In the intricate domain of taxation laws, few provisions carry as much weight as those pertaining to the power to arrest. For taxpayers and tax authorities alike, comprehending the nuances of Section 69 of the Central Goods and Services Tax (CGST) Act is crucial. This comprehensive guide aims to delve deeper into the provisions of Section 69, offering user-friendly insights and explanations to demystify the legal landscape surrounding arrests in taxation matters. 

Legal Provisions: Section 69 

Section 69. (1) Where the Commissioner has reasons to believe that a person has committed any offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of section 132 which is punishable under clause (i) or (ii) of sub-section (1), or sub-section (2) of the said section, he may, by order, authorise any officer of central tax to arrest such person. 

(2) Where a person is arrested under sub-section (1) for an offence specified under sub- section (5) of section 132, the officer authorised to arrest the person shall inform such person of the grounds of arrest and produce him before a Magistrate within twenty-four hours. 

(3) Subject to the provisions of the Code of Criminal Procedure, 1973 (2 of 1974), – 

(a) where a person is arrested under sub-section (1) for any offence specified under sub-section (4) of section 132, he shall be admitted to bail or in default of bail, forwarded to the custody of the Magistrate; 

(b) in the case of a non-cognizable and bailable offence, the Deputy Commissioner or the Assistant Commissioner shall, for the purpose of releasing an arrested person on bail or otherwise, have the same powers and be subject to the same provisions as an officer-in-charge of a police station. 

Analysis: Understanding Offenses and Punishments 

To comprehend the implications of Section 69, it’s essential to understand the offenses and corresponding punishments outlined in Section 132 of the CGST Act: 

– Offences under Section 132 include activities such as supply of goods or services without issue of invoice with the intention of tax evasion and issuing invoices without supply of goods or services for wrong availment and utilization of input tax credit, and failing to remit collected tax to the government in stipulated time frame. 

– Punishments range from imprisonment to fines based on the severity of the offense and the amount involved, as detailed in Section 132. 

Cognizable and Non-Bailable Offenses: The Critical Distinction 

Section 132(5) of the CGST Act designates offences involving significant tax amounts as cognizable and non-bailable. This distinction underscores the seriousness of such offenses and the stringent legal consequences they entail. 

Procedure of Arrest: To be followed 

In D.K Basu vs State of West Bengal SC 1996: In this case, Court issued guidelines to be adhere to in all cases of arrest or detention. Important guidelines are laid down below:- 

1. As per Article 22 Indian Constitution of India, It is the fundamental rights of person to know the ground of arrest. Police office should inform the reason of such arrest and also tell it is either a bailable or non-bailable offence. 

2. If a person arrested with warrant for non- cognizable offence, arrested person has a right to see the warrant and warrant of arrest should fulfill the conditions such as sign by the presiding officer, seal of the court, name of accused and offence under with arrest is made. 

3. Arrested person has a right to meet the advocate of his choice during the interrogation. 

4. Arrested person should not be detained for more than 24 hours of arrest without being presented before the magistrate. As per Article 22 of Constitution of India this is the fundamental right of the person. 

5. Arrested person has a right to check medically under the custody. Medical officer shall examine his body when is produced before magistrate. It is the duty of person having custody of accused to take care health and safety of the accused. 

6. Arrested person has right to remain silent during custody. 

Guidelines for arrest and bail for offences punishable under CGST Act 

Instructions No. 02/2022-23 [GST Investigation Wing] dated 17 August 2022 issued by CBIC to provide guidelines for arrest and bail in relation to offences punishable under CGST Act 2017. Gist of guidelines are reproduced below: 

Hon’ble Supreme Court of India in its judgment, dated 16th August, 2021 in Criminal Appeal 

No. 838 of 2021, arising out of SLP (Crl.) No. 5442/2021, has observed as follows: 

“We may note that personal liberty is an important aspect of our constitutional mandate. The occasion to arrest an accused during investigation arises when custodial investigation becomes necessary or it is a heinous crime or where there is a possibility of influencing the witnesses or accused may abscond. Merely because an arrest can be made because it is lawful does not mandate that arrest must be made. A distinction must be made between the existence of the power to arrest and the justification for exercise of it. If arrest is made routine, it can cause incalculable harm to the reputation and self-esteem of a person. If the Investigating Officer has no reason to believe that the accused will abscond or disobey summons and has, in fact, throughout co-operated with the investigation we fail to appreciate why there should be a compulsion on the officer to arrest the accused.” 

Conditions precedent to arrest 

1. Commissioner who has arrested or authorize an officer to arrest a person for committed an offence under Section 132 of CGST Act should have reason to believe that such person has committed the offence. The reason must be clear and based on credible evidence. 

2. Commissioner should consider the following points before the arrest, namely. 

1.  Arrest is necessary to ensure proper investigation of the offence? 

2. Can the offender tamper the evidence and influence the witnesses? 

3.  Offender being mastermind or key operator effecting proxy/ benami transaction in the name of dummy GSTIN on non-existent person for passing fraudulent ITC. 

4. As unless such person is arrested, his presence before investigating officer cannot be ensured. 

3. Approval to arrest should be granted only when it is evident that the offences are committed with the means rea. 

4. Arrest should not be resorted where the demand of tax is based on a difference opinion regarding interpretation of Law.  

Procedure of Arrest 

1. The Commissioner should prepare a file to record the nature of offence, name and role of offender and evidence available in respect of the committed offence. Procedure specified in Section 1973 must be adhered to arrest the concerned person. 

2. Arrest memo should be in compliance with direction of H’ble Supreme Court in Case of D.K Basu vs State of West Bengal reported in 1997. The arrest memo should be prepared according to Circular No. 128/47/2019 GST dated 23^rd December 2019 and manifest the relevant section in the memo. 

3. The commissioner or the authorised officer must explain the grounds of arrest to the arrested person and should be recorded in arrest memo. Officer shall inform the authorised/nominated person immediately and will record in arrest memo with the date and time of his arrest. 

4. Generation and quoting Document Identification Number (DIN) is mandatory for all the communications issued by officers of CBIC to taxpayers and other concerned person. Circular No. 122/41/2019 – GST dated 05^th November 2019. 

5. A women will be arrested only by a women officer in accordance with Section 46 of Code of Criminal Procedure 1973. 

6. Medical examination of arrest person shall be conducted by medical officer of Central/State Government or by a registered medical practitioner. In case of female, the same procedure shall be conducted a female medical officer or female registered medical practitioner. 

7. Person having custody of arrested person should be cautious for health and safety of arrested person. 

8. Arrest should be made with minimal use of force, publicity and without violence. 

Post arrest formalities  

Since, Section 132(4) or Section 132(5) of CGST Act has outlined the different approaches for the punishment specified therein. Under the issued instruction the different procedure is categorized. 

When person is arrested under sub-section (1) of Section 69 for offences committed under Section 132(4) of CGST Act. 

1. Assistant Commissioner or Deputy Commissioner is bound to release person on bail against the bail bond. Bail conditions should be informed in writing to the arrested person or to the nominated person. 

2. The amount indicated in personal bail bond and surety will depend upon the facts and circumstances of each case inter-alia on the amount of tax involved. Person who is accused under the act can not leave county without informing to the investigating officers. 

3. If the conditions of the bail are fulfilled by the arrested person he shall be released by the officer on bail. In cases where the conditions for granting bail are not fulfilled arrested person shall be produced before the magistrate within 24 hours of arrest. 

4. Arrested person can also handover to the nearest police station during the night under a challan. 

When person is arrested under sub-section (1) of Section 69 for offences committed under Section 132(5) of CGST Act. 

1. Authorised officer shall inform the arrested person of the grounds of arrest and produced him before the magistrate within twenty-four hours. 

2. Arrested person may be handed over to the nearest police station under a challan for the safety of such person. 

3. Formats and challan specified in Bail Bond in the Criminal Procedure 1973 should be followed. 

4. Where bail is not granted to the arrested person, officer may file prosecution complaint within sixty days of arrest. 

5. Every commissioner should maintain a Bail Register containing the details of the case arrested person, bail amount, surety amount etc. Money/instrument/documentation received as surety should keep under the custody of nominated officer and are kept valid till the bail is discharged. 

Reports to be sent  

1. Director General (DGGI)/ Chief Commissioner shall send report on every arrested person to the member of compliance management as well as zonal member within 24 hours of the arrest. 

2. Details of arrested person shall be provided in Annexure-I. 

Ensuring Compliance and Fairness: Practical Considerations 

While the legal provisions provide a framework for arrests and bail, it’s essential to consider practical implications and ensure compliance with fundamental principles of fairness and justice. Some key practical considerations include: 

– Evidence Gathering: Tax authorities must gather sufficient evidence before initiating arrests to ensure that actions are based on solid grounds. 

– Transparency and Communication: Clear communication of reasons for arrest and bail conditions fosters transparency and helps individuals understand their rights and obligations. 

– Procedural Compliance: Adherence to procedural requirements outlined in the law is critical to safeguarding individual rights and ensuring fair treatment. 

– Judicious Use of Arrest Powers: Arrests should be made judiciously, with due consideration for the severity of the offense and the likelihood of flight or obstruction of justice. 

Navigating the Legal Landscape with Confidence 

Understanding the power to arrest under Section 69 of the CGST Act is essential for both taxpayers and tax authorities. By familiarizing themselves with the legal provisions and procedural guidelines, individuals can navigate the taxation landscape with confidence, ensuring compliance with the law while safeguarding their rights. 

In conclusion, while the complexities of tax laws may seem daunting, a clear understanding of relevant provisions empowers individuals to fulfil their obligations effectively while protecting their interests. By demystifying Section 69 of the CGST Act, this guide aims to facilitate informed decision-making and promote transparency and fairness in taxation matters. 

By adhering to legal provisions and procedural guidelines, tax authorities can conduct investigations and enforcement actions in a manner that upholds the principles of justice and fairness. Similarly, taxpayers can navigate their obligations with confidence, knowing their rights are protected under the law. 

In the dynamic landscape of taxation, continuous education and awareness are key. By staying informed and engaged, individuals can contribute to a tax system that is not only efficient and effective but also fair and just for all stakeholders involved.