Tax evasion of over Rs 5 crore under the Goods and Services Tax (GST) regime would be a non-bailable offence. The new regime also empowers police to make an arrest without warrant.
The Central GST (CGST) Act has defined offences related to taxable good or services. The act provides that if the offences will be cognizable and non-bailable when the taxable goods and/or services where the amount of tax evaded or the amount of input tax credit wrongly availed or the amount of refund wrongly taken exceeds Rs 5 crore.
The Central Board of Excise & Customs (CBEC) in its 223-page frequently asked questions (FAQ) on GST said other offences under the act are non-cognizable and bailable. FAQ suggests that cognizable offence means the serious category of offences in respect of which a police officer has the authority to make an arrest without a warrant and to start an investigation with or without the permission of a court.
Safeguards mentioned in the FAQ
• FAQ that outlines the safeguards to be taken during arrest says that is a person is arrested for a cognizable offence, he must be informed in writing of the grounds of arrest and he must be produced before a magistrate within 24 hours of his arrest.
• In the case of arrest for a non-cognizable and bailable offence, the person can be released on bail by the Deputy/ Assistant Commissioner of CGST/SGST. The person will be subject to the same provisions as an officer-in-charge of a police station under section 436 of the Code of Criminal Procedure, 1973.
• In case the person fails to appear before the CGST/SGST officer when summon is issued against him then he will be liable to pay a penalty of up to Rs 25000. Issued guidelines say that summon can be issued as a last resort where the assessees are not co-operating and this should not be used for the top management.
• The FAQs also mentions guidelines for the tax department in which it asks to ensure that summon provisions are not misused by field officers.
• The guidelines suggest that the summons should not be harsh and legal which may cause unnecessary mental stress and embarrassment to the receiver.
• In the case of senior management officials like CFO, CEO, General Managers of PSUs and large companies the summons should not be issued at the first instance. However, the summons can be issued to them when the investigations indicate about their involvement in the decision-making process which led to the loss of revenue.
• Interesting fact about the summons is that superintendents can issue summon only after obtaining a written permission from an officer not below the rank of Assistant Commissioner. The permission letter must include the reasons for the issuance of summons to be recorded in writing.
The government has set a target date of 1st of July for rollout of the GST, which will subsume central excise, service tax, VAT and other local levies.
The Central GST (CGST) and State GST (SGST) Act have empowered the officers from Police, Railways, Customs, village officers, and any other government officers to assist CGST and SGST officers under the GST regime.