An important question that arises for consideration after the enactment of the Goods and Services Tax (GST) Act, 2017 (both Central as well as State) is as to whether police can investigate a cognisable offence of evasion of tax under the GST Act by taking resort to Section 4(2) of the Code of Criminal Procedure (CrPC), 1973 and whether police has the power to conduct search and seizure in respect of a cognisable offence under the GST Act without specific power having been conferred on the police and/or the Bureau of Investigation which comes under the police department under the GST Act to investigate into any offence committed under the GST Act.

Section 132 of the Central Goods and Services Tax (CGST) Act, 2017 prescribes punishment for certain offences. It provides that whoever commits any of the offences enumerated in sub-section (1) of Section 132 of the Act, shall be punishable with imprisonment for different terms on the basis of the nature of offence. Sub-section (4) of Section 132 provides that notwithstanding anything contained in the CrPC, 1973, all offences under the Act, except the offences referred to in sub-section (5) of Section 132 shall be non-cognisable and bailable. Sub-section (5) of Section 132 provides that the offences specified in clauses (a), (b), (c) or (d) of sub-section (1) and punishable under clause (i) of sub-section (1) of Section 132 shall be cognisable and non-bailable. Sub-section (6) of Section 132 provides that a person shall not be prosecuted for any offence under Section 132 except with the previous sanction of the Commissioner. Section 134 of the Act of 2017 provides that no court shall take cognisance of any offence punishable under the Act of 2017 or the Rules made thereunder except with the previous sanction of the Commissioner, and no court inferior to that of a Magistrate of the First Class, shall try any such offence. Similar provisions are contained in the Assam Goods and Services Tax Act, 2017.

The offences specified in clauses (a), (b), (c), (d) of sub-section (1) of section 132 have therefore been made cognisable and non-bailable. As such whoever supplies any goods or services or both without issue of an invoice, in violation of the provisions of the Act of 2017 and the Rules made thereunder, with the intention to evade tax, or issues any invoice or bill without supply of goods or services or both in violation of the provision of the Act of 2017 and the Rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax or avails input tax credit using an invoice or bill without supply of goods or services or both or collects any amount as tax but fails to pay the same to the Government beyond the period of three months from the date on which such payment becomes due, are cognisable offences and the same are non-bailable.

Chapter XIV of the CGST Act, 2017 deals with powers of inspection, search, seizure and arrest. Section 67 of the Act confers power of inspection, search and seizure on a proper officer who should not be below the rank of Joint Commissioner. Sub-section (10) of Section 67 provides that the provisions of CrPC relating to search and seizure, shall, so far as may be, apply to search and seizure under section 67 subject to the modification that sub-section (5) of section 165 of the said Code shall have effect as if for the word “Magistrate”ť, wherever it occurs, the word “Commissioner”ť were substituted. The question that arises for consideration is as to whether Section 67 of the Act of 2017 does away with the powers and functions of the authorities other than the proper authorities as specified in the Act of 2017 to act in accordance with the provisions of Section 132(1) read with section 132(5) of the CGST Act, 2017 and sub-section 2 of section 4 of the CrPC. Section 4 of the CrPC reads as under –

“4. Trial of offences under the Indian Penal Code and other laws.-

(1) All offences under the Indian Penal Code (45 of 1860) shall be investigated, inquired into, tried and otherwise dealt with according to the provisions herein contained.

(2) All offences under any other law shall be investigated, inquired into, tried and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences.”

Sub-section (2) of section 4 of CrPC provides about the investigation of all offences under any law other than the Indian Penal Code which are to be investigated and inquired into and tried in accordance with the provisions of CrPC except in respect of offences for which any law for the time being in force regulates the manner and place of investigation, inquiring into or trying or otherwise dealing with such offences. As such the offences other than the offences under the Indian Penal Code, procedure relating to investigation, inquiry and trial would be applicable if provided under any other law other than the CrPC. However, in the absence of such procedures specifically providing the procedure regulating the manner and place of investigation, inquiring into or trying or otherwise dealing with such offences, all such offences are to be investigated, inquired and tried according to the procedure provided under the CrPC. Section 132 of the Act of 2017 does not provide for trial of an offence under the Act or its investigation or inquiry for its trial and convictions. There is no provision under the Act of 2017 specifically providing any procedure for investigation, inquiry or trial other than as provided in CrPC or for trial of an offence under section 132 of the Act of 2017. Section 132 of the Act of 2017 indicates the offences and provides for penalty for committing the offences, where an offence is proved and a person is found guilty. Sub-section (5) of Section 132 of the Act makes the offences enumerated in clauses (a), (b), (c) and (d) of sub-section (1) of Section 132 to be cognisable and non-bailable meaning thereby a police officer can take cognisance of the offence committed by a person under clauses (a), (b), (c) and (d) of sub-section (1) of Section 132 without any orders of the Magistrate. As such in the absence of any provision specifically providing for investigation, inquiry and trial of offences under Section 132(1)(a), (b), (c), (d), the provisions of CrPC would be applicable under Section 4(2) of the CrPC. The provision of sub-section (6) of Section 134 of the Act of 2017 to the effect that no court shall take cognisance of any offence punishable under the Act or the Rules made thereunder except with the previous sanction of the Commissioner and that no court inferior to that of a Magistrate of the First Class shall try such offence and the provisions of sub-section(6) of Section 132 of the Act providing for that a person shall not be prosecuted for any offence under Section 132 of the Act except with the previous sanction of the Commissioner, is only for the purpose of the court to take cognisance of any offence and for the purpose of prosecution for the said offence, meaning thereby the court shall have the right to proceed in the matter only after previous sanction of the Commissioner and not otherwise. But so far as sub-section (5) of Section 132 is concerned, it makes the offences enumerated in clause (a), (b), (c), (d) of Section 132(1) to be cognizable and non-bailable, notwithstanding anything contained in CrPC, meaning thereby a Police Officer may proceed to investigate any case in relation to offences committed under clause (a), (b), (c), (d) of Section 132(1) of the Act without any order of a Magistrate. The power of the proper officer under Section 67 of the Act of 2017 for the purpose of the provisions of the Act do not take away the powers of police to investigate cognisable offences under sub-section (5) of Section 132 of the Act. The proper officer not below the rank of the Joint Commissioner shall have the power to inspect, search and seize accounts, registers, documents, goods etc. on having reason to believe that any person has evaded tax or is attempting to evade tax under the Act and in that case the provisions of CrPC relating to search and seizure shall as so far as may be applicable, but if any person has committed the offences enumerated in clauses (a), (b), (c), (d) of Section 132(1), namely cognisable offence, a police officer may be entitled to resort to the provisions of Section 4(2) of the CrPC.

A similar view has been taken by a Division Bench of the Hon’ble Guwahati High Court in Crompton Greaves Ltd. v. Commissioner of Taxes, (2000) 3 GLR 429 while examining the similar question in respect of the Assam Finance (Sales Tax) Act, 1956. The appeal filed before the Supreme Court against the said judgment was also dismissed, no doubt for non-prosecution.

In view of the above, it appears that the police officer shall have the power to investigate, conduct search and seizure in respect of the cognisable offences under the GST Act, 2017. It may be that the Police while exercising the power to investigate a cognisable offence under the Act exceeds its jurisdiction which may be a case of exercise of jurisdiction in excess but the same cannot be said to be without jurisdiction.