New Delhi: The forthcoming GST Council meeting will take up for discussion whether the stand-alone provision under the Goods and Services Tax regime, which empowers tax officials to arrest taxpayers under investigation, can be removed as instances of its misuse have come to the fore, as per a senior official.
This proposal has been made as part of the broader suggestions by the GST Council’s Law Committee on decriminalisation of GST laws, as on several occasions the failure to pay tax has not been deliberately intended. This would result in tax officials no longer having the power under Section 69 to arrest a taxpayer during a GST investigation.
The current GST framework gives the Commissioner the power under Section 69 of the CGST Act to authorise arrest where there are reasons to believe that a person has committed specified serious offences under Section 132.
The current thinking is that in serious cases involving fake invoicing, fraudulent input tax credit and claiming fake refunds, action can be taken for criminal prosecution under the provisions of the general criminal law provided in the Bharatiya Nyaya Sanhita (BNS).
The Council’s Law Committee, comprising officials from the Centre and states, examines legal provisions under the GST laws and recommends statutory amendments and clarifications to the GST Council.
Businesses and industry representatives have complained that the arrest provisions can create fear and uncertainty, particularly when used against senior executives or in sectors such as banking and insurance. This step of decriminalising the law is seen as a taxpayer-friendly move.
The Law Committee has also recommended raising the monetary threshold for prosecution of offenders. According to the current rules, the statutory minimum amount of tax evasion or wrongful ITC required to launch prosecution is Rs 5 crore. This threshold could now be raised to Rs 10 crore.
The Committee has also recommended reducing the imprisonment timelines for lighter offences as the existing terms are too harsh. Under Section 132 of the CGST Act, GST offences exceeding Rs 5 crore can attract a jail term of five years with a fine. Offences of the value of Rs 2-5 crore may attract a jail term up to three years, and offences of Rs 1-2 crore may attract imprisonment of one year.
However, any change in the law will have to be made through the introduction of an amendment Bill that will have to be approved by the Parliament.
(IANS)
