Centre & states to draft rules for existing arrest cases under GST

New Delhi: The Union government plans to collaborate with state governments to establish a standard operating procedure (SOP) for handling existing arrest cases under the Goods and Services Tax (GST) framework, according to a government official. The government also intends to review the risk-assessment process for GST refunds quarterly, starting from April 1, 2027.

The government is set to make the invoice management system mandatory from April 2027, with the Central Board of Indirect Taxes and Customs upgrading the system to ensure digital invoice matching, minimizing human error. This SOP aims to bring uniformity in the handling of such cases by both the Centre and states, in line with the proposed decriminalisation measures discussed at the 57th GST Council meeting.

The GST Council has recommended removing Section 69 of the CGST Act, which permits arrest in certain cases, and increasing the prosecution threshold to ₹5 crore from ₹1 crore. The proposals are part of efforts to streamline criminal enforcement under GST and reduce litigation for businesses. However, industry executives have expressed concerns about the treatment of existing cases as a key implementation issue.

The government has chosen April 1, 2027, as the implementation date, as the proposed changes will necessitate about a dozen amendments to existing rules and laws. While some amendments may be implemented sooner, others might require parliamentary approval. Post the announcement, the Centre will ensure the implementation of rules regarding 90% of refunds and input tax credits for businesses based on risk assessment, with quarterly reviews of refund risk assessment with states every three months.