The Union Budget 2024 has introduced significant amendments, particularly the insertion of Section 122A in the Goods and Services Tax (GST) Law. This new provision targets manufacturers of goods, imposing penalties for non-compliance with special registration procedures outlined in Section 148. The Finance Bill 2024 also brings forth related notifications, emphasizing the penalties for failure to register certain machines used in the manufacture of goods. In this comprehensive guide, we delve into the details of Section 122A, the prescribed penalties, and the special procedures outlined in Section 148.
Section 122A – Penalty for Failure to Register Machines:
1. Background:
Section 122A is a crucial addition to the GST Law, specifically targeting individuals engaged in manufacturing goods covered by special registration procedures outlined in Section 148. This section introduces penalties for contravention of the specified procedures.
2. Penalties Imposed:
The penalties under Section 122A are twofold:
a. Monetary Penalty: A person contravening the special registration procedure is liable to pay a penalty of Rs. 1 lakh for every unregistered machine used in the manufacturing process. This penalty is in addition to any other penalties applicable under Chapter XV or other provisions of the GST Law.
b. Seizure and Confiscation: Unregistered machines are subject to seizure and confiscation. However, there are conditions under which confiscation may not occur, as outlined in the provisos.
3. Conditions for Non-Confiscation:
To prevent the confiscation of unregistered machines, the following conditions must be met:
a. Penalty Payment: The penalty imposed must be paid by the concerned individual.
b. Timely Registration: Registration of the unregistered machine must be completed within three days of receiving the communication of the penalty order.
4. Notification of Special Procedure:
𝐍𝐨𝐭𝐢𝐟𝐢𝐜𝐚𝐭𝐢𝐨𝐧 𝐍𝐨. 4/2024-𝐂𝐞𝐧𝐭𝐫𝐚𝐥 𝐓𝐚𝐱 𝐝𝐚𝐭𝐞𝐝 05-01-2024 was issued, prescribing the special procedure under Section 148. This notification outlines the specific procedures for the registration of machines and includes a list of goods, such as pan masala, unmanufactured tobacco, hookah, smoking tobacco, chewing tobacco, Gutkha, etc., subject to these procedures.
5. Effective Date:
The effective date for the implementation of Section 122A is yet to be notified. Stakeholders are advised to stay informed about any updates regarding the commencement of this provision.
Conclusion:
The introduction of Section 122A in the Union Budget 2024 brings a heightened focus on compliance in the manufacturing sector. Manufacturers of specified goods need to be vigilant about adhering to the special registration procedures outlined in Section 148 to avoid substantial monetary penalties and the seizure of machinery. As the effective date is pending notification, businesses should stay attuned to official announcements to ensure timely compliance with these new provisions.
Penalty for failure to register certain machines used in manufacture of goods as per special procedure.
“122A. (1) Notwithstanding anything contained in this Act, where any person, who is engaged in the manufacture of goods in respect of which any special procedure relating to registration of machines has been notified under section 148, acts in contravention of the said special procedure, he shall, in addition to any penalty that is paid or is payable by him under Chapter XV or any other provisions of this Chapter, be liable to pay a penalty equal to an amount of one lakh rupees for every machine not so registered.
(2) In addition to the penalty under sub-section (1), every machine not so registered shall be liable for seizure and confiscation:
Provided that such machine shall not be confiscated where–
(a) the penalty so imposed is paid, and
(b) the registration of such machine is made in accordance with the special procedure within three days of the receipt of communication of the order of penalty.”.
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