GST Arrest FAQs — Section 69 Powers, Bail & Rights

These questions are drawn from real GST compliance scenarios, litigation, and common queries from practitioners. Answers reflect the law as amended up to Finance Act 2024.

• 1 Under what circumstances can a person be arrested under GST?

  Under Section 69(1) of the CGST Act, arrest can be made only when the Commissioner has 'reason to believe' that the person has committed a cognizable and non-bailable offence specified in Section 132(1). The key offences include issuance of invoices without actual supply, fraudulent availment of ITC, collection of tax without depositing it, and obstruction of GST officers. The arrest cannot be made mechanically — there must be substantive material to form the belief.

• 2 What is the monetary threshold for a GST offence to be cognizable and non-bailable?

  As amended by Finance Act 2024, Section 132(4) provides: offences involving evasion of tax (or wrongful ITC availment) exceeding ₹5 crore are cognizable and non-bailable. Offences between ₹2 crore and ₹5 crore are cognizable but bailable. Offences below ₹2 crore are non-cognizable and bailable. A second or subsequent commission of any Section 132(1) offence is cognizable and non-bailable irrespective of amount (Section 132(5)).

• 3 Can anticipatory bail be sought in a GST arrest case?

  Yes. Multiple High Courts have held that anticipatory bail under Section 438 of the Code of Criminal Procedure (now Section 482 of BNSS, 2023) is maintainable in cognizable and non-bailable GST offences. The Bombay, Delhi, Allahabad, and Rajasthan High Courts have consistently held that GST arrest cases are not excluded from the anticipatory bail jurisdiction. Courts have also held that depositing the disputed tax amount is a relevant factor in granting anticipatory bail.

• 4 Is a GST arrest without prior show-cause notice valid?

  The law does not require a prior show-cause notice before arrest under Section 69. However, courts have held that the power of arrest should not be exercised routinely or as a coercive tool to recover tax. The Telangana and Andhra Pradesh High Court in <em>Makemytrip v. Union of India</em> and the Gujarat High Court in several cases have held that where there is no flight risk or evidence-tampering threat, summons and SCN should precede arrest.

• 5 What rights does an arrested person have under Section 69?

  Section 69(2) requires that an arrested person must be informed of the grounds of arrest. Section 69(3) provides that if the arrest is for a bailable offence, the officer in charge of the place of arrest shall admit the person to bail. For non-bailable offences, bail is at the discretion of the court. The arrested person has the right to be produced before a magistrate within 24 hours, the right to legal representation, and the right to a copy of the arrest memo.

• 6 Can a GST officer conduct arrest without a warrant?

  Yes. Section 69(1) empowers the Commissioner to authorise arrest without a warrant where the conditions for arrest are met. The authorisation is by the Commissioner (not below the rank of Commissioner), and the arrest is then carried out by the authorised officer. Arrest under GST is thus an executive action — no prior judicial warrant is required, unlike under certain other statutes.

• 7 What is compounding of GST offences and who is eligible?

  Section 138 of the CGST Act provides for compounding of offences — essentially, payment of a compounding amount to avoid prosecution. Compounding is available on application to the Commissioner but is not available for repeat offenders or for offences involving the issuance of a false invoice for a supply not made. The compounding amount ranges from 50% to 150% of the tax involved, subject to a minimum of ₹10,000. Compounding discharges the person from all liability for prosecution for that specific offence.