What are GST Offences, Penalties, and Appeals

Atul Mittal

May 7, 2019

GST Offences, Penalties and Penalties

To make GST a corruption-free and successful tax system, the government has introduced strict provisions for penalties against GST offences. The purpose is to make sure that GST rules and laws are followed by every business and individual throughout the country.

A list of 21 offences has been released by the GST committee along with the guidelines of penalties to be applied for any kind of tax evasion. These offences will lead to a penalty against those following tax fraud, fake invoices, tax evasion and other practices in any form.

Offenses Under GST

Here’s the list of 21 offences identified under GST:

  • Selling products or services without producing a valid tax invoice or using a wrong/fake invoice.
  • Issuing a fake invoice without actually making the sale.
  • Using GSTIN of someone else.
  • Providing false information during GST registration.
  • Providing false information when filing tax returns or filing false returns.
  • Providing false information during assessment proceedings.
  • Not submitting tax collected to the government within three months.
  • Not submitting false tax deducted (In contravention of GST provisions) within 3 months.
  • Claiming or obtaining a GST refund by fraud.
  • Claiming ITC (Input Tax Credit) without providing the actual supply receipt.
  • Understating the actual sales during a particular period to evade tax.
  • Transporting of goods without proper documentation.
  • Supplying or transporting any products that are liable to confiscation.
  • Tampering with the products that have been confiscated by law.
  • Non-registration even if the person is liable to pay tax
  • Not deducting TDS even where applicable or deducting lesser amount
  • Not deducting TCS even where applicable or deducting lesser amount
  • Not distributing tax credits or distributing against the law provisions
  • Preventing any tax officer in performing his duties
  • Not maintaining proper account books as required by law
  • Destroying an evidence intentionally

Apart from these 21 offences, there is one more offence which is punishable under GST that of registering for composition scheme, even if the person is not eligible for it. If any of these offences are committed by a company, then the company and the officer-in-charge will be liable to borne the penalty.

Penalties Under GST

There is a provision of penalty for every kind of GST offence as mentioned in the above list.The various GST penalties are described below.

For unintentional tax frauds: Any person not paying tax on time or paying less amount has to pay a 10% penalty subject to a minimum of Rs. 10,000, in addition to the due tax amount.

For intentional tax frauds: The responsible person has to pay 100% penalty subject to a minimum of Rs. 10,000.

In addition to fine, the following punishments (jail-term) are also liable in some cases.

  • Jail up to 1 year for tax fraud of 50 lakhs to 100 lakhs
  • Jail up to 3 years for tax fraud of 100 lakhs to 250 lakhs
  • Jail up to 5 years for tax fraud of 250 lakhs and above

Inspection/Search Under GST: If and when the Joint Commissioner of CGST/SGST has reasons to believe that a person has intentionally hidden transactions to evade tax or claimed more tax credits, then he can authorize any GST officer to inspect and search the suspected place of business.

Seize under GST: Based on the inspection/search results, Joint Commissioner can order to seize the concerned property, if any goods are found which are liable to confiscation or if the officer believes that any of the documents/books can be useful during the proceedings.

Penalties for Goods in Transit: An authorized GST officer can intercept a vehicle to inspect the goods and prescribed documents. If any violation of any GST act is found, the officer can charge a fine or seize the vehicle.

Compounding of Offences: To avoid litigation, the responsible person has to appear before the Magistrate for every hearing. The compounding option is not available for amount value higher than 1 crore.

Prosecution and Arrest: This involves legal criminal proceedings in any intentional tax fraud case.

A tax fraud person with offence u/s 92 or above can be arrested by an authorized GST officer. The arrested person has to appear before the respective Magistrate within 24 hours of his arrest.

Appeals Under GST

An appeal is a process of filing a request in a higher court against the decision made by a lower court. Appeals under GST are allowed as per the following system.

  • 1st Appeal – First Appellate Authority – Under section 71 of law
  • 2nd Appeal – Appellate Tribunal – Sections 81, 82, 83 & 84
  • 3rd Appeal – High court – Section 87
  • 4th Appeal – Supreme Court – Section 88, 89

It is important to maintain the level of appeals as prescribed above. Any person can appeal against a decision made by an authority against him under GST to the next level authority only.

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