GST mein kisiko nahi 'Banana' - Charging incorrect GST

CA Umesh Sharma , Last updated: 07 August 2019  

Arjuna (Fictional Character): Krishna, What do you mean by charging incorrect rate of GST?

Krishna (Fictional Character): Arjuna,  charging incorrect rate of tax refers to short or excess collection of tax amount by the taxpayer other than the rate actually applicable.

For example, A fruit seller sells fresh fruit like 'Banana' sale of which under GST is exempt. However, seller wrongly charges 18% of GST on such sale. Then, it is charging an incorrect rate of GST and penalty can be levied on such instance.

Even heading 'GST mein kisiko nahi Banana' means taxpayer should not mislead and should comply with all the provisions. Here, 'Banana' refers to 'ulu banana' which is common Hindi idiom which means misleading.

Arjuna: Krishna, an actor has posted video on social media which instantly became viral and became hot topic of debate, what was it about?

Krishna: Arjuna, an actor had last week posted a video on social media which revealed the fact that a pair of bananas cost him Rs 442.50. As per the bill that the actor showed in the video, the hotel had charged a base price of Rs 335 for two bananas and levied 18 percent GST over it.

Department of the Union Territory of Chandigarh imposed a fine of Rs. 25,000 on the hotel after it failed to give satisfactory reply on a show-cause notice served. Rounds of discussion were held on question that how can hotel charge 18% GST on such exempt supply. But the hotels are service provider and GST rate of 5% or 18% is applicable, depending upon the category of hotel. Even rate of 28% is applicable in case of 5-Star Hotels. Thus, one needs to be careful while determining the rate of GST applicable.

Arjuna: Krishna, What is penalty for charging incorrect rate of GST?

Krishna: Arjuna, Section 122 of CGST Act deals with penalty for charging incorrect rate of GST. If any registered person who supplies any goods or services or both on which any tax has not been paid or short-paid or erroneously refunded, then penalty of:

(a) Rs. 10,000 or, (b) 10% of the tax due from such person, higher of the above shall be levied.

Arjuna: Krishna, What should one learn from this?

Krishna: Arjuna, The supplier should charge applicable rate of GST. In case, if taxpayer wrongly collects excess tax then taxpayer should remit such excess collection of tax to Government. One should be careful while charging as well as collecting tax. Hence, 'GST mein kisiko nahi Banana' ie 'ulu banana' by charging incorrect rate of tax.

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CA Umesh Sharma
Category GST   Report

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