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India – Arrest And Bail Provisions Under The Indirect Taxes.

27 November, 2013

 

The Union Budget of India for the year 2013 -14 witnessed introduction of provisions related to arrest under the customs, excise and service tax laws wherein various offences were made cognizable, especially in cases involving evasion of tax/ duty amounting to Rs. 50,00,000 or more.

 

Section 2(c) of the Code of Criminal Procedure, 1973 (“Cr.P.C.”) defines the term “Cognizable offences” as under-

 

“Offences for 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.”

 

This implies that in case of the specified cognizable offences, the customs/ central excise officer has the power to arrest any person at his own discretion without any warrant.

Generally Following offences have been declared as cognizable offences.
Customs

 

  • Mis – declaration of the value/ fraudulent evasion/ attempt to evasion of duty on goods, the market price of which exceeds Rs. 1,00,00,000; or 
  • Transacting/dealing in any manner with goods liable to confiscation, in relation to which the duty – evasion/ attempt to duty – evasion exceeds Rs. 50,00,000; or 
  • Attempt to export any goods liable to confiscation and also prohibited by the Central Government; or 
  • Fraudulently avails/ attempts to avail drawback or exemption from duty exceeding Rs. 50,00,000. 
 

Central Excise

 

  • Duty – evasion of Rs. 50,00,000 or more payable under the Excise Act; or 
  • Contravention of any of the provisions of the Excise Act/ the rules in relation to credit of duty of Rs. 50,00,000 or more, to be utilised towards payment of excise duty on final products. 
 

Service Tax

 

  • Collecting service tax of Rs. 50,00,000 or more but fails to deposit to the credit of the Central Government beyond a period of 6 months from the due date of payment.
 

All the above cognizable offences are punishable for a term which may extend to seven years along with fine. 


In this series, the Central Board of Excise and Customs (“CBEC”), has tried to lay down procedures related to arrest and bail to be followed by the authorised officers vide Circular nos. 171/6/2013 – ST, 974/08/2013 – C.E. and 38/ 2013 – Cus, all dated 17 September 2013 (“CBEC Circulars”).

 

As per the CBEC circulars, the powers related to arrest and bail are conferred on the officers not below the rank of Superintendent that too, if authorized by the Commissioner of Customs/ Central Excise. The arresting officer would hold the same powers as an officer in charge of a Police Station, subject to the conditions mentioned under Section 436 of Cr.P.C. Further, if the conditions of bail are fulfilled, the arresting officer also holds the power to release the arrestee on bail.

 

However, in case, bail is not granted the arrestee must be produced before the Magistrate within 24 hours without any unnecessary delay. The Magistrate may decide whether to grant bail or not as per the provisions of the Cr. P.C.

 

If, in circumstances the arrestee could not be produced before the Magistrate, the arrestee may be handed over to the nearest Police station for safe custody and the nominated person should be informed accordingly. The arrestee has to be produced before the Magistrate as soon as possible.

 

The law clearly states that an arrest memo is to be drafted at the time of arrest of an assessee. Although there has not been any prescribed format of arrest memo, every arrest memo should contain some significant information which is as under –

 

  • Brief facts of the case; 
  • Details of the person arrested; 
  • Evidences against the person; 
  • Relevant sections or laws under which the person is arrested; and 
  • Date and time of arrest. 
 

The law even states that the grounds of arrest should be explained to the arrestee and also to the person nominated by the arrestee. Every arrest memo is required to be attested by the nominated person and the same is also to be handed to the arrestee under proper acknowledgment.

 

Conclusion 


Though CBEC, vide the above mentioned CBEC Circulars, tried to provide much awaited clarity but as witnessed from the past, such provisions have more often been misused by the revenue officers according to their caprices and use these as an arm twisting measure to harass assesses. Thus, unless provided with proper checks and balances, the enforcement of such provisions is draconian in nature and must be utilized only under rare circumstances. It would have been a welcome step, had CBEC also provided some penal provisions for the arresting officers, in case of abuse of powers.

 

 

For further information, please contact:

 

Manoj Mishra, Clasis Law
manoj.mishra@clasislaw.com

 

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