The Central Board of Excise and Customs (CBEC) on Friday “substantially” raised the monetary limit for arrest and prosecution for alleged tax evasion so that these rigorous provisions are not used against small and medium enterprises (SMEs).
Under the new limit, arrest and prosecution would be resorted to by officers only in the case of evasion of central excise and service tax above R1 crore. At present, those alleged to have evaded central excise duty of R25 lakh and service tax of R10 lakh can be arrested and prosecuted. The new limits apply to both cases of tax evasion or wrongful utilisation of input ta credit.
In the case of customs duty evasion by wrongful availment of exemption or duty drawback, the limit has been revised to R1 crore from R10 lakh. Outright smuggling or mis-declaration of baggage above R20 lakh would attract arrest and prosecution as per the revised guidelines, up from the earlier limit of R5 lakh.
“The procedure for arrest and prosecution has also been revised with adequate safeguards in the new set of instructions to ensure that only in cases of serious nature above the revised thresholds, where there is strong prima-facie evidence, these powers are exercised,” said the board.
However, there is no lower limit for arrest and prosecution in the cases of smuggling of fake Indian currency notes, arms, ammunition, explosives and endangered species.