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The Gujarat High Court in a recent order has armed GST Commissioners with the power to authorise arrest of a person, if he has reasons to believe that the person has committed a cognisable and bailable offence and that the power can be exercised even before completion of assessment and determination of tax evaded.
The High Court in its order has said that they are of the opinion that the power to arrest as provided under section 69 of the CGST Act can be invoked , if the Commissioner has reason to believe that the person has committed offences as provided under the clauses (a), (b), (c) or (d) of sub-section(1) of section 132 of the CGST Act without there being any adjudication for the assessment.
The High Court further said in its order that the arrest order should be based on some credible materials or information and also should be supported by a supervening factor. It is not any and every material, howsoever vague and indefinite or distant remote or far-fetching, which would warrant the formation of the belief.
While giving the order, the Gujarat High Court has disagreed with the High Courts of Delhi, Madras, Haryana and Punjab, which have in different instances maintained that the commissioner has no power to arrest in every case during the investigation and that too without determination of the tax evaded. While the High Court has reiterated several safeguards before the power of arrest can be exercised, the judgment seems to overlook the practical considerations where powers of arrest can be brazenly misused by authorities and are used as a coercive measure of effecting recoveries of tax.It provided an important safeguard to assessees that their explanation would be considered before such drastic action is taken. Without these safeguards, they can be subjected to unwarranted threats of deprivation of personal liberty which should not be allowed.