GST: Offences, Penalties And Legal Proceedings

In July 2017, the Concept of Goods and Services Tax was introduced in India to ensure smooth flow of Taxes across the entire supply chain with a view to reduce Tax evasions, frictionless intrastate or interstate movement of Goods and an efficient tax collection system.

GST is a smooth taxation system which ensures that the Input Tax Credit is being channelised properly and tax collection becomes more transparent and efficient. Good support and powerback by GSTIN system, effective eway bill mechanism ensure that all the transactions have been on a recorded track.

GST Network ensures that the Returns have been filed on a timely manner and with deposition of taxes within the due dates and no operation hassles on the GST Taxpayer thereby reducing its operational cost, however, inspite of having a Good and Simple Tax Structure where some minimal returns have to be filed.GST has noticed some offences being committed and the offences are hereby described below:

Offences

The Type of Offences are hereby described as below;

1. Improper issuance of invoice for the supply of goods and services or both.
2. Use of Third Party GST Number to file improper GST Returns.
3. Bogus Claim of Input Tax Credit.
4. TDS being deducted and TCS being collected at less than the prescribed amount.
5. Improper or misleading information being provided while GST Registration.
6. Filing False GST Returns with improper or misleading information.
7. Claim of Bogus GST Refund.
8. Non-Cooperation by Taxpayer while Assessment Proceeding.
9. GST Collected by the Taxpayer and not deposited to the Government.
10. Sales being understated to evade tax.
11.  Mismatch in details of Goods being transported then the one declared in Eway Bill.
12.  Not obtaining GST Registration where it is mandatorily required.
13.  ISD distributing the input tax credit against the provision of Law.
14. Destroying or Tampering of Evidences with a view to Evade Taxes.
15. Sale of Goods or Services or both without an issuance of invoice.

Thereby considering the offences as prescribed above GST Tax authorities has described certain penalties and prosecution with a view to curb such malpractices being followed by the GST Taxpayers.

Penalties

The penalty depend upon the type of whether wilful or Non wilful. The penalty hereby described as below:,

Wilful Default

The GST Tax System imposes 100% penalty whether the intent of the taxpayer is wilfull to evade taxes subject to minimum of Rs 10,000.

Non-Wilful Default

GST Tax Structure imposes 10% penalty in case the tax evasion is by mistake or any unintentional mistake being committed subject to a minimum of Rs 10,000.

Imprisonment of Offences

Such imprisonment has been categorised based on some financial amount being fixed which is hereby described as below:

• For Tax Default from Rs 1Crore-Rs 2Crore: Upto 1Year.
• For Tax Default from Rs 2crore-Rs 5crore: Upto 3Years.
• For Tax Default above Rs 5crore: Upto 5 Years.

Decriminalisation of Offences

Certain Offences has been Decriminalised with a view to ensure that the Genuine Taxpayers shall not be affected by the GST Law.

1. Threshold limit of Rs 1crore has been increased to Rs 2 crore except Offence of Non-Issuance of Invoice for the Supply of Goods or Services or both.
2. Compounding Amount reduced from 50%-150% Tax amount to 25%-100%.
3. Decriminalised offence under clause (g), (j) and (k) of sub section (1) of Section 132 of the CGST ACT 2017 eg. Obstruction or Preventing officer from Discharge of Duties, Deliberate Tampering of material evidences, failure to supply the information.

Legal Proceedings

The Legal Proceedings shall include the steps to be taken by the Tax Authorities upon determination of any offence and the procedure to be followed by the Taxpayer upon the action which has been taken by the Tax authorities on them.

• Step 1. The Tax Authorities shall issue Show Cause Notice (SCN) upon determination of any offence and such SCN shall include the reason thereof along with reasonable opportunity being heard provided.
• Step 2. Upon receipt of SCN the Taxpayer has to reply the same within a reasonable time period or within the time period stated in the SCN.
• Step 3. It is the responsibility of the Tax Authority to justify the penalty being imposed by them as well as the nature of offence being committed.
• Step 4. Upon Examining the Reply the Tax Authority either will issue an order of demand or non demand or may further go for audit or investigation if the situation demands.
• Step 5. After the receipt of order either the Taxpayer can go for an appeal if unsatisfied with the demand order or may deposit if the Tax Default has been fully justified.

GIST

The above-said article talks about the GST Offences types, penalties and its legal proceedings which has been prescribed under GST Law. The GST is an efficient taxation system to ensure smooth flow of ITC and Taxes across the entire supply chain. The law also prescribes some penal actions to be taken wherever the supply chain gets disrupted due to any offence being committed. Also, provide some legal remedies to protect only Genuine Taxpayers.

Disclaimer: The Above said article is author viewpoint only,Please refer the respective sections,rules framed under GST Law.