Amendments to arrest & bail procedures under CGST Act

Amendments to arrest & bail procedures under CGST Act

The Goods and Services Tax Investigation Wing’s Instruction No. 01/2025- Goods and Services Tax introduces important amendments to arrest and bail procedures under the Central Goods And Services Tax Act 2017, focusing on transparency and procedural fairness, particularly in light of recent judicial pronouncements. Below is a concise breakdown of the key updates:

Differentiating ‘Reasons for Arrest’ and ‘Grounds of Arrest’:

• Reasons for Arrest: General factors justifying the need for an arrest, such as:
  • Preventing further offenses.
  • Avoiding tampering with evidence.
  • Precluding influence over witnesses.
• Grounds of Arrest: Case-specific details and allegations against the individual. These must now:
  • Be clearly communicated to the arrested person.
  • Taxpayer Be provided in writing as part of the arrest memo.

Amendment to Para 4.2.1 of Instruction 02/2022-23: The grounds of arrest are to be:

• • Clearly explained and documented.
  • Provided as an annexure to the arrest memo.
  • An acknowledgement of receipt must be obtained from the arrested individual.

These steps ensure greater accountability and uphold due process during arrests under Goods And Services Tax.  The amendment stems from judicial scrutiny and significant rulings, including:

1️⃣ Delhi High Court – Kshitij Ghildiyal v. Director General of GST Intelligence, Delhi (2024):

• Highlighted procedural lapses in arrests.
• Emphasized the need for written communication of arrest grounds to prevent arbitrary actions.

2️⃣ Supreme Court Rulings:

• Pankaj Bansal vs. Union of India (Supreme Court, October 3, 2023): Emphasized the need for transparency in arrest procedures and adherence to natural justice.
• Prabir Purkayastha vs. State (NCT of Delhi) (Supreme Court, May 15, 2024): Reiterated the significance of procedural fairness to safeguard individual rights during investigations.
• Arvind Kejriwal v. Directorate of Enforcement (2024)
  These decisions underscored the importance of safeguarding individual liberty and ensuring procedural exactitude in arrests under various laws, including the PMLA and UAPA.

The courts have consistently emphasized that failure to communicate specific grounds in writing violates fundamental rights and renders arrests arbitrary and illegal. This move strengthens procedural safeguards, aligning arrest guidelines with constitutional principles and judicial directives. It reflects the GST department’s commitment to maintaining a balance between enforcement powers and individual rights.  These amendments are likely to provide enhanced clarity, fairness, and protection to individuals under investigation while ensuring compliance with legal standards.