The CBIC vide Instruction No. 04/2022-23 [GST – Investigation] dated 01st September, 2022 has issued guidelines for the launching of prosecution under the CGST Act, 2017.

Under the GST Law, whoever commits any of the offences specified under sub-section (1) and sub-section (2) of section 132 of the CGST Act, 2017, can be prosecuted.

By this instruction Circular, the Board has issued guidelines on various areas of prosecution as under:

 A. Sanction of prosecution:

1. One of the important considerations for deciding whether prosecution should be launched is the availability of adequate evidence. Evidence collected should be adequate to establish beyond reasonable doubt that the person had guilty mind, knowledge of the offence, or had fraudulent intention or in any manner possessed mens-rea for committing the offence.
2. Merely because a demand had been confirmed in the adjudicating proceedings, prosecution should not be done.
3. Prosecution should not be launched in cases of technical nature, or where additional claim of tax is based on a difference of opinion regarding interpretation of law.
4. In case of public limited companies, prosecution should not be launched indiscriminately against all the Directors of the company but should be restricted to only persons who oversaw day-to-day operations of the company and have taken active part in committing the tax evasion etc. or had connived at it.

B. Monetary Limits: Prosecution should normally be launched where amount of tax evasion, or misuse of ITC, or fraudulently obtained refund in relation to offences specified under sub-section (1) of section 132 of the CGST Act, 2017 is more than Five Hundred Lakh rupees, except in the following cases-

1. Habitual Evaders
2. Arrest Cases

C. Authority to sanction prosecution: Prosecution complaint for prosecution should be filed only after obtaining the sanction of the Pr. Commissioner/Commissioner of CGST as per Section 132(6) of the CGST Act, 2017.

However, in respect of cases investigated by DGGI, the prosecution complaint for prosecution should  be  filed  only  after  obtaining  the  sanction  of  Pr.  Additional  Director General/Additional Director General, Directorate General of GST Intelligence (DGGI) of the concerned zonal unit/ Hqrs.

D. Procedure for sanction of prosecution: This include the procedures in case of –

1. Arrest(s) made under section 69 of the CGST Act, 2017
2. Prosecution against legal person, including natural person

E. Appeal against Court order in case of inadequate punishment/acquittal: The Prosecution Cell in the Commissionerate shall examine the judgment of the Court and submit their recommendations to the Pr. Commissioner/ Commissioner, in cases where appeal is required to be filed.

F. Procedure for withdrawal of prosecution: This include procedure in case of –

1. Withdrawal of sanction-order of prosecution: where prosecution has been sanctioned but complaint has not been filed and new facts or evidence have come to light necessitating review of the sanction for prosecution, the Commissionerate should immediately bring the same to the notice of the sanctioning authority. After considering the new facts and evidence, the sanctioning authority, if satisfied, may recommend to the jurisdictional Pr. Chief Commissioner/ Chief Commissioner that the sanction for prosecution be withdrawn who shall then take a decision.
   Where cases are investigated by DGGI, such withdrawal of sanction order may be made with the approval of Director General of DGGI of concerned sub-national unit.
2. Withdrawal of complaint already filed for prosecution: In these cases, the withdrawal can only be affected with the approval of the court.

G. General guidelines

H. Publication of names of persons convicted: This instruction directs the department in the deserving cases should invoke the provisions of section 159 of the CGST Act, 2017, i.e. to publish names and other particulars in respect  of  all persons who are convicted under the Act.

I. Monitoring of prosecution: The Pr. Commissioner/Commissioner of CGST or Pr. Additional Director General/Additional Director General of DGGI should monitor cases of prosecution at monthly intervals and take the corrective action wherever necessary to ensure that the progress of prosecution is satisfactory. For keeping a track of prosecution cases, entries of all prosecution cases should promptly be made in DIGIT/ Investigation Module, within 48 hours of sanction of prosecution and the entries must be updated from time to time.

J. Inspection of prosecution work by the Directorate General of Performance Management: Director General, Directorate General of Performance Management and Pr. Chief Commissioners/Chief Commissioners, who are required to inspect the Commissionerates, should specifically check whether instructions in this regard are followed and make a mention of the implementation of the guidelines in their inspection report. Similar exercise to be followed in DGGI.

Complete Instruction can be accessed at https://taxo.online/wp-content/uploads/2022/07/Instructuon-No-04-2022-23-INV.pdf