DECEMBER 18, 2019

By Vijay Kumar

THE story starts here. Please read Section 69 of the CGST Act.

(1) Where the Commissioner has reasons to believe that a person has committed any offence specified in clause (a) or clause (b) or clause (c) or clause (d) of sub-section (1) of section 132 which is punishable under clause (i) or (ii) of sub-section (1), or sub-section (2) of the said section, he may, by order, authorise any officer of central tax to arrest such person.

(2)  Where a person is arrested under sub-section (1) for an offence specified under subsection (5) of section 132, the officer authorised to arrest the person shall inform such person of the grounds of arrest and produce him before a Magistrate within twenty-four hours.

(3)  Subject to the provisions of the Code of Criminal Procedure, 1973,––

(a)  where a person is arrested under sub-section (1) for any offence specified under sub-section (4) of section 132, he shall be admitted to bail or in default of bail, forwarded to the custody of the Magistrate;

(b) in the case of a non-cognizable and bailable offence, the Deputy Commissioner or the Assistant Commissioner shall, for the purpose of releasing an arrested person on bail or otherwise, have the same powers and be subject to the same provisions as an officer-in-charge of a police station.

A Habeas Corpus petition came up in the Gujarat High Court on 06.12.2019 – just 12 days ago. The petition was filed by the son of a GST taxpayer who was arrested by the State Tax Officer, around 5-30 AM on 6.12.2019. The High Court issued notice returnable on 9.12.2019 , as though ostensibly there appears to be an arrest in accordance with law but the arrest memo and ground of arrest did not disclose any contemplation or mulling over and coming to a decision for arrest of the father of petitioner on account of statutory designated authority and therefore, the factum of arrest becomes absolutely illegal and thus, this Court will have jurisdiction to make appropriate order and even issue writ of habeas corpus .

The Court directed the STATE to produce the following on the next date of hearing:

1.   the order of authorization, which has been referred to by the arresting officer in the arrest memo, whereunder, he has been authorized to arrest the father of petitioner;

2. the documentary evidence and/or the circumstances indicating the due deliberation and application of mind on the part of designated statutory authority for ordering arrest of the father of petitioner – the corpus;

3. The gist of material which might have been forming part of consideration for arriving at circumstances stated so as to satisfy the statutory provisions of Section 69 by the statutorily designated authority to arrest;

4. any other material that may support and justify the arrest especially when emphatic statement is made qua lack of consideration on the part of designated statutory authority rendering the entire arrest questionable.

There was no effective hearing on 09.12.2019.

On 12.12.2019, the Court directed the State to produce the taxpayer on 16.12.2019, who was in custody pursuant to arrest.

On 16.12.2019, the High Court passed the following order:

The arrest of the corpus – Suresh bhai, son of Ugarchand Gadhecha, by the State Tax Officer-3, Enforcement, DIV-2, Ahmedabad, vide Arrest Memorandum No. DCST/ENF-2/ STO- 3/ARREST MEMORANDUM/2019-20/B, Dated : 06.12.2019, is held to be without authority of law and thus, illegal. The corpus needs to be set at liberty, if he is not otherwise required in any other offence.

The corpus – Sureshbhai, son of Ugarchand Gadhecha, who was arrested by the State Tax Officer-3, Enforcement, DIV-2, Ahmedabad, vide Arrest Memorandum No.DCST/ENF-2/ STO-3/ARREST MEMORANDUM/2019-20/B, Dated : 06.12.2019, and who is in judicial custody at Sabarmati Central Jail at Ahmedabad since 06.12.2019, and who is produced before this Court today pursuant to the order of this Court dated12.12.2019, is set at liberty, forthwith .

A taxpayer had to spend ten days in jail, thanks to the ignorance of the tax officials.

- If you don't know the law,   you will be punished.

- If the officers don't know the law,   you will be punished.

GST – the elephant in the room

The fifth meeting of the Economic Advisory Council of the Fifteenth Finance Commission (XVFC) was held in New Delhi on 16 th December. Following issues were (also) discussed-

-   Tax revenues and expenditure patterns emerging both at the Union and the States level. Possible way to improve tax collection for additional resource mobilization.

-   Issues related to stabilization of Goods &Services Tax (GST), relationship between GST Council and Finance Commission and GST compensation being paid to States.

Addressing the media after the meeting, the 15th Finance Commission, Chairperson N.K. Singh said:

-  Revenues from the Goods and Services Tax are the elephant in the room.

-  The most critical issue was that of future revenues, especially GST revenues, - the 'elephant in the room'.

-  Need to consider an incentive structure for States in order to encourage increased tax collections.

-  The GST structure should be made more revenue-friendly and stakeholder-friendly - tax changes need predictability and certainty.

-  While the 14% rate of GST compensation to States was mandatory under law for the initial five-year transition period, no mechanical replication in subsequent years.

-  While States have complained that GST revenues have been lower than expected, none of their Finance Ministers has raised protests, individually or collectively, in the GST Council of which they are a part.

-  States had a collective tendency for a 'race to the bottom', being 'lulled into a state of complacency' due to the assured 14% compensation cess.

-  In the pre-GST era, State revenue officials would have worked harder to ensure that their tax collections met revenue targets.

-  There may be a need for an incentive structure to encourage the State machinery to improve collections and tax compliance.

But what is this' elephant in the room '? Generally, when you say there is an elephant in the room , you mean that there is an obvious problem or difficult situation that people do not want to talk about. Is that what NK Singh meant? Nearly two years ago, the then Finance Minister Arun Jaitley said, "As far as the GST is concerned, "I think that is the elephant in the room in the sense that nobody knows which way it is going." So, maybe they are talking about different elephants! For most of us, GST is like the elephant described by the blind persons.

Advocacy to take its toll

A fake WhatsApp message is doing the rounds that all lawyers are exempted from paying toll charges.

NHAI has clarified that the user fee collection on National Highways is governed by NH fee rules. As per these rules, Advocates are not exempted from paying user fee (Toll) in NH Fee plazas.

PIB has also clarified as follows:

Claim: A Letter is being circulated on Social Media, stating that all Lawyers in India are exempted from paying Toll Fees

Reality: NHAI has clarified that as per NH fee rules lawyers are not exempted from paying Toll Fees

Conclusion: Fake News

Sabka Vishwas not to be extended?

The CBIC flashes:

-  15 Calendar days only till end of SVLDR Scheme on 31.12.2019. Eligible taxpayers are invited to avail this one-time opportunity.

-  Sabka Vishwas Legacy Dispute Resolution Scheme (SVLDRS) 2019 is available upto 31.12.2019. The scheme shall NOT be extended. All taxpayers are advised to avail the scheme and settle pending Service Tax & Central Excise disputes.

The scheme was also like an elephant in a room full of blind people. It was difficult to login, difficult to upload details, difficult to get response and above all, track challans and forms. The helpline was a torture and the departmental officers just raised their hands in despair. They could have made the system a little more reliable, friendly and workable and the helpline a little more helpful. I have seen taxpayers who paid the money under the Scheme running around to get their certificates and I have seen taxpayers running around banks not being able to pay the declared amount. The scheme which is very attractive may not succeed because of the shoddy portal and the total absence of the concept of ease of doing business.

Incidentally the elephant in the room could be a mouse. An elephant is defined as a mouse made as per government directions.

Until next week