Finance Ministry Issues Guidelines for Probe, Arrests, Bail under GST Act

The Finance Ministry has issued a set of guidelines detailing conditions for investigation, summons, arrests and bail procedures under the Goods and Services Tax Act, 2017 (GST Act) for violating GST provisions. These guidelines state that approval for arrest under the GST Act shall be granted for cases wherein a clear intent of tax evasion or committing violation exists. The Ministry of Finance notification also stated that approval for arrest should not be granted if tax discrepancy is based on the difference of legal opinion in interpretation of the law.

These guidelines further mentioned that in case an accused needs to be arrested for violation of the GST Act, arrest procedures under the Criminal Penal Code (CrPC) need to be followed. Information regarding arrests under the Act must be sent to the Directorate General of GST Intelligence (DGGI) every month, as per the guidelines.

Citing the Code of Civil Procedure, 1908, the guidelines read, “As per Section 70 (1) of the CGST Act, summons can be issued by proper officer to any person whose attendance is considered necessary either for giving evidence or producing a document or any other thing in an inquiry in the same manner as provided in the case of a civil court.”

These should also indicate the name of the offender(s) against whom the investigation provided the revelation is not detrimental to the cause of the probe to provide a prima facie understanding about the capacity in which the ofendor(s) has been summoned– accused, co-accused or witness.

While issuing summons under the GST Act, officials must also ensure that this is done in a judicious manner. Authorities concerned are also advised to look at incidents where a letter of requisition may suffice instead of issuing summons.

Here are the Finance Ministry guidelines for issuing summons under the GST Act:

· Power to issue summons generally rests with Superintendents though senior officials may also issue summons.

· Superintendents must issue summons after obtaining written permission detailing the reasons for issuance of a summon from an officer on the rank of Deputy/Assistant Commissioner.

· Summoning officer should be present at the time and date for which the summon has been issued.

· In case of any emergency, the summoned person should be informed in advance or orally.

· In cases where getting a written permission beforehand is not possible, oral/telephonic permission from an officer on the rank of Deputy/Assistant Commissioner should be obtained and the same should be reduced to writing and intimated to the officer on ground at the earliest.

· Summons shall be avoided in cases where statutory documents are available digitally or in the GST portal.

· In cases involving senior management officials (CMD, MD, CEO, CFO or similar officers of a company or PSU), summons should not be issued in the first instance.

· They should be summoned when there are clear indications of their involvement in the decision making which led to loss of revenue is proven in the investigation.