prpri All about Prosecution under Model GST Act All about Prosecution under Model GST Act

“What’s Prosecution under MGST”?? – Well That’s NOT Elementary, my dear Watson!! .

Many of us surely must have heard or read the word “Prosecution”. Well if not, then surely would have come across while reading famous books authored by Sir Arthur Conan Doyle or while watching movies like “A Few Good Men”!!

“To Prosecute” means to accuse someone of committing some offense and “Prosecution” means conducting of legal proceedings against the person who is so accused of having committed the offense. There are three logical aspects to Prosecution, which are:

  1. Person who is accused of having committed the offense.
  2. The activity, which calls for prosecution.
  3. Outcome of prosecution, which is in form of Penalty or Punishment.

Let us delve into each of above three constituents and in the process understand the aspect of “Prosecution” in chapter XVII “Prosecution And Compounding Of Offense” of Model GST Act.

1. Person Accused Of Committing Offense:

Generally our belief is that prosecution would get attracted only to “Taxpayer”. However this is not the fact!,I herewith draw attention of readers to Sec 73(1) of Model GST Act, 2016 (MGST) that lists out activities, which warrants for prosecution and note that this section begins with “Whoever Commits….”. Thus every individual should be aware of these activities and ensure that he or she doesn’t (even out of inadvertence) execute any of these activities and thereby invite for prosecution.

2. The Offense:

Section 73(1) lists down 12 offenses as below, which warrant institution of criminal proceedings and prosecution:

  1. Making a supply without issuing an invoice or upon issuance of a false/incorrect invoice;
  2. Issuing an invoice without making supply;
  3. Not paying tax collected for a period exceeding 3 months;
  4. Not depositing any tax that has been collected in contravention of the Act for a period exceeding 3 months;
  5. Availing or utilizing credit of input tax without actual receipt of goods and/or services;
  6. Obtaining any fraudulent refund;
  7. Furnishing false information or falsification of financial records or furnishing of fake accounts/ documents with intent to evade payment of tax;
  8. Obstructing or preventing any official in the discharge of his duty;
  9. Dealing with goods liable to confiscation i.e. receipt, supply, storage or transportation of goods liable to confiscation;
  10. Receiving/dealing with supply of services in contravention of the Act;
  11. Failing to supply any information required of him (officer) under the Act/Rules or supplying false information;
  12. Attempting to commit or abetting commission of any of the above 11 offences.

All offences under this Act (except offences relating to taxable goods and/or services where the amount of tax evaded exceeds two hundred and fifty lakh rupees) shall be non-cognizable and bailable (Sec 73(3) and Sec 73(4) of MGST). Cognizable offenses are those, which are of serious nature where the officer can commence investigation without any permission from court. In case a person is accused of a non-bailable offence it is a matter of discretion of the court to grant or refuse bail and application has to be made in court to grant bail.

“Mensrea” or culpable mental state is necessary for prosecution under MGST. However the Court shall presume the existence of such mental state, but it shall be a defense for the accused to prove the fact that he had no such mental state with respect to the act charged as an offence in that prosecution.

A “culpable mental state” is a state of mind wherein the act executed by person has below qualities:

  • The act is intentional;
  • The act and its implications are understood and controllable;
  • The person committing the act was not coerced and even overcomes hurdles to the act committed;
  • The person believes or has reasons to believe that the act is contrary to law.

3. Outcome Of Prosecution:

If the person is convicted of offense under Sec 73(1), then the person shall be punishable with a penalty that shall be as under:

Tax Evaded Punishment
Is between Rs.25 lakh and Rs.50 lakh 1 years imprisonment and fine
Is between Rs.50 lakh and Rs.250 lakh 3 years imprisonment and fine
Is exceeding Rs 250 lakh 5 years imprisonment and fine


“I used to be an atheist until I realized I was GOD!!!”.

In context to MGST such bewilderment won’t dawn on any of us if we demystify the statue and firmly affix in our mind as to what all is forbidden and may warrant prosecution”.

(CA Rajeev.Joshi ( CA,CISA,DISA,BSc (Microbiology)) The author is a Senior Management & Tax Consultant with over two decades of comprehensive industrial experience.He could be reached at

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August 2021