GST Council Set to Review Legal Changes on Taxpayer Arrests

Sources indicate that the upcoming GST Council session may address a controversial legal provision that currently allows tax officials to arrest a taxpayer during an investigation. The clause, found in the CGST Act, grants the commissioner power to order detention if a serious offence under Section 132 is suspected.

The Council's Law Committee has suggested de‑criminalising many GST violations, arguing that most defaults are unintentional and do not merit arrest. Instead, serious cases such as fake invoices, fraudulent input tax credit claims and bogus refund requests could be pursued under the Indian Penal Code and other criminal statutes.

If adopted, the amendment could create a friendlier climate for honest taxpayers while retaining strict penalties for deliberate fraud.