GST offence and GST Penalties

GST Law has made strict provisions for the offenders with respect to penalties, prosecution, and arrest for prevention of tax evasion and corruption.

Offences under GST Act:

As a part of legal framework for the GST Act, there are 21 offences under the GST Law and specific penalties are also prescribed on such offences.

Here is the list of 21 offences grouped as per the nature of the offence:

GST Offences related to fake/wrong Invoice and Documentation

• A taxable person issues false/incorrect invoice or doesn’t issue invoice for goods/services that have been supplied.
• He Issues GST invoice without making actual supply of goods or services
• He Issues an invoice or document using GSTIN (identification number) of another taxable person.

GST Offences related to transport/supply of goods

• A taxable person transports taxable goods without adequate or correct documentation
• Supplying or transporting or storing any goods that he knows are liable to be confiscated
• Destroying or tampering with goods that have been attached, seized or detained under GST Act.
• He fails to maintain relevant documents/records as required by GST Act

GST Offences related to Fraudulent Intent

• Submission of false information at the time of GST registration or at a later date
• Obtaining the GST refund by fraud.
• Submission of fake financial statements/documents/records or providing false information to evade tax.
• Not providing the required information or giving false information during proceedings
• A taxpayer doesn’t register under GST even though he is liable to registered under GST Act

GST Offences related to Tax Evasion

• Deliberately under reporting or suppressing turnover to evade tax
• Collected the tax from receiver of goods/services and failed to pay the same to the government within three months of collection
• In case of collection of tax in contravention of provisions specified by the GST Act and Failed to pay tax to the government within three months of due date.
• Availing or utilizing Input tax credit (ITC) without actual receipt/supply of goods or services
• Non deduction of TDS or deducting TDS amount less than the actual amount or not paying the tax to the government
• Non deduction of TCS or deducting TCS amount less than the actual amount or not paying the tax to the government

GST Offences related to Obstruction

19. A taxpayer obstructs/prevents any officer from discharging his/her duties.
20. He destroys any document or material evidence
21. Providing false documents or failure to furnish documents/information demanded by an officer.

Penalties under GST Act

If any of the offenses are committed then a penalty will have to be paid under GST. Under GST Law, penalties are defined for every kind of committed offence.

A penalty may include both corporal (jail) and pecuniary (monetary), here are the type of pecuniary penalties as per GST Law.

Penalty for late filing of GSTR

The late filing of GST return attracts the late fee which is Rs. 100 per day per Act. So it is 100 under CGST & 100 under SGST. Hence, the total GST fee will be Rs. 200 per day.

However, the maximum fee is Rs. 5,000 and also there is no late fee on IGST in case of delayed filing.

Note: It should be noted that along with late fee, interest shall also be levied at 18% per annum on the amount of tax to be paid from the next day of filing till the date of payment.

Penalty for not filing GSTR

In such case, Penalty hall be 10% of tax due or Rs. 10,000, whichever is higher.

Penalty in case of fraud under GST

For the 21 offenses with the intention of fraud or tax evasion: An offender who has committed fraudulent activities intentionally, has to pay a penalty amount of tax evaded/short deducted etc., i.e., 100% penalty, subject to a minimum of Rs. 10,000.

Penalty for other cases

For the 21 offenses with no intention of fraud or tax evasion: An offender not paying tax or making short payments must pay a penalty of 10% of the tax amount due subject to a minimum of Rs. 10,000.

Penalty for helping someone to commit fraud under GST

Penalty of any person other than a taxable person commits the following offences, and then he shall also be liable to pay a penalty of Rs. 25,000:

• Helps any person to commit fraud under GST
• Acquires goods or services knowingly that these are against the provisions of GST
• Fails to issue genuine invoice
• Fails to maintain or vouch for the books of accounts
• Fails to appear before the relevant authority upon a summon issued to his name,

General penalty

Penalty for any Offence Where No Separate Penalty has been prescribed

If a person commits any offence for which separate penalty has not been prescribed, then the quantum of penalty can go as high as Rs. 25,000.

No penalty for minor breach under GST:

Sometimes, the mistakes are committed unknowingly or without any malicious intention. Therefore, to save innocent persons from burden of penalties, the GST law has laid down some conditions where no penalty shall be charged in case of minor breach:

• Where the errors are easily rectifiable and clearly made without any intension of fraud and
• The amount of tax involved is Rs. 5,000 or less.

Offences without GST Penalties

Certain offences are not covered under GST law for the purpose of levying the penalty. However, these GST offences are liable to pay interest at a specified rate (18% per annum) on the amount of tax under consideration.

The following are some offences where no penalty under GST is applicable:

• No GST penalty is applicable for charging incorrect GST such as charging CGST/SGST instead of IGST. To rectify the mistake, the registered person has to pay the correct GST and get a refund for the wrong payment of GST.
• In case of incorrect filing of GST returns, there shall be no penalty under GST Act for but interest at the rate of 18% p.a. is chargeable on the tax amount shortfall.
• No penalty is applicable for delayed invoice payments. However, any input tax credit claimed on such invoices is liable to be reversed if invoice payment is delayed beyond 6 months.
• No penalty under GST Act for charging a wrong GST rate (lower than the actual rate) but the registered business/person is required to pay interest at 18% annually on the shortfall in tax amount.