homefinance NewsGST body issues guidelines on summons, arrests, bails — experts welcome move

GST body issues guidelines on summons, arrests, bails — experts welcome move

The GST investigation authority has asked field officers not to exercise the power to arrest in a mechanical manner and also refrain from summoning senior management officials like CMDs and CEOs.

Profile image

By Timsy Jaipuria  Aug 19, 2022 12:17:21 AM IST (Updated)

Listen to the Article(6 Minutes)
5 Min Read
GST body issues guidelines on summons, arrests, bails — experts welcome move

In a big reprieve for India Inc, the Narendra Modi government on August 17 issued guidelines for field offices regarding the investigation, summons, arrests, and bail procedures under the Goods and Services Tax (GST) law.

The GST investigation authority has asked officers not to exercise the power to arrest in a mechanical manner and also refrain from summoning senior management officials like CMDs and CEOs.


The guidelines also provided a checklist for the officers wanting to arrest an alleged GST offender. The list includes questions like whether the alleged offender is likely to tamper with evidence or intimidate witnesses, and if the person is the mastermind of the offence committed.

The guidelines on arrest take into account the Supreme Court judgment wherein it was observed that "merely because an arrest can be made because it is lawful does not mandate that arrest must be made."

Here are the important principles to be kept in mind by the department while issuing summons

1. Summon by superintendent should be issued after written permission from a senior officer.

2. Summon should indicate the name of the offender against whom the case is being investigated.
3. Summon may be avoided for calling statutory records as available on the GST portal.
4. Summon should not be issued to top senior officials like CMD/MD/CEO/CFO to call evidence or documents in the first instance.
5. All persons summoned are bound to appear before officers concerned.
6. Summoning officer must be present at the time and date for which summon is issued.
7. Issuing repeated summons should be avoided without ensuring adequately whether served properly.
8. Alternatively, the department may resort to the option of issuing a letter for requisition of information instead of summoning.

Here are the important principles to be kept in mind by the department during the arrests and bail procedures

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

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

3. Arrest should be made in cases where there is intent to evade tax or avail or utilise wrong input tax credit etc. Arrest should not be made in cases involving differences of opinion on the interpretation of the law.

4. Instruction also clarifies the procedure of arrest, like proper adherence of provisions of the Code of Criminal Procedure. The arrest memo should be in compliance with directions of the Supreme Court in the case of D.K. Basu and should indicate the grounds of arrest, intimation to the authorised person of the arrested person, date and time of arrest, mandatory quoting of DIN, etc.

5. Further, the instruction provides the post-arrest formalities — which are either to release the arrested person against a bail bond and surety amount or produce the arrested person before a magistrate within 24 hours of arrest. Also, the chief commissioner needs to send a report of every arrest to member (compliance management) within 24 hours and a monthly report of all arrests to the Directorate General of GST intelligence by the 5th of the succeeding month.

What the experts say

Saurabh Agarwal, a tax partner at EY said, "As a welcome move, the CBIC has issued a circular laying down the overall framework for issuance of summoning under GST. This circular emphasises the need for use of summon as an exceptional power under GST. This is in line with the past jurisprudence wherein high courts have multiple times held that summons should be issued as last resort with utmost necessary."

He said the present circular lays down important pillars like reasons and approval for issuance of summons, the procedure for issuance of summons, situations when summons should not to be issued, etc.

"The circular meets industry expectations by clarifying that summons should not be issued to demand statutory documents already available in the online GST portal, calling of senior officials such as MD, CEO, CFO in exceptional circumstances, non-issuance of repeated summon without ensuring service of summons. The circular brings certainty on important matters related to summon."

Agarwal said, "The CBIC has issued guidelines for arrest and bail in relation to GST offences. This instruction clarifies various issues in relation to the condition & procedure to arrest, post-arrest formalities, and reports to be sent. Various high courts followed principles laid down in the judgement of Make My Trip to uphold that provisions of arrest should be invoked rarely and not to be exercised arbitrarily or for sake of recovery."

"The instruction clarifies that power to arrest should be invoked in exceptional circumstances such as where person is involved in tampering with the documents, fraudulent activities etc. Power of arrest should not be invoked for routine or technical matters," he added.

Abhishek Jain, Partner Indirect Tax at KPMG in India said, "In various instances, summons were issued to CXOs for routine matters which otherwise could have been addressed by the tax department of the company. The guidelines reinstate the principle that CXOs should not be summoned at the first instance. Furthermore, the guidelines provide that DIN should be mentioned in the summons which will enable easy tracking for the summons."

Most Read

Share Market Live

View All
Top GainersTop Losers
CurrencyCommodities
CurrencyPriceChange%Change