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FAQs GST OFFENSES, PENALTIES & APPEALS

FAQs GST OFFENSES, PENALTIES & APPEALS

  1. What is the definition of offence under GST?

Offence is the breach of any law or rule and provisions prescribed under the GST Act and Rules.

  1. What are the different types of offences prescribed under GST?

Under Sec 122(1), the following defaults involve a penalty of Rs 10,000 or the amount of tax involved, whichever is higher.

  • Supply of goods/services without issuing an invoice or issuing an incorrect or false invoice.
  • Issuing an invoice without supplying goods and/or services.
  • TDS deducted but not deposited with government.
  • TCS collected but not deposited with the government.
  • TDS deducted in contravention with the provisions.
  • TCS collected in contravention with the provisions.
  • Claiming of full or partial input tax credit without receiving the goods and/or services.
  • Refund of tax obtained by fraud.
  • Distributing the input tax credit in a manner against the prescribed standards.
  • Submitting fake financial records, or producing fake accounts, documents ad returns.
  • Liable to take registration, but fails to take one.
  • False information furnished in the registration application.
  • Not allowing an officer from performing their duties.
  • Transfer of taxable goods through conveyance, without proper documents
  • Suppressing the turnover, with the intention to evade tax
  • Failure in maintaining proper books of accounts and documents
  • Failure to furnish information as required by the CGST/SGST officers.
  • Supplying of goods where the goods are liable for confiscation
  • Issuance of invoice or document using GSTIN of another person.
  • Tampering with material evidence crucial for proceeding.
  • Tampering with any goods, detained, seized, or attached, as an evidence in a proceeding.
  1. What does penalty mean under GST?

Penalty has not been specifically defined in GST; however, a penalty is a punishment imposed by law for committing of an offence or failing to do something.

Some common offence and penalty-

SR.NO SECTION PARTICULARS TYPE OF DEFAULT SECTION OF DEFAULT AMOUNT OF PENALTY
1. RULE 18 OF THE CGST RULES,2017 DISPLAY OF REGISTRATION CERTIFICATE AND GSTIN ON THE BOARD, WHERE THE PERSON UNDERTAKES BUSINESS ACTIVITIES.

 

FAILURE TO DISPLAY THE REGISTRATION NUMBER AND GSTIN ON THE BOARD OF PRINCIPAL PLACE OF BUSINESS. SECTION 125 OF THE CGST ACT, 2017.

RS.25,000/-

2 RULE 5 (1) OF THE CGST RULES,2017 THE PERSON OPTING FOR COMPOSITION LEVY TO MENTION THE WORDS “COMPOSITION TAXABLE PERSON, AND SHALL NOT COLLECT TAX ON SUPPLIES”, ON THE TOP OF THE BILL OF SUPPLY, PLACE OF BUSINESS AND ANY OFFICIAL COMMUNICATIONS. FAILURE TO COMPLY WITH THE PROVISIONS APPLICABLE ON COMPOSITE TAXPAYERS. RULE 125 OF THE CGST RULES, 2017.

 

RS.25,000/-

3 SECTION 22 & SECTION 24 OF THE CGST ACT,2017 LIABILITY TO GET REGISTERED UNDER GST WHERE THE AGGREGATE TURNOVER EXCEEDS RS.20 LACS AND RS.10 LACS AND IS THE SUPPLIER IS LIABLE TO TAKE COMPULSARY REGISTRATION. FAILURE TO GET REGSITERED. SECTION 122 OF THE CGST ACT,2017

 

RS.10,000/-

4 RULE 31(1) & (2) OF TH CGST RULES,2017 THE SUPPLIER SHALL ISSUE THE INVOICE BEFORE THE DATE ON WHICH THE SAID INVOICE IS OUGHT TO BE ISSUED. ALSO, THEY SHALL NOT ISSUE INVOICE WITHOUT MAKING THE SUPPLY. FAILURE TO ISSUE INVOICE WITHIN THE DUE DATE, OR ISSUED INVOICE WITHOUT MAKING SUPPPLY. SECTION 122 OF THE CGST ACT, 2017.

 

RS.10,000/- OR AMOUNT EQUAL TO THE TAX EVADED.

5 RULE 46 OF THE CGST RULES,2017 EVERY INVOICE ISSUED BE SIGNED BY THE AUTHORIZED SIGNATORY. INVOICE NOT AUTHORISED BY THE AUTHORIZED SIGNATORY. SECTION 122 OF THE CGST ACT,2017

 

RS.10,000/-

6 SECTION 49 (8) OF THE CGST ACT,2017 AMOUNT OF TAX COLLECTED, BE DEPOSITED WITH THE GOVERNMENT WITHIN THE PRESCRIBED PERIOD. AMOUNT COLLECTED BUT NOT PAID TO GOVERNMENT EVEN AFTER THE PERIOD OF THREE MONTHS. SECTION 122 OF THE CGST ACT,2017 RS.10,000/- OR AMOUNT EQUAL TO THE TAX EVADED.
7 SECTION 70 OF THE CGST ACT,2017 A SUMMON CAN BE ISSUED BY THE PROPER OFFICER FOR THE REPRESENTATION BY THE TAXPAYER FOR PROVIDING CERTAIN INFORMATION. THE TAXPAYER DOESNOT APPEAR IN FRONT OF PROPER OFFICER, AFTER RECEIVING THE SUMMON. SECTION 122 (3) OF THE CGST ACT,2017

RS.25,000/-

8

SECTION 68(1) OF THE CGST ACT,2017

INSPECTION OF GOODS IN TRANSIT OF VALUE EXCEEDING RS.50,000/-

SUPPLY OF GOODS IN TRANSIT WITHOUT PROPER DOCUMENTATION. RULE 138 OF THE CGST RULES, 2017

RS.10,000/-

9 SECTION 150 OF THE CGST ACT, 2017.

THE TAXPAYER IS REQUIRED TO FURNISH THE INFORMATION RETURN.

FAILS TO FURNISH INFORMATION RETURN.

SECTION 123 OF THE CGST ACT,2018

RS.10,000/-

10

RULE 59(1) OF THE CGST RULES,2017 AND 61 (5) OF THE CGST RULES,2017

FURNISH OF MONTHLY RETURN FOR DETAILS OF OUTWARD SUPPLIES OF GOODS OR SERVICES AND THE

OUTWARD AND INWARD SUPPLIES, DETAILS OF ITC AND THE DUTY LIABILITY.

NON-FILING OF GSTR 1 BEFORE THE DUE DATE,

LATE FEES RS.20 PER DAY FOR NIL RETURNS. AND RS.50 (RS.25 CGST + RS.25 SGST) PER DAY FOR OTHER RETURNS.

11

SECTION 16 OF THE CGST ACT,2017

NO REGISTERED PERSON IS ENTITLED TO AVAIL ITC UNLESS THE PERSON IS IN RECEIPT OF DUTY PAYING DOCUMENTS.

CLAIMING ITC ON THE BASIS OF FAKE DOCUMENT OR NON-RECEIPT OF GOODS OR SERVICES.

RS.10,000/- OR 100% OF ITC AVAILED WHICH IS HIGHER + INTEREST @24% p.a.

12

SECTION 35 OF THE CGST ACT,2017 AND RULE 56 OF THE CGST RULES,2017

PROPER MAINTENANCE OF ACCOUNTS AND RECORD IN THE PRINCIPAL PLACE OF BUSINESS AND BRANCHES AS WELL.

FAILURE TO MAINTAIN MANDATORY RECORDS.

SECTION 122 OF THE CGST ACT,2017

RS.25,000/-

13 SECTION 51 OF THE CGST ACT,2017 SUPPLIER REQUIRED TO DEDUCT TDS AND DEPOSIT IT WITH GOVERNMENT. FAILS TO DEDUCT TDS AND PAY TO THE GOVERNMENT. SECTION 122 OF THE CGST ACT,2017

RS.10,000/-

HOWEVER, THIS SECTION HAS BEEN POSTPONED TILL JUNE’18

14 SECTION 52 OF THE CGST ACT,2017 TCS REQUIRED TO BE COLLECTED BY THE E-COMMERCE OPERATORS AN THE SAME BE DEPOSITED WITH THE GOVERNMENT. FAILS TO COLLECT TCS AND PAY TO THE GOVERNMENT. SECTION 122 OF THE CGST ACT,2017

RS.10,000/-

HOWEVER, THIS SECTION HAS BEEN POSTPONED TILL JUNE’18

15 SECTION 125 OF THE CGST ACT,2017

GENERAL PENALTY PROVISION UNDER CGST ACT, 2017.

WHERE THE DEFAULT IS NOT PROVIDED WITH ANY PENALTY.

RS.25,000/-

OFFENCE WITH DO NOT ATTRACT ANY PENALTY

TYPE OF OFFENCE PENALTY
INCORRECT GST CHARGED NO PENALTY. NEW RETURN BE FILED WITH CORRECT GST AND APPLY FO REFUND OF ALREADY PAID ONE.
INCORRECT FILING OF GST RETURN NO PENALTY. INTEREST @18% BE PAID ON SHORTFALL AMOUNT
DELAY IN PAYMENT OF INVOICE. NO PENALTY. ITC CLAIMED, BE REVERSED, IF NOT PAID WITHIN 6 MONTHS.
CHARGING OF INCORRECT GST RATE NO PENALTY. INTEREST @18% BE PAID ON THE SHORTFALL.
  1. Does the GST act provide for any non-monetary penalty as well?

GST act also provides for imprisonment, where the amount of fraud is very high. The summary of punishment is as follows –

DEFAULT OF TAX IMPRISONMENT FINE
RS 100 – 200 LAKHS UPTO 1 YEAR APPLICABLE
RS 200 – 500 LAKHS UPTO 3 YEARS APPLICABLE
ABOVE RS 500 LAKHS UPTO 5 YEAR APPLICABLE

CBI issue Press Release : Former GST superintendent was fined INR 5 lakhs & given a 3-year Jail

The sentencing of the former GST superintendent to three years in prison and a fine of 5 lakhs for involvement in a bribery case, as indicated by the CBI press release, underscores the gravity of corruption within bureaucratic systems. It reflects the commitment of law enforcement agencies to uphold integrity and accountability in public service. Such actions serve as a deterrent against malfeasance and reinforce the principles of justice and transparency. for details refer Link 

CONCLUSION

After considering the above points, we can conclude, that the statutory provisions have been laid down under GST law for proper and timely compliances by the taxpayers. The provision of penalty has been specified, not only to control tax evasion but also to ensure smooth tax administration by the authorities.

Therefore, proper issuance of tax invoices for supplies of goods and services, timely filing of GST returns, timely payment of taxes, periodically reconciliation of accounting, rightly availing of input tax credit & its utilization, maintain & keep records at the principal place of business and each additional places of business, is required to be followed by each of the taxpayers.

As it is said, “Prevention is always better than cure.”, thus, to avoid penalties or prosecution, businesses should be very careful in GST compliance.

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