GST new guidelines: GST officers to furnish written grounds of arrest to avoid harassment  

GST new guidelines: The Central Board of Indirect Taxes and Customs (CBIC) has issued new guidelines for GST related raids. According to the latest guidelines issued on January 13, GST officers must now provide a clear explanation of the reasons for arresting a taxpayer for alleged tax evasion, fake invoices, fraudulent input tax credit, etc., when the value exceeds Rs 5 crore.

Additionally, officers are required to obtain written confirmation from the taxpayer, acknowledging their understanding of the grounds for arrest. These measures aim to protect honest taxpayers from undue harassment and enhance the trust in the tax administration.

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The guidelines also aim to prevent arbitrary arrests of individuals registered under GST by any officer and establish a clearer and more transparent procedure for arrests. The reasons for arrest must be clearly explained to the individual and provided to them in writing as an Annexure to the Arrest Memo, CBIC said. 

“The grounds of arrest must be explained to the arrested person and also furnished to him in writing as an Annexure to the Arrest Memo. Acknowledgement of the same should be taken from the arrested person at the time of service of the Arrest Memo,” CBIC said.

Experts said during the moment of arrest, the accused may not be in the optimal state of mind to fully comprehend the reasons for their arrest as they are being explained. As per this amendment, providing the grounds of arrest in writing will enable the accused's authorized representative to better grasp the details of the case and the rationale behind the arrest. This will empower them to present relevant arguments in defense of the case.

“GST authorities can arrest a person on the reasons to believe that he has committed offences such as tax evasion, fake invoices, fraudulent input tax credit etc. of value exceeding Rs 5 crores liable for imprisonment for a term up to 5 years,” said Kamal Aggarwal, Senior Partner, Singhania & Co.

According to the August 2022 guideline, GST officers were to provide a detailed explanation of the grounds for arrest to the individual being detained, and document this information in the arrest memo.

“The revised guidelines are poised to bring about a paradigm shift in the enforcement mechanism under the GST law. Requiring officers to substantiate arrests with detailed reasoning ensures that enforcement actions are predicated on concrete evidence and not subjective discretion,” said Tushar Kumar, Adovcate, Supreme Court of India.