22 August 2022
CBIC issued guidelines for ‘Arrest and Bail’ in relation to offenses punishable under the CGST Act, 2017

Pursuant to the Hon’ble Apex Court’s decision in the case of Siddharth vs The State of Uttar Pradesh dated 16 August 2022, the Central Board of Indirect Taxes and Customs (CBIC) has issued instruction no. 02/2022-23 dated 17 August 2022, the details are mentioned below:
 
Conditions precedent to arrest
 
  • Given that arrest impinges on the personal liberty of an individual, the power to arrest must be exercised carefully.
  • Apart from fulfilling legal conditions precedent to arrest as per Section 132 of the CGST Act, 2017, power to arrest must be exercised only if custodial investigation becomes necessary or it is a heinous crime or where there is a possibility of influencing the witness or where there are reasons to believe that the accused may abscond.
  • Approval for arrest should be granted only where wilful/fraudulent intent is evident and an element of mens rea (guilty mind) is present.
  • Arrest should not be warranted in cases involving interpretational issues.
 
Procedure for arrest
 
  • The provisions of the Code of Criminal Procedure 1973 read with Section 69(3) of the CGST Act must be adhered to.
  • The Principal Commissioner/Commissioner must record on file that he has reasons to believe that the person has committed an offense and may authorize an officer of Central Tax to arrest the concerned person(s).
  • An arrest memo must be prepared, complete in all aspects, to be provided and explained to the concerned person. A separate arrest memo shall be given to each individual (in case there are several arrests in a single matter).
  • It is mandatory to quote the Document Identification Number (DIN) on the arrest memo.
  • Specific modalities with respect to the arrest of females have been outlined in the instruction.
 
Post arrest formalities

Bailable offenses
  • Bail conditions should be informed in writing to the arrested person and on the telephone to the nominated or authorized person of the person arrested.
  • If conditions for grant of bail are not fulfilled, the arrested person shall be produced before the appropriate Magistrate within 24 hours of arrest.

Non-Bailable offenses
  • The arrested person shall be produced before the appropriate Magistrate within 24 hours of arrest, exclusive of the time necessary for the journey from the place of arrest to the Magistrate’s Court.
  • A prosecution complaint shall be filed before the competent court, preferably within 60 days of arrest.
 
Reports to be sent
 
  • Monthly reports of arrests made shall be prepared and compiled at the zonal level and sent to the Directorate General of GST Intelligence and Commissioner (GST-Investigation).
Our Comments
The power to arrest, even though lawful, had an impact of causing incalculable harm to the reputation and self-esteem of a person. The Apex Court had to step in to moderate these powers, and specific emphasis was drawn on providing a justification for exercising the power to arrest instead of making an arrest a routine act or a compulsion.

Owing to the Apex Court’s decision, the Circular provides guidelines and instructions for exercising the power of arrest under the CGST Act, 2017. This will entail and, as a result, will provide some relief to avoid unnecessary hassles faced by taxpayers on account of coercive arrest powers exercised by revenue authorities.
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