Can tax authorities arrest individuals for GST evasion? Supreme Court to examine the matter

The Supreme Court agreed to examine the powers of tax authorities to arrest an individual for GST evasion saying that different High Courts have taken divergent views on the issue and it was necessary to clarify the position in law.

A vacation bench comprising Chief Justice Ranjan Gogoi and Justice Aniruddha Bose issued notice on the Centre’s plea against the Bombay High Court verdict which had granted protection from arrest to certain individuals in some Goods and Services Tax evasion cases.

“Issue notice returnable in four weeks. As different High Courts of the country have taken divergent views in the matter, we are of the view that the position in law should be clarified by this court. Hence, the notice,” the bench said.

The court said that at this stage it would not like to interfere with the pre-arrest bails granted to these individuals by the Bombay High Court.

“However, we make it clear that the High Courts while entertaining such request (protection from arrest) in future, will keep in mind that this Court by order dated May 27…had dismissed the special leave petition filed against the judgement and order of the Telangana High Court in a similar matter, wherein the High Court of Telangana had taken a view contrary (refused to grant protection from arrest) to what has been held by the High Court in the present case,” the bench said.

The bench listed the batch of petitions before a three-judge bench to decide the question of law on the power of arrest.

The top court had on May 27 dismissed a plea challenging the Telangana High Court verdict which had said that a person can be arrested by the authority concerned in cases of GST evasion.

On April 18, the Telangana High Court had said it was not inclined to grant relief against arrest to petitioners who had approached it challenging the summons issued by Superintendent (Anti-Evasion) of the Hyderabad GST Commissionerate under the Central Goods and Services Tax Act, 2017, and invocation of penal provisions under the law.

The High Court had delivered the verdict which dealt with a batch of petitions filed by some private companies, its top officials and others. The government had told the High Court that the petitioners before it were allegedly involved in incorporating several partnership firms and had claimed input tax credit on the basis of certain invoices, without there being any actual physical receipt of goods.

It had alleged that the fraudulent input tax credit claimed by them was to the tune of Rs 224.05 crore.