GST Council to Consider Removing GST Officers' Power of Arrest: Decriminalising the Tax Law
The 57th meeting of the GST Council will be held on 8 October 2026 (moved from 7 October) in New Delhi. It will consider major changes to how the GST law is enforced, chaired by the Union Finance Minister with the finance ministers of the states.
The main proposal is to remove pre-prosecution arrest by GST officers. Today, under Section 69 of the CGST Act, 2017, a Commissioner can order an arrest before any court case starts. Under the proposal, an arrest could happen only after prosecution is launched and a court allows it.
Finance Ministry sources say the idea rests on the principle of "trust the taxpayer". A tax officer's main job should be to recover tax, while serious crime is left to courts and law enforcement agencies.
The reasoning: arrest power was carried into GST in 2017 from the old Central Excise law, at a time when sellers' and buyers' invoices could not be matched. Arrest was a deterrent (a fear factor) against fake invoices. Now, technology matches invoices automatically, so fake credit can be caught by the system itself.
The threshold for prosecution (criminal case in court) is proposed to rise from ₹1 crore to ₹5 crore. Reports also say 9 offences may be removed from the criminal list entirely, and punishments for 24 others may be reduced. No show-cause notice would be issued for amounts below ₹10,000.
One or two states are reported to want arrest powers to stay. If the Council agrees, the law changes are likely to take effect in early 2027, after Parliament and state legislatures amend the GST Acts.
GST Act Provisions on Offences and Arrests
The GST law punishes wrongdoing in two ways. The first is a money punishment (tax demand, interest and penalty) decided by tax officers. The second is criminal punishment (jail), which only a criminal court can give after a trial. This second route is called prosecution, and arrest is linked to it.
The proposal would take away the Section 69 power to arrest before a court case and would raise the prosecution threshold to ₹5 crore. Tax disputes would then be handled mainly through recovery, interest and penalties, with arrest only after prosecution and a court's permission.
Jan Vishwas (Amendment of Provisions) Act, 2023
The Jan Vishwas Act is a law that changed many central laws at once to remove jail terms for small, technical or procedural mistakes. In their place, it put money penalties decided by officers. "Jan Vishwas" means "people's trust": the state should trust citizens and businesses and not treat every small mistake as a crime. This idea, called decriminalisation, is the same idea behind the GST proposal.
The GST proposal applies the Jan Vishwas logic to tax law. Minor and technical tax lapses would be settled with money, not jail, while real fraud would still face prosecution in court.
The GST Council (Article 279A)
The GST Council is a joint body of the Union Finance Minister and the finance ministers of all states. It recommends the main rules of GST: tax rates, exemptions, thresholds and changes to the GST laws. It is the main forum where the Centre and the states make shared decisions on indirect tax, an example of cooperative federalism.
Removing arrest powers needs the Council's recommendation because both the Centre (CGST Act) and the states (SGST Acts) have the same enforcement provisions. That is why the support of the states, including the one or two that are reported to have doubts, matters for this proposal.
- 57th GST Council meeting: 8 October 2026, New Delhi (moved from 7 October)
- Proposal: remove pre-prosecution arrest under Section 69, CGST Act, 2017; arrest only after prosecution, with court permission
- Prosecution threshold proposed: ₹1 crore → ₹5 crore (Finance Act, 2023 had set ₹2 crore generally, ₹1 crore for fake invoices)
- Reported: 9 offences to be decriminalised, punishments for 24 offences to be reduced
- No show-cause notice below ₹10,000
- Likely implementation: early 2027
- Arrest power in GST was carried over from the old Central Excise law, which GST replaced in 2017
- Radhika Agarwal v. Union of India (27 February 2025) upheld GST arrest powers with safeguards
- GST Council: Article 279A, 101st Amendment Act, 2016; Centre one-third and states two-thirds of the vote; decisions by three-fourths weighted majority