GST evasion, ITC misuse over 55 crore may face prosecution

• Prosecution can be launched against offenders in cases where the amount of evasion or misuse of input tax credit (ITC) is more than Rs 5 crore under GST regime
• Prosecution can not be launched “indiscriminately against all the Directors of the company
• It 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 or had connived at it

Monetary threshold

• The monetary threshold, however, will not be applicable for habitual evaders
• Sanction of prosecution has serious repercussions for the person involved, therefore, the nature of evidence collected during the investigation should be carefully assessed.
• The evidence collected should be adequate to establish beyond reasonable doubt that the person had a guilty mind, knowledge of the offence, or had fraudulent intention.

Habitual evader

• A company/taxpayer would be treated as habitual evader, if it has been involved in two or more cases of confirmed demand of tax evasion/fraudulent refund or misuse of ITC involving

Filing of complaint

• In all other cases of arrest, prosecution complaints should also be filed within a definite time frame.
• Decision should be taken on case-to-case basis considering various factors, such as nature and gravity of offence, quantum of tax evaded, or ITC wrongly availed, or refund wrongly takenn and the nature as well as quality of evidence collected, the guidelines read.