States across India are resisting a proposal to curtail GST officers’ arrest powers as the Centre pushes for a trust-based, decriminalised tax regime, potentially reshaping enforcement strategies at the upcoming GST Council meeting.
States are pushing back against a proposal to remove the power of GST officers to arrest taxpayers, even as the Centre seeks to reassure businesses that the indirect tax system is moving towards a more trust-based regime. The issue is expected to dominate the 57th GST Council meeting in Delhi on Thursday, with the discussion forming part of a wider effort to decriminalise a range of GST offences and address long-running complaints about overreach by tax officials.
According to reports in The Indian Express and other Indian publications, Maharashtra, Gujarat, Uttar Pradesh, Karnataka and Andhra Pradesh have raised objections in pre-meeting consultations to any broad trimming of enforcement powers. Their concern is that the tax framework should not be left unable to respond forcefully to serious evasion. One state minister told The Indian Express that the regime must not become “toothless”, and argued for a graded system under which especially serious cases could still attract a form of civil arrest before prosecution.
The proposal under discussion would alter Section 69 of the Central GST Act, which currently allows tax officers to order arrests directly. Under the reform being considered, cases involving serious fraud would instead move through the ordinary criminal justice system, with court oversight for any arrest. Reports suggest that officials see the move as consistent with a trust-based tax administration, while leaving room for prosecution of deliberate wrongdoing under the Bharatiya Nyaya Sanhita, India’s general criminal code.
The plan is also understood to be part of a broader legislative clean-up that has been under discussion for months and could be taken to Parliament in the Winter Session. Some reports indicate that implementation may be phased, giving businesses and tax authorities time to adjust, but the central question remains whether the GST Council can secure enough agreement from both the Centre and the states to push through a reform that would materially narrow one of the tax department’s most forceful tools.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
