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Delhi HC upholds arrest provision in CGST Act for tax evasion
PrintThe Delhi High Court has upheld the controversial provisions in the Central Goods and Service Tax (CGST) Act that gives power to authorities to arrest any person if there is “reason to believe” that he has committed tax evasion.
A Bench of Justice Manmohan and Justice Sanjeev Narula gave the decision on a petition challenging the Sections 69 (power to arrest) and 132 (punishment for certain offences) of the CGST Act.
The petitioners here, a man and a firm facing action for allegedly availing fraudulent IGST refund and Input Tax Credits (ITC), had claimed that Section 69 being of criminal nature, it could not have been enacted under Article 246A of the Constitution. However, the High Court ruled “...the pith and substance of the CGST Act is on a topic, upon which Parliament has power to legislate as the power to arrest and prosecute are ancillary and/or incidental to the power to levy and collect Goods and Services Tax”.
It opined that both Sections 69 and 132 of the CGST Act are “constitutional and fall within the legislative competence of Parliament”. The court remarked that the scope of Article 246A is “significantly wide” as it not only empowers both Parliament and State Legislatures to levy or enact GST Act, but also grants the power to make all laws ‘with respect to’ GST.
Additional Solicitor General S.V. Raju also informed the court that a person under the CGST Act can only be arrested, if the amount of tax evasion is more than Rs.2 crore. He further stated that all offences in which tax evasion is less than Rs.5 crore are bailable and only grave offences involving tax evasion of Rs.5 crore and above are non-bailable and cognisable. Mr. Raju emphasised that the government has been hit with numerous cases involving non-functional and bogus firms that had fraudulently availed IGST refunds and ITC credits and had caused substantial loss to the exchequer.
A Bench of Justice Manmohan and Justice Sanjeev Narula gave the decision on a petition challenging the Sections 69 (power to arrest) and 132 (punishment for certain offences) of the CGST Act.
The petitioners here, a man and a firm facing action for allegedly availing fraudulent IGST refund and Input Tax Credits (ITC), had claimed that Section 69 being of criminal nature, it could not have been enacted under Article 246A of the Constitution. However, the High Court ruled “...the pith and substance of the CGST Act is on a topic, upon which Parliament has power to legislate as the power to arrest and prosecute are ancillary and/or incidental to the power to levy and collect Goods and Services Tax”.
It opined that both Sections 69 and 132 of the CGST Act are “constitutional and fall within the legislative competence of Parliament”. The court remarked that the scope of Article 246A is “significantly wide” as it not only empowers both Parliament and State Legislatures to levy or enact GST Act, but also grants the power to make all laws ‘with respect to’ GST.
Additional Solicitor General S.V. Raju also informed the court that a person under the CGST Act can only be arrested, if the amount of tax evasion is more than Rs.2 crore. He further stated that all offences in which tax evasion is less than Rs.5 crore are bailable and only grave offences involving tax evasion of Rs.5 crore and above are non-bailable and cognisable. Mr. Raju emphasised that the government has been hit with numerous cases involving non-functional and bogus firms that had fraudulently availed IGST refunds and ITC credits and had caused substantial loss to the exchequer.
Category : GST | Comments : 0 | Hits : 1134
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