Centre & states to draft rules for existing arrest cases under GST

New Delhi: The Centre will work with states to frame a standard operating procedure (SOP) for existing arrest cases and will conduct a quarterly review of the risk-assessment process with states for goods and services tax (GST) refunds, a government official said.

The government is also planning to make the invoice management system mandatory from April 1, 2027, and the Central Board of Indirect Taxes and Customs is upgrading the system to make invoice matching completely digital, leaving minimum scope for human error.

The SOP is intended to bring uniformity to the handling of such cases by both the Centre and the states in alignment with the proposed decriminalisation measures announced under the indirect tax regime at the 57th GST Council meeting, the official said.


"The Council has clearly said that tax officers will not have the power of arrest. However, we have to coordinate with the states on ongoing cases to ensure continuity and uniformity in treatment," said a senior official, who did not wish to be identified. "We are still working on the SOP as it requires more discussion."

The GST Council has recommended removing Section 69 of the Central Goods and Services Tax (CGST) Act, which provides for arrest in specified cases, and raising the prosecution threshold to ₹5 crore from ₹1 crore.

The proposals form part of a wider effort to rationalise criminal enforcement under GST and reduce litigation for businesses.

Industry executives had hailed the decriminalisation of a large number of offences but flagged that the treatment of existing cases would be a key implementation issue.

The official said that a reason the government has decided on April 1, 2027, for the implementation is that the proposed changes will require about a dozen amendments to the existing rules and laws.

While those requiring changing rules may be rolled out sooner, some of the amendments may require approval from Parliament.

The official added that after the announcement, the Centre will ensure the implementation of rules on the ground, especially around the decision to allow 90% of refunds and input tax credits for businesses on the basis of risk assessment.

"We will have a quarterly review of refund risk assessment with states every three months to ensure that the refund process remains responsive and consistent across jurisdictions," the official said.