1. Offences and penalties go hand-in hand in any taxation statue. The GST law attempts to standardise the categories of offences in order to bring clarity in the quantum of penalty to a fixed amount, so that the discretion exercisable by the officer imposing the penalty is minimal. Despite this, the question of whether or not there was malafide intent in the non-compliance would continue to be relevant in determining the quantum of penalty.
2. The following table summarises the offences and the corresponding penalty:
Nature of Offence – When the trader:
• Supplies any goods without invoice;
• Issues invoice without supply of goods;
• Transports taxable goods without documents;
• Disposes or tampers goods detained or seized etc.;
• Collects tax amount but does not remit the same;
• Collects tax in contravention of the Act;
• Fails to deduct/ collect tax at source;
• Takes input tax credit (ITC) without receipt of supply;
• Takes or distributes credit in violation;
• Obtains refund by fraudulent means;
• Fails to get registered;
• Suppresses turnover;
• Gives false information;
• Manipulates financial records;
• Fails to maintain books of account;
• Fails to provide information, required documents;
• Obstructs/ prevents an officer in discharge of duty;
• Tampers or destroys evidence.
Higher of the following: 1. Rs. 10,000/-; or
2. An amount equivalent to:
· tax evaded;
· tax not deducted;
· tax not collected;
· excess ITC availed;
· excess ITC distributed;
· excess refund claimed.
(a) Tax not paid/ short-paid/ erroneously refunded, or input tax credit wrongly
(a) Higher of the following:
availed/ utilized is for any reason, other than by fraud or any wilful misstatement or suppression of facts to evade tax
(b) Tax not paid/ short-paid/ erroneously refunded, or input tax credit wrongly availed/ utilized is for any reason of fraud or any wilful misstatement or suppression of facts to evade tax
1. Rs. 10,000/-; or
2. 10% of tax due
(b) Higher of the following: 1. Rs. 10,000/-; or
2. Tax due
• Aids or abets any of the offences specified in Sl.No.1 above;
• Acquires possession of, or deals with any goods which he knows/ has reason to believe are liable to confiscation;
• Receives any supply of services in contravention;
• Fails to appear before an officer when summoned;
• Fails to issue invoice or record it;
• Residuary penalty.
Up to Rs. 25,000/-, subject to:
• Issuance of show cause notice;
• Opportunity of being heard;
• Explanation specifying the nature of breach, applicable provisions prescribing the penalty;
• Facts and circumstances of the case.
3. Detention, seizure & release of goods and conveyances in transit: Where any person transports/ stores goods while they are in transit in contravention of the provisions, such goods, along with the conveyance carrying such goods, and the related documents would be liable to detention / seizure. The payment towards the tax and penalty shall be made upon receipt of notice, for the release of goods / conveyance. After detention / seizure, the goods or conveyance shall be released,-
(a) on payment of the applicable tax and penalty equal to 100% of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to 2% of the value of goods or Rs. 25,000/-, whichever is less, where the owner of the goods comes forward for payment of such tax and penalty;
(b) on payment of the applicable tax and penalty equal to the 50% of the value of the goods reduced by the tax amount paid thereon and, in case of exempted goods, on payment of an amount equal to 5% of the value of goods or Rs. 25,000/ -, whichever is less, where the owner of the goods does not come forward for payment of such tax and penalty;
(c) upon furnishing a security equivalent to the amount payable under clause ( a) or clause (b) in such form and manner as may be prescribed
In this regard, the law has carved out a provision for the transporter to upload the details of interception on the GST Common Portal where a vehicle has been intercepted and detained for a period exceeding 30 minutes vide Rule 138D of the CGST Rules, 2017.
4. The GST law provides for confiscation of goods and/ or conveyances and levy of penalty where any person:
- Uses any conveyance for carriage of taxable goods in contravention of the provisions (unless the owner proves that it was without his knowledge/ connivance) ;
- Does not account for goods liable to tax;
- Makes taxable supplies without applying for registration;
- Supplies/ receives goods in contravention of provisions, with an intent to evade tax;
- Contravenes any of the provisions of the law with intent to evade tax.
CA. S. Venkatramani has drafted this article and CA. Virender Chauhan and CA. Venugopal Gella has reviewed the same.