GST Council meeting today: Cutting across divide, 5 big states oppose end of taxmen’s arrest powers

Five large states resist arrest power rollback

At the 57th Goods and Services Tax (GST) Council meeting in Delhi, a proposal to do away with tax officials' arrest powers is facing pushback from several major states. Maharashtra, Gujarat, Uttar Pradesh, Karnataka and Andhra Pradesh have raised reservations during multiple rounds of discussions between state and Central officials ahead of the Council session. The meeting, originally scheduled for Wednesday, was deferred by a day to Thursday, with the intervening time reportedly used by Union officials to engage GST chief commissioners across zones and resolve residual concerns, particularly around the proposed no-arrest framework.

States Seek Graded Powers

A central demand from these states is that the indirect tax regime should not become "toothless." A state minister indicated that while arrests could be barred in ordinary cases, an additional layer of "civil arrest" should remain available for serious violations. This would mean graded powers even at the pre-prosecution stage, rather than a blanket removal. The proposal under discussion seeks to eliminate pre-prosecution arrests altogether, keeping prosecution only for higher-threshold cases. Under the plan, the prosecution threshold would rise to Rs 5 crore from the current Rs 1 crore.

Why It Matters For Businesses

The direction of the debate carries direct consequences for taxpayers and compliance teams. If the Council adopts the no-arrest proposal, enforcement would shift toward civil outcomes such as tax recovery, interest on delayed payment and penalties, with criminal prosecution reserved for larger cases. Officials describe the intent as moving enforcement from custody-based deterrence to detection-led action, a change that could ease investor concerns about aggressive tax authority overreach. For businesses, a higher prosecution threshold and reduced arrest exposure could lower the perceived risk of routine disputes escalating into criminal proceedings…