The Supreme Court overturned a Gujarat HC order restricting GST arrest powers, affirming statutory authority for arrest in non-compliance cases and directing assessees to cooperate with inquiries. The decision clarifies the scope of enforcement under Section 69 CGST Act.
SC Sets Aside Gujarat HC Order Restricting GST Arrest Powers
The Supreme Court has set aside a Gujarat High Court order that had restrained the use of arrest powers under the GST regime in cases of procedural defaults. The apex court upheld the statutory authority of tax officers to arrest individuals under Section 69 of the CGST Act where there is wilful non-compliance, false entry, or evasion of substantial tax.
The matter arose from a challenge to GST summons issued in connection with non-filing of returns and failure to produce records. The Gujarat HC had previously granted protection against arrest, asserting that arrest should be limited to cases involving fraud or deliberate evasion. However, the Supreme Court disagreed, stating that
The power of arrest is not limited only to egregious fraud but extends to conduct demonstrating obstruction or non-cooperation in a valid inquiry.
The ruling reaffirms the enforcement tools available to revenue authorities and signals that non-compliance alone, especially when coupled with lack of cooperation, may trigger enforcement under Section 69. Practitioners must advise clients to respond promptly to summons and produce documents, as non-engagement may now be deemed sufficient for coercive action.
Citations
- Section 69, CGST Act
