Key Points related to Offences and Penalities under GST (Section 122-138 of CGST Act):
♠ A taxable person is liable to pay the penalty of Rs. 20,000 (CGST+SGST) or an amount equivalent to tax evaded or short paid or not paid or TDS/TCS not deducted or TDS/TCS deducted but not credited into the government or input tax credit claimed excessively or wrong utilization of input tax credit; whichever is higher due to following reasons:
1. supplies any goods or services or both without issue of any invoice or issues an incorrect or false invoice with regard to any such supply;
2. issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder;
3. collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
4. fails to deduct the tax in accordance with the provisions of sub-section (1) of section 51
5. fails to collect tax in accordance with the provisions of sub-section (1) of section 52,
6. takes or utilises input tax credit without actual receipt of goods or services or both either fully or partially
7. fraudulently obtains refund of tax under this Act;
8. Falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax due under this Act,
9. is liable to be registered under this Act but fails to obtain registration;
10. furnishes any false information with regard to registration particulars, either at the time of applying for registration, or subsequently;
11. obstructs or prevents any officer in discharge of his duties under this Act;
12. transports any taxable goods without the cover of documents as may be specified in this behalf;
13. suppresses his turnover leading to evasion of tax under this Act;
14. fails to keep, maintain or retain books of account and other documents in accordance with the provisions of this Act or the rules made thereunder;
15. fails to furnish information or documents called for by an officer or furnishes false information or documents during any proceedings under this Act;
16. supplies, transports or stores any goods which he has reasons to believe are liable to confiscation under this Act;
17. issues any invoice or document by using the registration number of another registered person;
18. tampers with, or destroys any material evidence or document;
19. disposes off or tampers with any goods that have been detained, seized, or attached under this Act,
♠ A taxable person is liable to pay penalty which may be extend upto Rs. 50,000(CGST+SGST) due to following reasons:
1. The person who abet or push to do any of the offences as mentioned in first point;
2. acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with any goods which he knows or has reasons to believe are liable to confiscation
3. receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of any provisions of this Act;
4. fails to appear before the officer of central tax, when issued with a summon for appearance to give evidence or produce a document in an inquiry;
5. fails to issue invoice in accordance with the provisions of this Act or the rules made thereunder or fails to record the invoice in his books of account.
♠ If a person has not paid the tax or short paid or wrong utilization of input tax credit or tax erroneously refunded for any reason other than the fraud or willful misstatement, then the penalty will be 20,000(CGST+SGST) or 10% of the tax due; whichever is higher.
♠ But if a person has not paid the tax or short paid or wrong utilization of input tax credit or tax erroneously refunded for reason of fraud or willful misstatement, then the penalty will be Rs. 20,000 or the total amount of tax due; whichever is higher.
♠ If a taxable person who fails to furnish the information return as required under section 150, then the person shall pay the penalty of Rs. 200(CGST+SGST) per day which shall not exceed from Rs. 10,000(CGST+SGST)
♠ If a taxable person who fails to furnish the information of furnish the false information return as required under section 151, then the person shall pay the penalty of 20,000(CGST+SGST) which shall not exceed from Rs. 50,000(CGST+SGST).
♠ General Penalty– Where a taxable person who contravenes any provision of the act or the rules made thereunder for which no penalty has been defined then the general penalty will be lievable which may be extend up to Rs. 50,000(CGST+SGST).
♠ No officer shall impose the penalty for minor breach of tax regulation or procedural requirement or omission if the amount of tax involved is less than Rs. 5,000 and omission or mistake in documentation can be easily rectifiable.
♠ No officer can impose the penalty without giving the opportunity of being heard
♠ If the taxable person voluntarily discloses the breach of tax regulation or procedural requirement or omission or error, then the officer shall consider the fact as a mitigating factor while deciding the penalty amount.
♠ The government can waive off the penalty in full or part which has been levied in above points after getting the recommendation from the gst council.
♠ If a taxable person transport any goods in contravention of the provision of the act, then the said goods and the conveyance in which the said goods are being transported shall be liable to detain or seize and after detention or seized, they shall be released by paying the;
a. Applicable tax and penalty equal to 100% of the tax payable on the said goods, where the owner of the goods comes forward to pay the tax and penalty.
b. Applicable tax and penalty equal to 50% of the value of the goods reduced by the tax paid thereon, where the owner of the goods is not comes forward to pay the tax and penalty.
c. Furnish a security amount equal to the amount as mentioned in a and b point.
♠ No goods can be seized or detained without giving the proper order of detention or seizure on the person transporting the goods.
♠ Where the taxable person is fails to pay the tax, interest and penalty within 7 days, then the provision related confiscation of goods shall be implemented.
♠ If the goods detained or seized are hazardous or perishable, then the said 7 days time period may be reduced by the officer.
Section 130-
Following are the reason behind confiscation of goods along with payment of applicable penalty:
- If a person supplies goods in contravention with the provisions of the act with the purpose of evasion of tax;
- Does not account any goods which is liable to pay tax under this act;
- Supplies any goods liable to tax under this act without applying for registration;
- Uses any conveyance to transport the goods liable to be confiscated.
An officer can give the option to the owner of the goods to pay the fine in a place of confiscation of the goods.
Fine amount shall not be more than the market value of the goods less tax chargeable on such goods
Total amount of fine and penalty shall not be less than amount of penalty as specified under section 129(1).
Order of confiscation shall not ordered without giving the opportunity of being heard.
Time limit to pay the fine in place of confiscation is not exceeding 3 months, after that the proper officer shall dispose off the goods and conveyances confiscated and credit the sale proceeds into the account of government.
- Imprisonment under this Act:
| Serial No. | Amount of tax evaded or input tax credit wrongly availed or utilized or amount of refund wrongly taken | Imprisonment with fine |
| 1. | > 5 Crore | 5 years with fine |
| 2. | >2 Crore < 5 Crore_ | 3 years with fine |
| 3. | >1 Crore < 2 Crore | 2 years with fine |
| 4. | Falsifies financial records or produces fake accounts etc., prevents the officer from performing his duties, Destroy any material evidences | 6 months or fine or both |
| 5. | Offence is committed again | For second and every subsequent offence, 5 years with fine |
| 6. | Govt Officials and certain other persons | 6 months or fin upto Rs. 50,000(CGST+SGST) or both |
♠ If any offences as discussed above is committed by the company, then the person in charge or any person authorize to conduct the business of the company shall be the guilty of misconduct and penalized accordingly to both.
If it is proved that all the committed offences are due to negligence of the company’s directors, secretary, managers, any other officer of the company, then all such shall be liable to be guilty of misconduct and penalized accordingly.
If an offence is committed by LLP, Trust, Partnership firm, HUF etc, then the person in charge i.e. the partner, trustee and karta are liable for misconduct and penalized accordingly.
(Author can be reached at info@raagconsultants.com)
Author Bio
LOAD ALL THE TAX PAYERS WITH THE MAXIMUM COMPLIANCES MANY OF WHICH ARE TO SATISFY THE BUREAUCRATS ‘ EGO AND WHIMS AND MAKE THE SOFTWARE AND SERVER VERY POOR WHICH WOULD COMPEL THE TAX PAYERS TO COMMIT THE DEFAULT AND THEN INVITE PROVISIONS FOR HEAVY PENALTIES. LET THE LAW BE FAIR. LET THERE BE PROVISIONS FOR GRANTING REBATE AND RELIEF TO THE TAX PAYERS WHEN THE LAXITY HAS BEEN COMMITTED BY THE OFFICERS AND THE DEPARTMENT.