Çognizable offence in GST

Model GST law (MGL) envisages enforcement thereof both by the Central Excise officers as well as by the officers of the State VAT department.  One of the provisions of MGL is pertaining to arrest – power of which the state government officers never had and the Central Excise officers were reluctant to use in order to avoid the ‘headaches’ following the arrest.

MGL provides for arresting[1] a person who commits an offence punishable under section 73(1)(i), (ii) or 73(2).  Every person who is authorised to arrest should produce the arrested person before a Magistrate within 24 hours, if the offence is a ‘Cognizable offence’.  In case the offence is non cognizable, the Deputy Commissioner or the Assistant Commissioner of CGST/SGST have the powers to release him on bail subject to Section 436 of CrPC.

Now, what is a ‘Cognizable offence’?  MGL has no answer – Cognizable offence is not defined here. Therefore the Criminal Procedure Code, 1973 is referred to, which defines a ‘Cognizable Offence’ as

“Cognizable offence means an offence for which and ‘cognizable case’ means a case in which, a police officer may, in accordance with the First Schedule or under any other law for the time being in force, arrest without warrant”[2]

However, Section 73(3) and (4) of MGL makes a distinction between cognizable and non-cognizable offences.

“(3) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), all offences under this Act, except the offences referred to in sub-section (4) shall be non-cognizable and bailable.”

(4) The offences relating to taxable goods and/or services where the amount of tax evaded exceeds two hundred and fifty lakh rupees shall be cognizable and non-bailable”.

Now, let us examine a situation if this act is passed as such, and if an overzealous or a hyperactive police officer arrests a person for evading GST of more than Rs. 2.5 Crores.  Since it is a cognizable offence as per Section 73(4), the police officer is well within his powers to arrest the offender and one cannot find fault with him. But however, if the arrested person is produced before the court, the court would not be able take cognizance of the offence![3]  The said police office officer can neither investigate or adjudicate a case under the Act, but can arrest a person!   Still the law doesn’t require him to produce the arrested person before any adjudicating authority of GST.

Therefore, ideally, it is felt that “Cognizable offence” for the purpose of this Act should be defined in an unambiguous manner.  May be this fact has to be taken into consideration seriously by the law makers, before the law is finalized.

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Tail piece:

Section 74 discusses the cognizance of offences

“No Court shall take cognizance of any offence punishable except with the previous sanction of the designated authority, and no Court inferior to that of a Magistrate of the First Class, shall try any such offence”.

It is felt that for better clarity, words “under this act” should have followed the words “any offence punishable” in Section 74, so that it becomes meaningful.

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[1] Section 62

[2] Section 2(c) of CrPC

[3] Section 74