Arjuna (Fictional Character): Krishna, Today is Rakshabandhan. This festival is celebrated in whole India. On this holy occasion what information about GST you can give?
Krishna (Fictional Character): Arjuna, very good subject you have started. Yes, today is Rakshabandhan. It means sister bind the Rakhi to her brother and brother gives promise to protect his sister by following all the restrictions. Similarly, in GST if taxable person does trading by following all the restrictions, then only he will be protected from interest, penalty, etc. So let us do the detail discussion about these restrictions. These restrictions exactly mean the provisions of penalty under section 122 and section 132 of the Central goods and service tax act.
Arjuna: Krishna, which is the restriction of Tax Invoice in GST?
Krishna: Arjuna, if the registered person supplies goods or services or both then he is suppose to issue correct tax invoice to the receiver. But if the taxable person gives incorrect or false tax invoice then it means he has violated the restrictions of the Act and it is not possible to protect him.
Arjuna: Krishna, what is the restriction on supply and issue of invoice for that?
Krishna: Arjuna, the taxable person is liable to issue the invoice or bill without violation of the provisions of the act and rules made thereunder. But if the taxable person issues the invoice or bill without doing supply by violating the provisions then this act of taxable person will be liable to penalty.
Arjuna: Krishna, which is the third restriction on taxable person regarding tax payment?
Krishna: Arjuna, if any amount is collected as tax then within the period of three months from the date of that amount is payable is to be paid to the government. But if taxable person does not pay the amount after the expiry of period of three months then he will be liable to pay the penalty.
Arjuna: Krishna, Is there any other restriction on taxable person?
Krishna: Arjuna, Taxable person should take or utilized the Input Tax Credit subject to the provisions of act, supply of goods or services or both without invoices and claim for input tax credit, then it will be considered as taxable person has violated the restrictions of act and he will not be protected from the interests, penalties, etc payable under this act.
Arjuna: Krishna, is there any restriction on taxable person other than those?
Krishna: Arjuna, there are so many restrictions given in the act which are applicable to the taxable person. Like, claim refund should be in proper way, furnish proper details of accounts and records, give correct information about turnover, if the prescribed limit of turnover is crossed then take the registration, if purchases from unregistered person then pay the tax under Reverse charge mechanism, etc are the restrictions and taxable person should do the trading within those restrictions.
Arjuna: Krishna, what if the taxable person violate these restrictions?
Krishna: Arjuna, if the restriction are not followed then there are so many punishments like penalty, interest, etc. The taxable person may be liable to pay the penalties of atleast Rs. 10000, Rs. 25000 or 100% amount of tax evaded.
Arjuna: Krishna, what lesson taxpayer should take from this?
Krishna: Arjuna, Rakshabandhan is the festival of brother and sister. The relationship between seller and purchaser is also somehow similar. If the transactions of seller and purchaser matched, then only it would be treated as correct transaction. Similarly, taxable person should follow all the provisions of the GST act. They should do the trading in restrictions of the GST only. Then only they can be protected.