The GST Council recommended omitting Section 69 of the CGST Act at its 57th meeting on 8 October. Since the GST portal now tracks invoices automatically, the power to arrest is no longer needed. Many feel this old rule gave officers too much power to pressure businesses during tax disputes.
When GST was rolled out in 2017, the power to arrest came with it, carried over from the Central Excise law. Tax officers dealing with VAT or service tax had never enjoyed such powers. The reasoning was understandable at the time. Invoices could not be matched, fake credit was difficult to trace, and the prospect of custody was among the few levers an officer could pull.
Nine years later, much of that detective work is done by the GST portal. Returns are matched automatically, mismatches surface on their own, and suspicious credit chains can be flagged from a desk. A deterrent designed for a paper-based era has outlived the problem it was meant to solve. That is essentially the case the GST Council accepted at its 57th meeting on 8 October, when it recommended omitting Section 69 of the CGST Act altogether.
Concerns that date back to GST's inception
The unease is not new. At the fifth Council meeting in December 2016, Maharashtra and West Bengal questioned whether arrest powers were compatible with ease of doing business and with the way VAT had worked. The Centre has also moved in the same direction on direct taxes, where recovery rules no longer provide for arrest and detention over defaults.
In practice, the power was used sparingly, though that is rather the point. Between 2021-22 and 2024-25, central GST formations are reported to have made 887 arrests against 72,393 offence cases. A power like this was never meant to be used often. Its value to an officer lies in its availability. Those 887 arrests did not shape only 887 cases; they shaped all 72,393. Industry has long argued that the mere possibility of custody gives officers a bargaining chip, prompting senior executives to settle disputes they might otherwise contest rather than risk arrest. Banking and insurance companies have raised this concern more often than most.
The gap between safeguards and practice
The law does carry safeguards. CBIC instructions require credible material and a recorded reason to believe before an arrest is authorised. The Supreme Court, in Radhika Agarwal v. Union of India (2025), upheld the framework but made it clear that procedural requirements and personal liberty must be respected. The harder question is whether practice matches the letter of the law.
A recent Allahabad High Court order is a useful reminder. The court granted bail to the CEO of the SabPaisa payment platform in a GST case, noting that the investigation was complete, the complaint had been filed, the trial was unlikely to conclude soon and there was nothing to suggest that evidence would be tampered with. It said nothing about the merits of the case, and the order must be read in its own context. Even so, it raises a fair question: if prosecution can proceed through the ordinary legal process, what does continued custody add?
Fraud can still be prosecuted
None of this lets the fraudster off the hook. Prosecution remains available before a competent court on a complaint by the tax authorities, with the threshold raised from ₹1 crore to ₹5 crore. Deliberate fraud, such as fake invoicing, can still be pursued under the Bharatiya Nyaya Sanhita. Recovery, interest and penalties remain in place. The honest taxpayer, meanwhile, stands to gain clear relief.
States seek safeguards against serious fraud
Some states are not fully convinced. Maharashtra, Gujarat, Uttar Pradesh, Karnataka and Andhra Pradesh are reported to have sought a provision for civil arrest in cases involving serious violations. That concern deserves a hearing. The answer lies in defining serious fraud narrowly and ensuring that courts can act swiftly.
Parliament must now follow through
What matters now is follow-through. These are recommendations, not yet law. Section 69 remains on the statute book until Parliament amends the CGST Act, the amendment is notified and the states enact corresponding changes. Until then, the existing safeguards must be observed in full, and a recorded reason to believe cannot be treated as a mere formality.
Evasion has to be fought, but a regime that can now detect it on screen has less reason to rely on custody. The Council has shown the way forward. Parliament should not keep it waiting.