Offences and Penalties attracted under GST

Introduction

Every law in India has its own compliances which if not complied with, shall lead to offences and penalties. The common types of offences reported every day by taxpayers are non-payment or short payment of taxes or improper availment or utilization of input tax credit or erroneous refund. Let us continue with our topic and learn the offences on which penalty is applicable.

Offences under GST

As per Section 122(1) of the CGST Act, where some offences are observed conducted by the taxpayers, they are then liable to a penalty of rupees ten thousand (Rs. 10,000/-) or an amount equivalent to the tax evaded or the tax not deducted or short deducted or deducted but not paid to the Government or input tax credit availed or passed on or distributed irregularly, or the refund claimed fraudulently, as  the case may be, whichever is higher.

Let us now discuss on which all particular offenses, the above stated penalty shall be applicable.

Where a taxable person –

1. supplies any goods or services or both without issue of any invoice or issues an incorrect or false invoice with regard to any supply.
2. Issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder.
3. collects any amount as tax but fails to pay the same to the credit of the Government beyond a period of three months from the date on which such payment becomes due.
4. Collects any tax in contravention of the provisions of this Act but fails to pay the same to the credit of the Government beyond a period of three months from the date on which such payment becomes due.
5. fails to deduct the tax or deduct an amount which is less than the amount required to be deducted under the said sub-section or where he fails to pay to the credit of the Government
6. fails to collect tax or collects an amount which is less than the amount required to be collected or he fails to pay to the credit of the Government, the tax collected as tax.
7. Takes or utilizes input tax credit without actual receipt of goods or services or both either fully or partially in contravention of the provision of this Act.
8. fraudulently obtains refund of tax under this Act
9. takes or distributed input tax credit in violation of section 20 or the rules made thereunder
10. Falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax due under this Act.
11. Is liable to be registered under this Act but fails to obtain registration
12. Furnished any false information with regard to registration particulars, either at the time of applying for registration or subsequently
13. Obstructs or prevents any officer in discharge of his duties under this Act.
14. Transports any taxable goods without the cover of documents as may be specified in this behalf.
15. Suppresses his turnover leading to evasion of tax under this Act.
16. Fails to keep, maintain or retain books of account and other documents in accordance with the provisions of this Act or the rules made thereunder.
17. Fails to furnish information or documents called for by an officer in accordance with the provisions of this Act or rules made thereunder or furnishes false information or documents during any
18. Supplies, transports or stores any goods which he has reason to believe are liable confiscation under this Act
19. Issues any invoice or document by using the registration number of another registered person.
20. Tampers with, or destroys any material evidence or document.
21. Disposes of or tampers with nay goods that have been detained, seized, or attached under this Act.

So, for all these offences, the penalty of Rs. 10,000 shall be chargeable which is stated in Section 122 (1) of CGST Act.

Offence in case of tax not paid/short paid/input tax credit wrongly availed

Where any of the registered persons supplying goods or services or both on which any tax has not been paid or short paid or erroneously refunded or where the input tax credit has been wrongly availed or utlised-

1. a) a penalty of 10,000 or 10% of the tax due from such person shall be paid where for any reason other than the reason of fraud or any willful misstatement or suppression of facts to evade tax.
2. b) a penalty equal to 10,000 or the tax due from such person, whichever is higher.

This offence where the tax is not paid or shortly paid or input tax credit is wrongly availed is covered under Section 122(2) of CGST Act.

Offence in case of aiding or abating offence or contravening provisions

As per Section 122(3) of CGST Act, where a person tries to do any of the offence specified below, he or she shall be liable to a penalty which may extend to Rs, 25,000.

So, a penalty of Rs. 25,000 shall be attracted where a person who:

1. aids or abets any of the offences specified in Section 122(1)
2. acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying or purchasing or in any other manner deals with any goods which he knows or has reason to believe are liable to confiscation under this Act or the rules made thereunder.
3. receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reason to believe are in contravention of any provisions of this Act
4. fails to appear before the officer of central tax, when issued with a summon for appearance to give evidence or produce a document in an enquiry.
5. fails to issue invoice in accordance with the provisions of this Act or rules made thereunder, or fails to account for an invoice in his books of account.

Failure to furnish information or GST return

Where the person who is required to furnish an information return under section 150 fails to do so within the period specified in the notice issued under section 150(3), the officer may direct that such person shall be liable to pay a penalty of one hundred rupees for each day of the period during which the failure to furnish such return continue to be in existence. Also, as per the law the penalty under the section shall not exceed five thousand rupees.