Rein in Overreach: The Hindu Editorial on Arrest and Summons under the GST Law

The Central Board of Indirect Taxes and Customs (CBIC), through four separate releases this week, has changed the enforcement procedures for tax evaders in customs as well as in Goods and Services Tax (GST) cases. Firstly, it significantly raised the monetary limit to initiate prosecution and arrest under the Customs Act. separately, board Detailed guidelines laid down for GST officers before they exercise their powers of arrest and issue of summons under the Central GST Law. While such norms were prescribed for legacy laws governing taxes like Central Excise, which have now been subsumed in the GST, the CBIC felt the need to issue new guidelines. The summons checklist, for example, looks into issuing summons to top executives of firms even for purchase of records available on the GST portal, and specifies that the CXO and MD of any firm should be ‘generally’ in the first instance. ‘ should not be called. But only if their involvement in tax evasion is clearly indicated. An approval process that requires officers to record reasons for issuing summons, to ensure that the power is exercised judiciously, has even been advised to consider that Where simple letters may suffice.

The norms prescribed for arrest and bail for GST offences, which stem from a Supreme Court ruling, are far more elaborate and are aimed at preventing ‘routine and mechanical’ arrests. Pre-requisites set before an arrest include the availability of credible evidence of wrongdoing as a starting point. However, the sanction for arrest will depend on whether the intention to evade or wrongfully obtain tax benefits is clear and the reason or guilty mind of the men is clear. The board has said that mere disagreement on the interpretation of the tax levy should not result in arrest, underlining that the power of arrest should be exercised with caution as it affects individual liberty. The CBIC, however, took a year to respond to the apex court’s finding that arrests should not be made just because its latest diktat will quell uneasiness among GST payers about a new kind of tax panic. While the GST Council will continue to navigate the remaining clean-up of exemptions and inverted duty structures and reform the messy tax rates with an eye on revenue growth from the still-evolving tax regime, it will equally reduce the barriers to compliance. is important. Taxpayers and officials can always differ on what the fine print means, and filings can contain omissions or mistakes that are not necessarily malicious. Separating these from the genuinely evasive tricks of some taxpayers, and following a well thought-out process to prosecute errants by design, making GST a really nice and simple tax for businesses rather than a new fear factor. Will go a long way in the making. fret over.