FAQ’s on Arrest in GST

• Can we seek anticipatory bail in case of arrest in GST u/s 438 of CRPC?

No, CRPC is made applicable via section 69(3) of GST whereas the arrest is made via section 69(1). Thus Section 438 of anticipatory bail can’t be used in GST

• Do we have any provision for bail before arrest in GST?

No, There is no particular section for anticipatory bail in GST.

• Can we use writ u/a 226 of COI to seek anticipatory bail?

Yes, but it should be used sparingly (SC in case of Km. Hema Mishra. It will be depending on case to case basis. Where a statute is specifically kept out from the applicability of a provision, writ should not be used to fail the law. But yes exceptions can be there.

• When can an arrest happen in GST?

Section 69 talks about the arrest in GST. Section 69(1) provides for the arrest in case of offence in clause (a) to (d) of section 132(1). All these offences are cognizable and non bailable. Surprisingly section 69(1) doesn’t give any authority related to the arrest in case of non cognizable and bailable offence.

• Whether an arrest can take place when the taxpayer is complying with the notices of appearance? Can he seek protection under section 41(A)(3) of CRPC.

Let us first try to understand whether the CRPC will be applicable at this stage? As we discussed earlier, section 69(1) doesn’t talk about CRPC. But in this case the right to seek information is given under section 70 of CGST Act and there the CRPC is made applicable. Thus section 41(A)(3) will be applicable.

Now the question is whether the arrest can take place when the assessee is complying with the notices? The answer is yes because in some circumstances section 41(A)(3) itself provides the right to arrest for reasons to be recorded in writing. Hence an arrest in GST can take place even if the taxpayer is complying.

• Whether it is compulsory to “record the reason” of arrest in case of arrest in GST?

In section 69 the requirement is to have a “reason to believe”. If the reason is recorded in the file, it is not mandatory to record it on the authorization letter for arrest. (PV Ramanna  Reddy Vs Union of India)

• Can the department launch the prosecution only after Assessment?

No, The prosecution is not dependent on the Assessment. Section 132 provides for the instances which can initiate the prosecution. There is no requirement under the law to complete or start assessment before starting the prosecution.

• There is no necessity to arrest a person for the alleged commission of an offense which is compoundable.

The compounding can be done before or after prosecution. Also the tax along with interest and penalty is payable even for compounding. 

• The arrest of a person which will not facilitate further investigation, has to be discouraged, since the same has the potential to punish a person before trial.

The purpose of arrest is not just investigation. It serves many other purposes also. In some cases SC has indicated that in fiscal statutes the object of arrest is to further the process of enquiry. But, it does not mean that the furthering of enquiry/ investigation is the only object of arrest. (PV Ramanna Reddy)