Following the judgment of the Supreme Court in Siddharth v. The State of Uttar Pradesh and Anr, dated 16th August 2021 in Criminal Appeal No. 838 of 2021, arising out of SLP (Crl) No. 5442/2021, the Central Board of Indirect Taxes (CBIC) issued instructions guidelines with respect to arrest under CGST Act, 2017 and even, under Central Excise Act, 1944 and Chapter V of the Finance Act, 1994.
The Guidelines add conditions precedent to arrest, the procedure for arrest, post-arrest formalities, and the manner in which the reports need to be sent. Before placing a person under arrest, the legal requirements must be fulfilled, the reasons for an arrest must be unambiguous, and must be based on credible material.
The arrest should not be made in a routine and mechanical manner. The Commissioner or competent authority must determine if the answer to certain questions is affirmative or not before arrest. Approval to arrest should be granted only where the intent to evade tax or commit acts leading to utilization of wrongful Input Tax Credit or fraudulent refund of tax or failure to pay the amount collected as tax is evident.
The Principal Commissioner or Commissioner should consider the role of the person involved, the evidence available, and the commission of offense under Section 132 of the CGST Act. The arrest memo must be in compliance with the directions in DK Basu v.State of West Bengal. The Instructions also specify the arrest of women as per Section 46 of CrPC and mandate medical examination of the arrested person. A separate arrest memo must be made and provided to each arrested person and the arrest should be made with minimal use of force and publicity.
Sub-section (4) and (5) of Section 132 of the CGST Act, 2017 have been amended to modify the right of bail, and conditions of bail, and in cases where conditions for bail are not satisfied then the arrested person be produced before the Magistrate within 24 hours of arrest and also handing over the person to police custody in case of necessity. The Instructions also mention making of prosecution complaint under section 132 at the earliest and also maintaining of bail register.
“Pr. Director-General (DGGI) or Pr. Chief Commissioner or Chief Commissioner shall send a report on every arrest to Member (Compliance Management) as well as to the Zonal Member within 24 hours of the arrest and maintain an all-India record of arrests made in CGST, from September 2022 onwards, a monthly report of all persons arrested in the Zone shall be sent by the Principal Chief Commissioner or Chief Commissioner to the Directorate General of GST Intelligence by the 5th of the succeeding month. The monthly reports received from the formations shall be compiled by DGGI and a compiled Zone-wise report shall be sent to Commissioner (GST-Investigation), CBIC by the 10th of every month. Further, all such reports shall be sent only by e-mail and the practice of sending hard copies to the Board should be stopped with immediate effect” the Instruction added.
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