GST Council’s recommendation to scrap arrest powers under the GST law has triggered debate in Gujarat, where Central GST formations detected 12,511 cases involving Rs 12,632.88 crore in ITC fraud in 2025-26. In all, 55 arrests were made.
The council on Thursday recommended omitting Section 69 of the CGST Act, effectively removing the power to arrest under GST. It also recommended raising the monetary threshold for prosecution from Rs 1 crore to Rs 5 crore and narrowing the offences that can lead to prosecution.
The issue has drawn mixed reactions from tax advocates and enforcement officials. An advocate said the arrest provision under GST was unconstitutional. “After the implementation of GST, the provision effectively allowed arrest in what is essentially a tax dispute,” he said. “However, the other side of the coin is the need to deal with fraudulent transactions and tax evasion.”
Fake invoice networks typically involve firms created or used to generate invoices without corresponding supplies of goods or services, enabling fraudulent ITC claims.
“The removal of arrest powers could weaken deterrence against organised GST fraud. Organised operators create bogus GST registrations using identity documents of unsuspecting people and use them to issue bogus invoices. If you remove the deterrence and make the entire statute incapable and toothless, this will give way to scams,” said a source.
Source from: https://timesofindia.indiatimes.com/city/ahmedabad/gujarat-accounted-for-12511-gst-fraud-cases-in-2025-26/articleshow/134799327.cms
