Stories
GST Council Proposes Major Overhaul of Penalties and Arrest Powers
- •The GST Council has recommended omitting Section 69 of the Central GST Act, removing the power of tax officers to make arrests in specified cases.
- •The prosecution threshold under GST is proposed to be raised significantly from 1 crore rupees to 5 crore rupees alongside rationalized punishments.
- •The general penalty ceiling under Section 125 is recommended to be reduced from 25,000 rupees to 10,000 rupees.
- •Goods in transit will now only be intercepted based on specific intelligence and with authorization from a Joint Commissioner or higher rank.
- •All proposed changes are subject to official legal amendments, notifications, and effective dates, with existing rules applying until then.
Key Questions Answered
The GST Council has recommended omitting Section 69 of the Central GST Act, which deals with arrest powers, shifting toward intelligence-led enforcement. Additionally, the Council proposed raising the criminal prosecution threshold from ₹1 crore to ₹5 crore.
The Council proposed lowering the general penalty ceiling under Section 125 from ₹25,000 to ₹10,000 and establishing a minimum threshold of ₹10,000 in combined taxes and cess for issuing show-cause notices. A reduced penalty of 5% is also suggested for specified non-fraud cases when tax and interest are paid promptly.
Goods in transit should only be intercepted based on specific intelligence and with authorisation from an officer not below the rank of Joint Commissioner. Inspections and detentions will generally be handled where the supplier or recipient is registered, and confiscation under Section 130 is proposed not to apply to goods in transit.
