CGST officer of Delhi North Commissionerate have arrested Company Director for evading more than 3 Crores of Service Tax. The respective company had collected the service taxes from its clients but did not deposit the same with the Government Exchequer. He was produced before Patiala House Court wherein the Director has been sent to the Judicial Custody for 15 days.
Section 91 of the Finance Act 1994 empowers to arrest any person violating Sec. 89 of Finance Act 1994 read with Section 174 of CGST Act, 2017.
The action has been taken by the Govt. in order to assure taxpayers do not run the risk of facing such punitive action in carrying out their day to day operations. The power to arrest is to be exercised where there is deliberate fraud of sizeable magnitude with intent to evade tax. It is meant to serve as a deterrent to unscrupulous elements in trade who may try to defraud the system. There are sufficient checks built into the law to ensure that inadvertent or procedural lapses do not attract severe punitive measures.