GST Council may consider court approval for arrests under proposed reforms
India’s GST Council is expected to consider changes that would remove arrest authority from tax officers and require judicial approval, according to sources cited in the report. The proposals would also raise the prosecution threshold and preserve tax recovery powers if approved and enacted.
India’s Goods and Services Tax Council is expected to consider proposed changes to enforcement rules at its October 7 meeting, including a requirement for judicial approval before an arrest, according to sources cited in the report. Under the proposal, GST officers would no longer authorise arrests under Section 69 of the Central GST Act. Any arrest would instead require an order from a court.
The plan forms part of the government’s proposed Next-Generation GST reforms. The Council may also consider raising the threshold for criminal prosecution from ₹1 crore to ₹5 crore. The change would reserve criminal proceedings for cases involving more significant alleged tax evasion or fraud.
The proposals would narrow prosecution provisions so that routine disputes over classification, valuation or input tax credit were not treated as criminal offences when they resulted from differing interpretations of tax rules. The changes would not remove the government’s power to recover unpaid tax or impose interest and penalties. Taxpayers found to have short-paid tax or wrongly claimed input tax credit would remain subject to recovery proceedings and other statutory consequences.
The package covers 24 offences. Nine are proposed for removal, while 11 would remain in their current form. The minimum-sentence provision could be removed, allowing courts to impose a fine in every case.
The maximum sentence in a middle category could fall from three years to two. The Council may also consider compounding, late-fee relief for small taxpayers and more proportionate penalties. The proposals are presented as part of a move toward data-based detection, easier registration, faster refunds and simpler input-tax-credit procedures.
Rajat Mohan of AMRG Global described the plan as a shift from arrest-led deterrence to technology-led detection and civil liability. Any recommendations would still require amendments to GST law and legislative approval before taking effect.
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