GST Council Recommends Ending Arrest Powers | CLAT GK

CURRENT AFFAIRS | 09 OCTOBER 2026

The GST Council, at its 57th meeting held in New Delhi on Thursday, 8 October 2026, has recommended the complete withdrawal of the power of GST officers to arrest taxpayers. According to the Press Information Bureau (PIB) release titled “Recommendations of the 57th Meeting of the GST Council” (Ministry of Finance, posted 8 October 2026), the Council “has recommended complete withdrawal of arrest powers under GST by omission of section 69 of CGST Act, 2017.” The meeting was chaired by Union Finance & Corporate Affairs Minister Nirmala Sitharaman.

In the same package, the Council recommended that “the monetary threshold for prosecution” be raised “from ₹1 crore to ₹5 crore”, and that the maximum general penalty under Section 125 of the CGST Act be cut from ₹25,000 to ₹10,000. The single most important word for an exam aspirant is “recommended”: none of this is law yet. The PIB release itself notes that the recommendations will be given effect through circulars, notifications and law amendments, “which alone shall have the force of law”.

What exactly did the Council recommend?

The arrest-and-prosecution changes sit under the heading “Ease of living and doing business” in the PIB release. Paragraph 11 lists them in two parts:

• Arrest (para 11.1): omit Section 69 of the Central Goods and Services Tax (CGST) Act, 2017 — the provision that allows a Commissioner to authorise the arrest of a person.
• Prosecution (para 11.2): raise the prosecution threshold from ₹1 crore to ₹5 crore; omit clause (i) of Section 132(1); delete the words “evades tax” from clause (e) and “or in any other manner deals with” from clause (h); restrict clause (c) to fraudulent availment of input tax credit (ITC) without receipt of goods or services, or without an invoice or bill; and rationalise the amount of punishment for offences under Section 132.

The stated aim, in the release’s words, is “a progressive and trust-based tax regime, while retaining effective deterrence against fraud and evasion”. Speaking at the post-meeting press conference, Ms. Sitharaman said the process reforms “have been driven by the principle of trust”, as reported by The Hindu.

The wider 57th Council package

The arrest decision was one item in a long list of process reforms. The Hindu noted that the Council met more than a year after its previous meeting in September 2025, which had rationalised rates and reduced the number of tax slabs. This time, the Finance Minister said, no GST rates were changed. Other recommendations in the PIB release include:

• a minimum threshold of ₹10,000 for issuing show-cause notices under Sections 73, 74 and 74A — no notice if the tax involved is below ₹10,000;
• faster, system-based refunds, with the time for acknowledgement cut from 15 days to 10 days;
• e-way bill reform: a vehicle may be intercepted only on specific intelligence and with authorisation from an officer not below the rank of Joint Commissioner, with no interception in transit States;
• in-principle approval of a concept note for an optional Annual Return Quarterly Payment (ARQP) scheme for B2C businesses with turnover up to ₹5 crore.

On timing, The Hindu reports that the Finance Minister said all the changes are expected to come into effect from 1 April 2027. The PIB release, however, fixes no commencement date for the arrest and prosecution items, which need amendments to the CGST Act.

Why this needs Parliament, not just the Council

The GST Council is a recommendatory body. In Union of India v. Mohit Minerals (2022), the Supreme Court held that the Council’s recommendations have persuasive value and do not bind Parliament or State legislatures, because Article 246A confers simultaneous legislative power and Article 279A contains no non-obstante clause. Section 69 is a provision of the CGST Act, an Act of Parliament, so only Parliament can delete it. Each State would also have to amend its own State GST (SGST) Act for the change to apply uniformly.

The recommendation also has to be read alongside Radhika Agarwal v. Union of India, decided by a three-judge bench of the Supreme Court on 27 February 2025. The Court upheld the validity of the arrest and summons provisions (Sections 69 and 70) of the CGST Act, but laid down safeguards: arrest cannot rest on mere suspicion; the Commissioner’s “reasons to believe” must be recorded and based on material; the safeguards of the criminal procedure code apply; and anticipatory bail can be sought even before an FIR. The Court also held that GST officers are not “police officers”. In other words, the Supreme Court found the arrest power valid but subject to strict limits; the Council now proposes to remove it through legislation.

Analysis: what changes, and what does not

What changes: If Parliament acts, tax officers will no longer be able to authorise arrests under the GST law. The higher prosecution threshold would mean that criminal proceedings are reserved for larger cases, and smaller disputes are settled through tax, interest and penalty. This fits a broader trend of decriminalising economic and regulatory offences, where civil consequences replace jail terms for technical or minor defaults.

What does not change: Prosecution itself survives above the new threshold, and the release says deterrence against “fraud and evasion” is retained. Clause (c) of Section 132(1) is narrowed, not removed, so availing fake input tax credit without receiving goods or services remains an offence.

The debate: Supporters see a trust-based system that reduces harassment and litigation. Critics of decriminalisation in general argue that weaker penalties may embolden large-scale invoice frauds. The Council’s answer is the higher threshold paired with retained prosecution for serious fraud. For a CLAT reader, this is a balance between personal liberty (Article 21) and the State’s interest in collecting revenue.