New Delhi, Mar 3 (KNN) In a first, two businessmen were arrested in Mumbai for allegedly availing tax credit illegally, following which the Micro, Small and Medium Enterprises (MSMEs) are fearful that this hints at reinstating ‘inspector raj’ in the country.

Talking to KNN, Sunil Vaish, President of MSME Body Indian Industries Association (IIA) said that the provision of ‘arresting’ under the GST law is not the best thing to do.

“In the initial stage, there are just charges that needs to be proven, if the tax office goes for the arrest in the first stage itself, this might lead to a fearful environment for businessmen”, he said.

He further said that the resting of such powers in the hands of tax office will give the officers a upper hand on the basis of which the officer will be able to threaten the businessmen.

Vaish raised that it is important for the government to note that the country is still in the initial phase of GST implementation, things are already not well across sectors, in such a situation if arrests are made, it would be very difficult for businesses to work.

“The refund continues to remain stuck with the tax office, exporters are in a lot of stress already, the government must focus on easing the tax structure instead of making it more complex”, he raised.

Earlier, CGST Mumbai Central Commissionerate arrested Sanjiv Pravin Mehta, director of Shah Brothers Ispat Pvt Ltd, and Vinaykumar D Arya, director of V N Industries, for availing "ineligible credit" of Rs. 5.20 crore and Rs. 2.03 crore, respectively, the Commissionerate said in the statement, a media report said.

The companies were found only exchanging invoices for so-called sale and purchase. There was only paper and invoice movement, but no actual sale or purchase of goods, following which the tax office arrested the businessmen. (With Inputs from a media report) (KNN/DA)