ARREST PROVISIONS UNDER THE GST LAW – ESSENTIAL TO KNOW
1.Provisions to arrest in a Taxation Statute is necessary as a strong DETERRENT against tax evading crooks.
2. The GST Law is no exception to this, especially when it allows you to take credit of the tax paid by you on your input goods and services [ITC], which are vulnerable for large scale abuse by fake business men and crony capitalists.
2.1. This large scale abuse of availing wrong ITC on fake supply bills is evidenced by the spate of arrests all over the country since July 2018, involving thousands of crores of rupees in tax evasion.
3. Section 132 of the CGST Act,2017 specifies the OFFENCES for which arrests can be made, apart from other methods of recovery of the evaded tax.
3.1. These provisions are applicable to all the State GST Acts, the IGST and the UGST Acts also.
4. In brief, the following Offences attract arrest.
4.1.You supply any goods or service without issuing an Invoice.
4.2.You issue an Invoice WITHOUT SUPPLYING ANY goods or service [ fake invoice].
4.3. You avail ITC on the basis of the invoice mentioned in 4.2. above.
4.4. You collect the tax but you FAIL to pay the same to the Govt [may be you are making huge losses in business and do not have the money to pay the tax collected] beyond a period of three months from the date on which the payment becomes due.
4.5. You evade tax or fraudulently avail ITC, or fraudulently claim and obtain REFUND of tax by any method other than those mentioned in 4.1. to 4.4. above.
4.6. You falsify your financial records and Accounts or provide any false information to evade tax.
4.7. You obstruct any Officer or prevent any Officer in the discharge of his duties.
4.8. You acquire possession of any goods knowing that these are liable for confiscation under the Act.
4.9.You receive any goods or service when you know that these are made in contravention of any of the provisions of the Act.
4.10.You tamper with or destroy any evidence or documents.
4.11. You either fail to supply the information asked from you within the time allowed or supply false information.
4.12. You attempt to commit or abet in the commitment of any of the Offences mentioned in Sl. Nos. 4.1. to 4.11.
5. DURATION OF IMPRISONMENT
5.1. Up to five years where the amount of tax evaded, or ITC wrongly availed or refund fraudulently obtained, EXCEEDS Rs.5 Crs.
5.2. Up to three years where such amounts mentioned above exceeds Rs. two Crs but does not exceed Rs. five Crs.
5.3. Up to one year where such amounts mentioned in 5.1. exceeds Rs. one Cr but does not exceed Rs. two Crs.
5.4. Up to six months for Offences mentioned in Sl. Nos.4.10., 4.11. & 4.12.
WISH YOU HAPPY COMPLIANCE WITH THE LAW AT ALL TIMES!