CBIC Issues Guidelines For Prosecution Under GST

Section 132 of the Central Goods and Services Tax Act, 2017 (CGST Act, 2017) codifies the offences under the Act which warrant the institution of criminal proceedings and prosecution.

As per the guidelines, prosecution should not be filed merely because a demand has been confirmed in the adjudication proceedings. Prosecution should not be initiated in cases of a technical nature or where an additional claim of tax is based on a disagreement over the interpretation of the law.

The evidence collected should be adequate to establish beyond reasonable doubt that the person had a guilty mind, knowledge of the offence, or had a fraudulent intention or in any manner possessed mens rea for committing the offence.

In the case of public limited companies, prosecution should not be launched indiscriminately against all the directors of the company. However, the prosecution should be restricted to only those who oversaw the day-to-day operations of the company and had an active part in committing the tax evasion, etc. or had connived at it.

The CBIC in its instructions stated that prosecution should normally be launched where the amount of tax evasion, or misuse of ITC, or fraudulently obtained refund, is more than Rs.500. The Rs. 500 monetary limit will not apply to habitual evaders or arrest cases.

The prosecution complaint for prosecuting a person should be filed only after obtaining the sanction of the Pr. Commissioner/Commissioner of CGST in terms of section 132(6) of the CGST Act, 2017.

In respect of cases investigated by DGGI, the prosecution complaint for prosecuting a person should be filed only after obtaining the sanction of Pr. Additional Director General/Additional Director General, Directorate General of GST Intelligence (DGGI) of the concerned zonal unit/HQrs.

"It has been reported that delay in the Court proceedings is often due to non- availability of the records required to be produced before the Court or due to delay in drafting of the complaint, listing of the exhibits etc. It shall be the responsibility of the officer who has been authorised to file a complaint to take charge of all documents, statements and other exhibits that would be required to be produced before a court," the CBIC said.

The filing of prosecution need not be kept in abeyance on the ground that the taxpayer has gone into appeal or revision. However, to ensure that the proceedings in appeal/revision are not unduly delayed because the case records are required for the purpose of prosecution, a parallel file containing copies of essential documents relating to adjudication should be maintained.

The Superintendent in-charge of the adjudication section should endorse a copy of all adjudication orders to the prosecution section. The Superintendent in charge of the prosecution section should monitor receipt of all serially numbered adjudication orders and obtain copies of adjudication orders of missing serial numbers from the adjudication section every month. In respect of adjudication orders related to DGGI cases, the Superintendent in charge of the adjudication section should ensure endorsing a copy of the adjudication order to DGGI. Concerned Zonal Units/ Hqrs. of DGGI shall also follow up the status of adjudication of the case from the concerned Commissionerate or adjudicating authority.

Instruction No. 04/2022-23

Dated: 1.09.2022

Click Here To Read/Download Instruction