Arrest under the Goods and Services Tax law is governed by a compact statutory scheme. Section 69 of the CGST Act, 2017 permits arrest only on the Commissioner's authorisation, only for offences listed in Section 132, and the monetary threshold in Section 132(5) decides whether the offence is bailable at all. Understanding that arithmetic is the first step in any GST arrest or bail strategy.
The statutory gateway: Section 69
Arrest under the CGST Act is not a general investigative power. Section 69 permits arrest only where the Commissioner has reasons to believe that a person has committed an offence specified in Section 132 of the kind the statute makes arrestable, and only on a written authorisation. The power therefore has two built-in filters: the offence must fall within the Section 132 list, and a senior officer must apply his mind to the material before any officer proceeds to arrest. Neither filter is a formality; both are routinely tested in bail proceedings.
What Section 132 punishes
Section 132 criminalises a defined set of conduct connected with tax evasion. The clauses most commonly invoked in arrest cases are:
Supply without invoice
Supplying goods or services without issuing an invoice, with the intention of evading tax.
Invoice without supply
Issuing an invoice or bill without any actual supply of goods or services, leading to wrongful availment or utilisation of input tax credit or refund.
Fraudulent ITC
Availing input tax credit using such invoices or bills issued without supply.
Tax collected, not paid
Collecting tax but failing to pay it to the Government beyond a period of three months from the date it fell due.
Most departmental arrest files in Delhi involve the second and third categories, usually described as fake invoicing or circular trading. The allegation is typically built on supplier-end verification, e-way bill data and bank-flow analysis, and the defence often begins with the question of whether the underlying supplies were in fact fictitious.
The five crore line
The single most important number in GST criminal law is the monetary threshold that separates bailable from non-bailable offences.
| Amount involved | Classification | Where bail is dealt with |
|---|---|---|
| Tax evaded or ITC wrongly availed or utilised exceeds Rs 5 crore | Cognizable and non-bailable — Section 132(5) | Courts, under the BNSS bail provisions |
| All other Section 132 offences | Non-cognizable and bailable — Section 132(4) | Deputy / Assistant Commissioner, exercising the powers of an officer-in-charge of a police station under Section 69(3) |
This threshold arithmetic is rarely as simple as it looks. The department may aggregate credit across multiple firms, across financial years, or treat credit availed and credit utilised interchangeably. Each of these computation choices can push a case across the five crore line, and each is open to challenge. In bail and anticipatory bail hearings, a careful reconciliation of the figures — invoice by invoice where necessary — is often the most productive ground of argument, because it goes to whether the offence is non-bailable at all.
Bail where the offence is bailable
Where the alleged amount does not exceed Rs 5 crore, the offence is bailable, and Section 69(3) of the CGST Act places the bail power in the hands of the Deputy Commissioner or Assistant Commissioner, who for this purpose has the powers of an officer-in-charge of a police station. The arrested person is entitled to release on bail, subject to the provisions of the BNSS. In practice this means furnishing a bond with or without sureties at the departmental stage, without the matter needing to travel to a court unless bail is improperly withheld.
Bail where the offence is non-bailable
Where the amount exceeds Rs 5 crore, the offence is cognizable and non-bailable, and bail is governed by the ordinary BNSS framework: an application before the Magistrate, or before the Court of Session or the High Court under Section 483 BNSS (formerly Section 439 CrPC). The considerations are the familiar ones — the nature of the allegation, the stage of the investigation, the documentary character of the evidence, and the risk of tampering. GST cases are overwhelmingly document-driven: invoices, returns, ledgers and bank statements are already with the department or on the GSTN portal by the time of arrest, which bears directly on how long custody can serve any investigative purpose.
Anticipatory bail
Where arrest is apprehended — typically after searches, summons to a director or proprietor, or the arrest of an alleged co-conspirator — an application for anticipatory bail under Section 482 BNSS (formerly Section 438 CrPC) is maintainable. The application ordinarily sets out the business, the transactions under scrutiny, the dispute over computation, and a concrete offer of cooperation: appearing in response to every summons, producing records, and not dealing with the disputed credit. Interim protection, where granted, usually comes with a direction to join the investigation.
Summons under Section 70
Most GST investigations begin not with arrest but with a summons under Section 70 of the CGST Act, which empowers the proper officer to summon a person to give evidence or produce documents. A summons should be treated seriously and attended, with records organised in advance: purchase and sales registers, e-way bills, transport documents, payment proofs and reconciliation statements. Ignoring summons invites adverse inferences and strengthens the case for custodial interrogation; a documented record of attendance and production does the opposite, and becomes the backbone of any later bail or anticipatory bail application.
Conditions on bail
Conditions imposed in GST bail matters normally track the purpose of bail: securing the presence of the accused at investigation and trial, and protecting the integrity of the inquiry. Typical conditions include appearing before the investigating officer when called, not tampering with records or influencing witnesses, and not leaving the country without leave. A condition requiring deposit of the disputed tax before the demand has been adjudicated sits uneasily with that purpose, and courts have been circumspect about conditioning liberty on payment of an amount that remains to be determined in adjudication. The sound position is that bail conditions must relate to the trial and the investigation, not operate as a recovery mechanism.
The CGST Act also contains a compounding provision under which specified offences may be compounded on payment, before or after prosecution is instituted. Whether compounding is available or advisable depends on the clause invoked and the facts, and is a separate decision from bail strategy.
Frequently Asked Questions
Is every GST offence arrestable?
No. Arrest under Section 69 of the CGST Act is available only for offences specified in Section 132, and only when the Commissioner records reasons to believe that such an offence has been committed. Where the tax evaded or input tax credit wrongly availed does not exceed Rs 5 crore, the offence is non-cognizable and bailable under Section 132(4), which materially limits the consequences of arrest.
Can anticipatory bail be sought in a GST matter?
Yes. Where a person apprehends arrest in connection with a Section 132 offence, an application under Section 482 of the BNSS (formerly Section 438 CrPC) is maintainable before the Court of Session or the High Court. The application typically explains the transactions in question, the computation dispute, and offers full cooperation with the investigation, including appearance in response to summons.
Who grants bail when the GST offence is bailable?
For offences that are non-cognizable and bailable under Section 132(4), Section 69(3) of the CGST Act confers on the Deputy Commissioner or Assistant Commissioner the powers of an officer-in-charge of a police station for the purpose of granting bail. The arrested person is therefore entitled to be released on bail at the departmental stage itself, subject to the BNSS provisions.
Must the tax demand be adjudicated before an arrest can happen?
The statute does not make completed adjudication a precondition. Section 69 requires the Commissioner to have reasons to believe that a Section 132 offence has been committed. In practice, however, the computation of the alleged evasion is often seriously disputed, and that dispute is a legitimate consideration in bail and anticipatory bail proceedings, since the five crore threshold itself turns on it.