The Finance Act, 2013 gave way for arrest for offences involving evasion of service tax. The power to arrest has been introduced with effect from 10-05-2013, in cases which involve evasion of service tax in excess of fifty lakh rupees. However recently by circular no. 1010/17/2015-CX dated 23-10-2015, the said limit of 50 lakhs has been raised to one crores.
Newly introduced section 90 and 91 by the Finance Act, 1994 (w.e.f. 10th May, 2013) deals with provisions of cognizance of offences and power to arrest respectively. Apart from above, CBEC has also issued Guidelines for arrest and bail in relation to offences punishable under the Finance Act, 1994a circular no 171/6/2013 dated 17-09-2013.
The offences under any law including the Indian Penal Code have been classified as cognizable and non-cognizable, as bailable or non-bailable. These are given and defined in the First Schedule of the CPC, 1973.
Cognizable and Non-cognizable Offence:
Bailable and Non-bailable Offence:
"non-bailable" means shall not be automatically entitled to be released on bail [but does not mean that the court may not order him to be released on a suitable bail - with or without any conditions]
Offences liable for arrest under Service Tax:
Subsection (1) clause (a) to (c) lays down offences which under section 90 are non-cognizable and bailable as under:
Subsection (1) clause (d) lays down offence which under section 90 are cognizable and non-bailable as under:
(d) collecting any amount of service tax but failing to pay the amount as collected to the credit of the Central Government beyond a period of six months from the date on which such payment becomes due.
Exercise of Power to arrest as per Section 91:
Non-cognizable and bailable offences:
Cognizable and non-bailable offences:
Applicability of Code of Civil Procedure 1973, Hon'ble Supreme Court Guidelines and other modalities:
Further the guidelines set up by Hon'ble Supreme Court in D.K Basu vs State of West Bengal reported in 1997(1) SCC 416 (paragraph 35-36) must be followed while effecting an arrest.
Apart from the above, CBEC has also prescribed the following modalities which are required to be followed:
1. A female should be arrested by or in the presence of a woman officer;
Bail of arrest person:
In cases of non-cognizable and bailable offence, covered under clause (a) to (c) above, the commissioner is bound to release a person on bail against a bail bond. The bail conditions should be informed in writing to the arrested person and also informed on telephone to the nominated person of the person (s) arrested .The arrested person should be also allowed to talk to a nominated person. The conditions will relate to, inter alia, execution of a personal bail bond and one surety of like amount given by a local person of repute, appearance before the investigating officer when required and not leaving the country without informing the officer. The amount to be indicated in the personal bail bond and security will depend, inter alia, on the amount of tax involved. If the conditions of the bail are fulfilled by the arrested person, he shall be released by the officer concerned on bail forthwith. However, only in cases where the conditions for granting bail are not fulfilled, the arrested person shall be produced before the appropriate Magistrate without unnecessary delay and within twenty-four (24) hours of arrest. The arrested person may be handed over to the nearest police station for his safe custody, within 24 hours, during the night under a challan, before he is produced before the Court.
In the case of cognizable and non-bailable offence as under clause (d) above, and only in the event of circumstances preventing the production of the arrested person before a Magistrate without unnecessary delay, the arrested person may be handed over to nearest Police Station for his safe custody, within 24 hours, under a proper challan, and produced before the Magistrate on the next day, and the nominated person of the arrested person may be also informed accordingly.
Arrest of first person under the provisions of Service Tax