Arrest under Service Tax?
On Monday DDT asked a question, "Who can arrest for an offence under Service Tax and who can grant bail?" A famous advocate - writer - friend of DDT wrote to us,
what a question baba? Where is arrest under service tax?. The section 83 of the Finance Act, 1994 which makes certain provisions of the Excise Act applicable to the service tax has FORTUNATELY OR UNFORTUNATELY not made section 9 or 9A of the Excise Act or Section 13 (power to arrest) of the Act ibid, applicable to service tax. So there is no arrest or bail for any service tax evasion, as on date. But I am afraid, as you have raised this pertinent question in your popular column, the day is not so far!!
To this another netizen remarked,
That is the beauty of the question. There are no provisions under Service Tax to arrest. But, have you heard of the Commissioners down south who shout at the Service Tax assesses to pay up or face arrests?
Yes it does happen. DDT knows of an incident where a company was forced to make a 'voluntary' deposit of a huge amount of Rs. Five Crores under threat of arrest of the Managing Director. When we told them that there was no provision of arrest under the Service Tax Law, the MD felt so cheated. But if an ignorant Inspector arrests an assessee for an alleged offence under Service Tax, it is quite possible that a court may send the 'accused' to 15 days judicial remand and nothing will happen to the officer who wrongly arrests the assessee.
So do remember, there is no arrest under service Tax and if somebody is threatened with arrest, believe it is an empty threat and they really can't arrest.