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Offences & Penalty Provisions Under GST

Provisions for Penalties under GST

As rightly quoted by Arun Jaitley, “GST is not the end but the start of a journey.” Well truly, GST has come with an aim to better the tax structure in a lot of ways. GST implementation is a turning point in the history and reform of tax structure. Since GST is being implemented with a view to control tax evasion and issues pertaining to double taxation, the penalty provisions under GST are stringent making sure no one escapes the process making the revenue generation convenient for the government.

Offences by Individuals Under GST

Following offences under GST listed as under:

Fraud:

  1. Provide wrong information during proceedings.
  2. Provide wrong information while registering under GST.
  3. Submit fake documents/ files in order to evade tax.

Supply/ Transport of Goods

  1. Destroy goods that have been seized.
  2. Transport goods without valid documents.
  3. Continue supply/ transport of goods which have been confiscated.

Fake/ Wrong Invoices

  1. Issues invoice or bills in violation of GST law.
  2. Issues invoice using identification number of another bonafide taxpayer.
  3. Issues false invoice or makes supply without the issue of invoice.

Tax Evasion

  1. Obtain refund of CGST/ SGST by fraud.
  2. Utilize input tax credit without actual receipt of goods and services.
  3. Suppress sales in order to evade tax.
  4. Failure to deposit GST collected in contravention of provisions within 3 months.

Others

  1. Not registered under GST despite being required to do so.
  2. Destruction of evidence.
  3. Non-collection of TCS or collection of lesser amount, wherever applicable.
  4. Non-deduction of TDS or deduction of less amount, wherever applicable.
  5. Being an input service distributor, taking or distributing input tax credit in violation of rules.
  6. Obstructing proper officer during his duty while investigation and auditing.
  7. Non-maintenance of books required by law.

Offences by Companies

  • Officer in charge (director, manager, secretary) shall be held liable.

 Offences by LLPs, HUFs and Trusts

  • Partner, Karta, Managing Trustee shall be held liable.

Penalties Under GST

General Rules:

  • Every taxpayer being charged of offence would be served with a show cause notice and an opportunity of being heard.
  • The tax authority will give an explanation regarding penalty and nature of offence.
  • For any person who voluntarily discloses a breach of law, the tax authority may reduce the penalty.

Following are the consequences of non-compliance under GST.

For tax evasion/ short deduction: 100% penalty subject to a minimum of Rs. 10,000/-

Any person who

  • Acquires/ receives any goods/ services with knowledge that it is a violation of GST law.
  • Helps a person to commit fraud under GST
  • Fails to issue invoice in accordance with GST rules
  • Fails to account/ vouch any invoice in the books of account
  • Absents himself from summons by tax authority

would be liable to pay a penalty extending up to Rs. 25,000.

For tax amount involved 100 to 200 lakhs, a jail term of 1 year along with the fine.

For tax amount involved 200 to 500 lakhs, a jail term of 3 years along with the fine.

For non-payment and short payment of tax, a penalty of 10% of tax amount due subject to a minimum of Rs. 10,000/-.

For offences under GST law that are not specifically mentioned, liability to a penalty extending to Rs. 25,000 would arise.

The penalties under GST are sure to bring down the tax evasion rate and improve the overall tax structure of the nation. GST is meant to bind the country into ‘One Nation, One Tax.’ With the laws being more unpermissive against offences, the growth is sure to happen.

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