By Vibhav Mishra, Advocate-on-record, Supreme Court
When GST rolled out in 2017, the power to arrest came with it, carried over from the Central Excise law. Tax officers dealing with VAT or service tax never had it. The reasoning was understandable at the time. Invoices could not be matched, fake credit was hard to trace, and the prospect of custody was among the few levers an officer could pull.
Nine years later, much of that detective work is done by the GST portal. Returns are matched automatically, mismatches surface on their own, and suspicious credit chains can be flagged from a desk. A deterrent designed for a paper era has outlived the problem it was meant to solve. That is essentially the case the GST Council accepted at its 57th meeting on 8 October, when it recommended omitting Section 69 of the CGST Act altogether.
The unease is not new. At the fifth Council meeting in December 2016, Maharashtra and West Bengal asked whether arrest powers sat well with ease of doing business and with how VAT had worked. The Centre has also moved the same way on direct taxes, where recovery rules no longer allow arrest and detention over defaults.
The numbers suggest arrest was never the main tool. Central GST formations reportedly made 887 arrests across 72,393 offence cases between 2021-22 and 2024-25. For the business on the receiving end, though, the possibility is enough. Industry has long said the power can become a bargaining chip, pushing senior executives towards settling a dispute simply to stay out of custody.
The law does carry safeguards. CBIC instructions require credible material and a recorded reason to believe before an arrest is authorised. The Supreme Court, in Radhika Agarwal v. Union of India (2025), upheld the framework but was clear that procedure and personal liberty must be respected. The harder question is whether practice matches the paper.
A recent Allahabad High Court order is a useful reminder. The court granted bail to the CEO of the SabPaisa payment platform in a GST case, noting that the investigation was complete, the complaint was filed, the trial was unlikely to end soon and there was nothing to suggest evidence would be tampered with. It said nothing on the merits, and the order must be read in its own context. Even so, it raises a fair question. If prosecution can proceed through the ordinary legal process, what does continued custody add?
None of this lets the fraudster off. Prosecution remains available before a competent court on a complaint by the tax authorities, with the threshold raised from ₹1 crore to ₹5 crore. Deliberate fraud, such as fake invoicing, can still be pursued under the Bharatiya Nyaya Sanhita. Recovery, interest and penalty stay in place. The honest taxpayer gets clear relief.
Some states are not fully convinced. Maharashtra, Gujarat, Uttar Pradesh, Karnataka and Andhra Pradesh are reported to have sought a layer of civil arrest for serious violations. That concern deserves a hearing. The answer lies in how tightly serious fraud is defined and how quickly courts can act.
What matters now is follow through. These are recommendations and not yet law. Section 69 stays on the statute book until Parliament amends the CGST Act, the amendment is notified and the states pass matching changes. Until then, the existing safeguards must be observed in full, and a recorded reason to believe cannot be treated as a formality.
Evasion has to be fought, and a regime that can now catch it on screen has less reason to rely on custody. The Council has shown the direction. Parliament should not keep it waiting.