Arrest should not be made in cases involving differences of opinion on the interpretation of the law.

4. The instruction also specifies the arrest procedure, as well as proper compliance with the provisions of the Code of Criminal Procedure. The arrest note must be in accordance with the instructions of the Supreme Court in the DK Basu case and must state the reasons for the arrest, the notice to the authorized person of the arrested person, the date and time of the arrest. arrest, compulsory mention of the DIN, etc.

5. In addition, the instruction provides for the formalities after the arrest – which consists of either releasing the arrested person against bail and an amount of bail, or bringing the arrested person before a magistrate within 24 hours of the arrest. In addition, the Chief Commissioner must send a report of each arrest to the member (Compliance Management) within 24 hours and a monthly report of all arrests to the GST Intelligence Branch by the 5th of the following month.

Saurabh Agarwal, a tax partner at EY, said: “As a welcome step, the CBIC has issued a circular setting out the general framework for issuing notices under GST. This circular emphasizes the need to use the summons as an exceptional power under GST. This is consistent with past case law where high courts have repeatedly ruled that subpoenas should be issued as a last resort with the utmost necessity.”

He said that this circular sets forth important pillars such as the grounds and approval for the issuance of the summons, the procedure for issuing the summons, the situations in which the summons should not be issued, etc.

“The circular responds to industry expectations by clarifying that summons should not be issued to demand statutory documents already available on the GST online portal, the appeal of senior officials such as the Managing Director, CEO , the financial director in exceptional circumstances, the non-issuance of a repeated summons without ensuring the service of summons The circular provides certainty on important issues related to the summons.

Agarwal said: “The CBIC has issued guidelines for arrest and bail in relation to GST offences. This instruction clarifies various issues relating to the conditions and procedure of arrest, formalities after arrest and reporting. Various high courts have followed the principles set out in Make My Trip to confirm that arrest provisions should be invoked infrequently and not be used arbitrarily or for clawback purposes.”

“The instruction clarifies that the power of arrest should be invoked in exceptional circumstances, such as when a person is involved in falsification of documents, fraudulent activities, etc. The power of arrest should not be invoked to routine or technical matters,” he added.

Abhishek Jain, Indirect Tax Partner at KPMG in India, said: “In several cases, summonses were issued to CXOs for routine matters which otherwise might have been handled by the corporate tax department. re-establish the principle that CXOs should not be summoned in the first instance. In addition, the guidelines provide that the DIN must be mentioned in the summons, which will allow easy monitoring of the summons.”


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