FM addresses issue of bailability - 7 offences made non-bailable under indirect taxes

THE Offences under the Customs Act and the Central Excise Act were treated as non-bailable till October, 2011 when the Apex Court in the case of Om Prakash (2011-TIOL-95-SC-CX-LB) held that the offences under both these acts are bailable. This led to serious erosion of the enforcement ability of the Revenue Machinery. In the Budget 2012 an attempt was made to correct and even garner more than adequate powers. The attempt failed because certain provisions of bail, similar to those of preventive laws, were designed to be incorporated in the tax laws. A leading BJP mascot in the Rajya Sabha had flayed the provisions and termed them as similar to that of POTA and TADA. This finally lead to guillotining the proposal at the time of passage of the Bill.

Having learnt the lesson the present Finance Minister, who is a very good match for all the legal eagles in the Opposition, has moved proposals to make some offences non-bailable which are selective, and aimed at taking a pot shot at organised evasion. For example, collecting but not depositing service tax is a glaring example of hurting the Treasury. It will be indeed a tough ball game for the Opposition leaders to get the Finance Minster exercise his scissors again. Indeed,

such offences are non-bailable under the IPC. In these offences, the person arrested would have to be produced before a magistrate, who would have freedom to grant bail or deny at his discretion.

These proposed non-bailable offences are:

Customs Act

(a) evasion or attempted evasion of duty exceeding fifty lakh rupees; or

(b) prohibited goods notified under section 11 which are also notified under sub-clause (C) of clause (i) of sub-section (1) of section 135; or

(c) import or export of any goods which have not been declared in accordance with the provisions of this Act and the market price of which exceeds one crore rupees; or

(d) fraudulently availing of or attempt to avail of drawback or any exemption from duty provided under this Act, if the amount of drawback or exemption from duty exceeds fifty lakh rupees, shall be non-bailable.

Central Excise Act

(1A) The offences relating to excisable goods where the duty leviable exceeds fifty lakh rupees and is punishable under clause (b) {evasion of duty} or clause (bbbb) {wrongful availment of Cenvat Credit} of sub-section (1) of section 9, shall be cognizable and non-bailable.

Service Tax

(d) failure to pay any amount {in excess of Rs 50 lakhs} collected as service tax to the credit of the Central Government beyond a period of six months shall be cognizable offence.

Note of Caution for CBEC: While the provisions are carefully crafted to address the organised evasion they would do well to issue a detailed guidelines regarding the use of these powers responsibly, and also a clear cut set of treatments to be given to the officers in case of complaints of misuse and abuse of such powers.