GST: Govt to draft rules for existing arrest cases

The Central government plans to draft rules for existing arrest cases related to goods and services tax (GST) refunds, according to a government official. The government will also review the risk-assessment process quarterly with states to ensure proper handling of GST refunds. A new invoice management system will become mandatory from April 1, 2027, with the Central Board of Indirect Taxes and Customs upgrading the system to minimize human error.

This SOP aims to bring uniformity in handling arrest cases by both the Centre and states, aligning with the proposed decriminalisation measures at the 57th GST Council meeting. The Council has recommended removing Section 69 of the CGST Act, which allows for arrest in certain cases, and raising the prosecution threshold to ₹5 crore from ₹1 crore.

Industry executives welcomed the decriminalisation of many offences but expressed concern over the treatment of existing cases. The government has set April 1, 2027, as the implementation date, allowing time for amendments to existing rules and laws, some of which may require parliamentary approval. The Centre will also ensure the implementation of rules on the ground, particularly regarding the decision to allow 90% of refunds and input tax credits for businesses based on risk assessment.

Quarterly reviews of refund risk assessment will be conducted with states every three months to maintain responsiveness and consistency across jurisdictions.