The ongoing reform approach to criminal law increasingly emphasizes that criminal sanctions should not ordinarily be used for minor, technical or procedural breaches, particularly where the underlying dispute is essentially civil or regulatory in nature. In the taxation context, this approach supports reserving criminal liability for conduct involving deliberate evasion, deception or fraud.
The GST framework, however, continues to contain criminal provisions for specified tax-related offences. Under the Central Goods and Services Tax (CGST) Act, Section 69 provides for arrest where the prescribed conditions are met and the authorized officer has reasons to believe that a person has committed an offence covered under Section 132. The arrest mechanism can operate during the investigation stage and is not dependent on prior adjudication of the tax demand.
Section 132 sets out offences and corresponding criminal consequences under the GST law. For specified offences involving tax evasion or wrongful input tax credit, including cases involving amounts exceeding ₹5 crore, the statutory framework provides for cognizable and non-bailable offences, subject to the conditions prescribed under the law.
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The reform perspective discussed in the underlying material proposes that criminal proceedings in GST matters should generally follow a determination by the competent adjudicating authority that the conduct involves tax evasion of a criminal nature. It further suggests that such a finding could ideally be considered by the GST Appellate Tribunal before criminal prosecution proceeds.
The issue therefore concerns the balance between effective action against deliberate GST fraud and ensuring that criminal law is applied proportionately in matters arising from tax disputes. CASansaar