Circular
171/6/2013-Service Tax
F.No. 137/47/2013-Service
Tax
Government of
India
Ministry of
Finance
Department of
Revenue
Central Board of
Excise & Customs
Service Tax
Wing
***
New
Delhi, the 17th September, 2013
To,
All Chief
Commissioners of Central Excise
All Chief
Commissioners of Customs and Central Excise
All Directors
General
All Commissioners of
Service Tax
All Commissioners of
Central Excise
Subject: Guidelines for arrest and bail in relation to
offences punishable under the Finance Act, 1994
Section 103 (K) of
the Finance Act, 2013 has introduced Sections 90 & 91 in the Finance Act,
1994, with effect from 10th
May, 2013. In terms of section 90 of the
Finance Act , 1994, as amended, offences under section
89(1) (ii) shall be cognizable and all other offences shall be non-cognizable
and bailable. In terms of section 91(1) read with
section 89(1) (i) and (ii) of the Finance Act, 1994, as amended, the power to
arrest has been introduced in cases involving evasion of service tax covered
under section 89(1) (i) and (ii) of the Finance Act, 1994, as amended and the
amount of service tax evaded exceeds
rupees fifty lakh. In this context, the following points may be noted for strict
compliance:-
1.2 The following cases are covered under
section 89(1) (i):
1.2.1 where a person
knowingly evades the payment of service tax, or
1.2.2 avails and
utilizes credit of taxes or duty without
actual receipt of taxable service or excisable goods either fully or partially
in violation of the rules, or
1.2.3 maintains false
books of accounts or fails to supply any information which he is required to
supply or supplies false information,
and the amount of
service tax involved is more than fifty lakh rupees.
In such cases, the
Assistant Commissioner or the Deputy
Commissioner shall, for the purpose of releasing an arrested person on bail or
otherwise, have the same powers and be
subject to the same provisions as an officer in-charge of a police station has,
and is subject to, under Section 436 of
the Code of Criminal Procedure, 1973( 2 of 1974). This is in terms of section
91(3) of the Finance Act, 1994, as amended.
1.3 The following cases are covered under
section 89(1) (ii):
1.3.1 where a person has collected any amount
exceeding fifty lakh rupees as service tax but fails to pay the amount as
collected to the credit of the Central Government beyond a period of six months
from the date on which such payment becomes due.
In such cases, after following the due procedure of arrest,
the arrested person must be produced before the magistrate without unnecessary
delay, and definitely within 24 hours. This is in terms of section 91(2) of the
Finance Act, 1994, as amended. The magistrate will decide on whether or not to
grant bail.
2.0 Conditions
precedent
2.1 Since arrest impinges on the personal
liberty of an individual, this power must be exercised carefully.
The Finance Act 1994, as amended, has
specified categories of offences in respect of which only powers of
arrest may be exercised and these offences are covered under clause (i) or
clause (ii) of sub-section (1) of section 89 of the Finance Act, 1994. Further, the Finance Act 1994 has also
prescribed value limits of evasion of service tax exceeding Rs 50 lakh, for exercising the powers of arrest.
2.2 The legal stipulations in the Finance
Act 1994 , as amended, contained in section 91 read with section 89 must be
strictly adhered to. An officer of Central Excise not
below the rank of
Superintendent of Central Excise can carry out an arrest on being
authorized by the Commissioner of Central Excise. To authorize the arrest the
Commissioner should have reason to believe that the person proposed to be
arrested has committed an offence specified in clause (i) or clause (ii) of
sub-section (1) of section 89. The reason to believe must be based on
credible material which will stand judicial scrutiny.
2.3 Apart from fulfilling the legal
requirements, the need to ensure proper investigation, prevention of the
possibility of tampering with evidence or intimidating or influencing witnesses
and large amounts of service tax evaded are relevant factors before deciding to
arrest a person.
3.0
Procedure for
arrest
3.1 The provisions of the Code of Criminal Procedure 1973 (2 of
1974) relating to arrest and the procedure thereof must be adhered to . It is therefore
advised that the Commissioner should ensure that all officers are fully
familiar with the provisions of the Code
of Criminal Procedure 1973 (2 of 1974).
3.2 There is no prescribed format for arrest
memo but an arrest memo must be in compliance with the directions in D.K Basu vs State of West Bengal
reported in 1997(1) SCC 416 ( see paragraph 35). The arrest memo should
include:
3.2.1 brief facts of
the case;
3.2.2 details of the
person arrested;
3.2.3 gist of evidence
against the person;
3.2.4 relevant section
(s) of the Finance Act, 1994 or other laws attracted to the case and to the
arrested person;
3.2.5 the grounds of
arrest must be explained to the arrested person and this fact noted in the
arrest memo;
3.2.6 a nominated person
(as per the details provided by arrested person) of the arrested person should
be informed immediately and this fact also may
be mentioned in the arrest memo;
3.2.7 the date and time
of arrest may be mentioned in the arrest memo and the arrest memo should be
given to the person arrested under proper acknowledgment;
3.2.8 a separate arrest
memo has to be made and provided to each individual/arrested person. This should
particularly be kept in mind in the event that there are several arrests in a
single case.
3.3 Further there are certain modalities
that should be complied with at the time of arrest and pursuant to an arrest,
which include the following:
3.3.1 A female should be arrested by or in the
presence of a woman officer;
3.3.2 Medical examination of an arrested person
should be conducted by a medical officer in the service of Central or State
Governments and in case the
medical officer is not available , by a registered medical
practitioner, soon after the arrest is made. If an arrested person is a female
then such an examination shall be made only
by, or under supervision of a female medical officer , and in case the
female medical officer is not available, by
a female registered medical practitioner.
3.3.3 It shall be the duty of the person having
the custody of an arrested person to take reasonable care of the health and
safety of the arrested person.
4.0 Post arrest formalities
4.1 The procedure is separately outlined
for the different categories as listed in section 89(1) (i) and (ii) of the
Finance Act, 1994, as amended:
4.1.1 In cases covered under section 89(1) (i),
the Assistant Commissioner or Deputy Commissioner is bound to release a person
on bail against a bail bond. The bail conditions should be informed in writing to the arrested person and also
informed on telephone to the nominated person of the person (s) arrested .The
arrested person should be also allowed to talk to a nominated person. The
conditions will relate to, inter alia, execution of a personal bail bond and one
surety of like amount given by a local person of repute, appearance before the
investigating officer when required and not leaving the country without
informing the officer. The amount to be indicated in the personal bail bond and
security will depend, inter alia, on the amount of tax
involved.
4.1.2 If the conditions of the bail are
fulfilled by the arrested person, he shall be released by the officer concerned
on bail forthwith. However, only in
cases where the conditions for granting bail are not fulfilled, the arrested
person shall be produced before the appropriate Magistrate without unnecessary
delay and within twenty-four (24) hours of arrest. The arrested person may be handed over to the
nearest police station for his safe custody, within 24 hours, during the night
under a challan, before he is produced before the
Court.
4.2 In cases covered under section 89(1)
(ii) and only in the event of circumstances preventing the production of the
arrested person before a Magistrate without unnecessary delay, the arrested
person may be handed over to nearest Police Station for his safe custody, within
24 hours, under a proper challan, and produced before
the Magistrate on the next day, and the nominated person of the arrested person
may be also informed accordingly.
4.3 Formats of the relevant documentation i.e.
the Bail Offer Letter, the Bail Bond and the Challan
for handing over to the police, in the Code of Criminal Procedure, 1973. ( 2 of 1974) may be followed.
4.4 Every Commissionerate should maintain a
Bail Register which will have the details of the case, arrested person, bail
amount, surety amount. The money/instruments/documents received as surety should
be kept in safe custody. The money should be deposited in the treasury. The
other instruments/documents should be kept in the custody of a single nominated
officer. It should be ensured that the instruments/documents received as surety
are kept valid till the bail is discharged.
5.0 Reporting System
5.1 A report on every person arrested should
be sent to the jurisdictional Chief Commissioner with a copy to DGCEI
(Headquarters) the same day or on the next day.
5.2 Chief Commissioners shall send a
report on every arrest to the Zonal Member within 24 hours of the arrest giving
such details as prescribed in the monthly report . To
maintain an all India record of arrests made in service tax, a monthly report of
all persons arrested in the Zone shall be sent by the Chief Commissioner to
DGCEI (Headquarters), New Delhi, by the 5th of the succeeding
month, in the
following format:
Monthly Report on
Persons Arrested in a Zone
|
S.No
|
Name,
designation
and age of
arrested
person
|
Date
of
arrest
|
Commissionerate
|
Name and
Registration
Number of
Company
|
Amount of
duty
evaded
|
Role
in
evasion
and
nature
of
evidence
collected
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
Yours
faithfully
(Rajeev Yadav)
Director (Service
Tax)
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