GOODS AND SERVICES TAX OFFENCES AND PENALTIES

Transcription

1 GOODS AND SERVICES TAX OFFENCES AND PENALTIES

2 Basic Principles for Levy of Penalty (S. 126 of CGST Act) These are to be followed mandatorily, in view of the word shall existing in majority of the sub-clauses. No penalty for minor breaches (where amount of tax involved is less than Rs. 5,000) No penalty in respect of any omission or mistake in documentation, which is easily rectifiable and made without fraudulent intent or gross negligence. Penalty to be commensurate with severity of breach No penalty without notice and hearing Reason to be given for imposing penalty Lower penalty if breach is voluntarily disclosed The provisions are not applicable, when law specifies a fixed amount or percentage of penalty 2

3 Penal Provisions for non-payment or short payment of tax, erroneous refunds, or wrong availment or utilization of Input Tax Credit. Section Nature of Offence Penalty Section 73(5) and Section 73(6) of CGST Act, 2017 Section 74(5) and Section 74(6) of CGST Act, 2017 Section 73(8) of CGST Act, 2017 Where the assessee pays the tax and Interest thereon, on own ascertainment or on ascertainment by proper officer, before SCN, and informs the proper officer and where there is no charge of suppression of facts, fraud or wilful misstatement on the assessee. Where the assessee pays the tax and Interest thereon, on own ascertainment or on ascertainment by proper officer, before SCN, and informs the proper officer and where there is a charge of suppression of facts, fraud or wilful misstatement on the assessee. Where the assessee pays the tax and Interest thereon, within 30 days of the date of issue of SCN, but before the adjudication order and where there is no charge of suppression of facts, fraud or wilful misstatement on the assessee. No Penalty. No SCN (show-cause notice). Matter stands concluded. Penalty = 15% of Tax. No SCN (show-cause notice). Matter stands concluded. No Penalty. Matter stands concluded. 3

4 Penal Provisions for non-payment or short payment of tax, erroneous refunds, or wrong availment or utilization of Input Tax Credit (contd) Section Nature of Offence Penalty Section 74(8) of CGST Act, 2017 Where the assessee pays the tax and Interest thereon, within 30 days of the date of issue of SCN, but before the adjudication order and where there is a charge of suppression of facts, fraud or wilful misstatement on the assessee. Penalty = 25% of Tax. Matter stands concluded. Section 73(9) of CGST Act, 2017 Where the assessee pays the tax. Interest and reduced penalty after adjudication order and where there is no charge of suppression of facts, fraud or wilful misstatement on the assessee. Penalty = 10% of Tax or Rs. 10,000/-; whichever is higher. Section 74(1) and Section 74(11) of CGST Act, 2017 Where the assessee pays the tax. Interest and reduced penalty after adjudication order and where there is a charge of suppression of facts, fraud or wilful misstatement on the assessee. Penalty = 100% of Tax or Penalty = 50% of Tax, if paid within 30 days from communication of order. Matter stands concluded. 4

5 Penal Provisions for non-payment or short payment of tax, erroneous refunds, or wrong availment or utilization of Input Tax Credit (contd. ) Section Nature of Offence Penalty Section 73(11) of CGST Act, 2017 Where an amount of selfassessed tax or Interest (as per return) thereon remains unpaid for a period exceeding 30 days. Penalty = 10% of Tax. Section 10(5) of CGST Act, 2017 Where a person opts and pays tax under Composition Scheme, despite being ineligible for opting such scheme. Penalties under section 73 or 74, as above, shall apply mutatis mutandis. Note: Once Penalties under section 73 or 74 of the CGST Act, 2017 are paid, all proceedings are deemed to be concluded, and penalty cannot be imposed under any other provision of GST Law. (However, prosecution proceedings can be initiated) 5

6 Penal Provisions for Other Offences under the GST Acts. Section Nature of Offence Penalty Section 122(1) of CGST Act, 2017 The following 21 offences are covered under this section:- 1. Making a supply without invoice or with false/ incorrect invoice; 2. Issuing an invoice without making supply; 3. Not paying tax collected for a period exceeding three months; 4. Not paying tax collected in contravention of the CGST/SGST Act for a period exceeding 3 months; 5. Non-deduction or lower deduction of tax deducted at source or not depositing tax deducted at source under section 51; 6. Non-collection or lower collection of or non-payment of tax collectible at source under section 52; 7. Availing/utilizing input tax credit without actual receipt of goods and/or services; 8. Fraudulently obtaining any refund; 9. Availing/distributing input tax credit by an Input Service Distributor in violation of Section 20; 10. Furnishing false information or falsification of financial records or furnishing of fake accounts/ documents with intent to evade payment of tax; 11. Failure to register despite being liable to pay tax; 12. Furnishing false information regarding registration particulars either at the time of applying for registration or subsequently; Rs. 10,000/- Or Amount Equivalent Tax Evaded; Whichever higher. to is 6

7 Penal Provisions for Other Offences under the GST Acts (contd.) Section Nature of Offence Penalty Section 122(1) of CGST Act, Obstructing or preventing any official in discharge of his duty; 14. Transporting goods without prescribed documents; 15. Suppressing turnover leading to tax evasion; 16. Failure to maintain accounts/documents in the manner specified in the Act or failure to retain accounts/documents for the period specified in the Act; 17. Failure to furnish information/documents required by an officer in terms of the Act/Rules or furnishing false information/documents during the course of any proceeding; 18. Supplying/transporting/storing any goods liable to confiscation; 19. Issuing invoice or document using GSTIN of another person; 20. Tampering/destroying any material evidence; 21. Disposing of /tampering with goods detained/ seized/attached under the Act. Rs. 10,000/- Or Amount Equivalent to Tax Evaded; Whichever is higher. Section 122(2)(a) of CGST Act, 2017 Where any registered person supplying goods/services/both has not paid or short paid or erroneously refunded, any tax, or has wrongly availed or utilized Input Tax Credit, and where there is no charge of suppression of facts, fraud or wilful misstatement on the assessee. Rs. 10,000/- Or 10% of Tax; Whichever higher. is 7

8 Penal Provisions for Other Offences under the GST Acts (contd.) Section Nature of Offence Penalty Section 122(2)(b) of CGST Act, 2017 Where any registered person supplying goods/services/both has not paid or short paid or erroneously refunded, any tax, or has wrongly availed or utilized Input Tax Credit, and where there is a charge of suppression of facts, fraud or wilful misstatement on the assessee. Rs. 10,000/- Or Tax Due; Whichever is higher. Section 122(3) of The Penal clause under this section is for any person (who may or may Extending to Rs. 25,000/-. CGST Act, 2017 not be a registered taxable person), committing the following offences:- 1. Who aids or abets any of the 21 offences as specified under section 122(1) above; 2. Who deals in any way (whether receiving, supplying, storing or transporting) with goods that are liable to confiscation; 3. Who receives or deals with supply of services in contravention of the Act, 4. Who fails to appear before an authority who has issued a summon; 5. Who fails to issue any invoice for a supply or account for any invoice in his books of accounts 8

9 Penal Provisions for Other Offences under the GST Acts (contd.) Section Nature of Offence Penalty Section 123 of CGST Act, 2017 Failure to furnish an Information Return under section 150 of the Act, within the time specified in the notice issued by a proper officer. Rs. 100/- per day, subject to a maximum of Rs. 5,000/- Section 124 of CGST Act, 2017 Section 125 of CGST Act, 2017 Failure to furnish or furnishing of any false information or return under section 151 of the Act, within the time specified in the notice issued by a proper officer. Residual Penalty: For Contravention of any of the provisions of the Act or Rules made thereunder, for which no separate penalty is provided under the Act. For non-continuing offence: up-to Rs. 10,000/-. For continuing offence: up-to Rs. 10,000/- + Rs. 100/- per day subject to a maximum of Rs. 25,000/- Up-to Rs. 25,000/- 9

10 Detention and/or Seizure of goods or conveyance (Section 129 of the CGST Act, 2017) Circumstances a) Where the owner of the goods comes forward for payment of tax and penalty, in case of;- i) Such detained or seized goods. Remedy/Penalty Such detained or seized goods, shall be released upon payment of applicable Tax+100% of Tax as Penalty. Or; On furnishing of security equivalent to the said amount. ii) Exempted goods. Penalty = 2% of Value of goods Or Rs. 25,000/-; Whichever is less. Or On furnishing of security equivalent to the said amount. 10

11 Detention and/or Seizure of goods or conveyance (Section 129 of the CGST Act, 2017) (contd.) Circumstances a) Where the owner of the goods does not come forward for payment of tax and penalty, in case of;- i) Such detained or seized goods. Remedy/Penalty Such detained or seized goods, shall be released upon payment of applicable Tax+50% of Value of goods before tax, charged as penalty. Or; On furnishing of security equivalent to the said amount. i) Such detained or seized goods. On furnishing of security equivalent to the said amount. ii) Exempted goods. Penalty = 5% of Value of goods Or Rs. 25,000/-; Whichever is less. Or On furnishing of security equivalent to the said amount. 11

12 Offences warranting prosecution under GST Section 132(1) of the CGST Act, 2017, states that any person who commits the following offences:- Supplies any goods or services or both, in contravention of the provisions of the Act or Rules, without an invoice,with the intention to evade tax; Issues any invoice without supplying any goods/services- thus leading to availment or utilization of wrong input credit or refund of tax. Avails any input tax credit based on invoice or bill under clause (2) above. Collects any amount as tax, but does not deposit it to the government accounteven beyond 3 months from the due date. Evades tax, fraudulently avails input tax credit, or obtains any refund by fraud, in cases not covered under (1) to (4) above. Falsifies or substitutes financial records/documents or produces fake accounts or documents or furnishes any false information, with an intent to evade tax. Obstructs the proper officer during discharge of his duty Supplying/transporting/storing any goods liable to confiscation; Acquires/receives supply of anyservices in violation of GST Act or Rules. Tampers or destroys any material evidence or documents. Fails to provide information/gives false information during proceedings Attempts to commit or abets the commission of any offences as mentioned above. shall be liable to prosecution,which shall be as per the next slide. 12

13 Offences warranting prosecution under GST (contd.) Amount of Tax Evasion Nature of Offence Imprisonment Term& Fine Exceeding Rs. 1 Crore and up-to Rs. 2 Crore. Non-Cognizable Bailable and Remarks Up-to 1 year + Fine Applicable for 12 specified offences u/s 132(1) of the Act. Up-to 3 years + Fine Applicable for 12 specified offences u/s 132(1) of the Act. Up-to 5 years + Fine Applicable for offences under clauses (1), (2), (3) and (4) of section 132(1) of the Act. Exceeding Rs. 2 Crore and Non-Cognizable and up-to Rs. 5 Crore. Bailable specified offences u/s Exceeding Rs. 5 Crore Cognizable and Non- Bailable Exceeding Rs. 5 Crore Non-Cognizable and Bailable Up-to 5 years + Fine Applicable for offences under clauses (5) to (12) of section 132(1) of the Act. 13

14 Liability of Officers and certain other persons (Section 133 of the CGST Act, 2017) Where any person engaged in connection with:- the collection of statistics under section 151 or compilation or computerisation thereof; or if any officer of central tax having access to information specified under sub-section (1) of section 150; or if any person engaged in connection with the provision of service on the common portal or the agent of common portal; wilfully discloses any information or the contents of any return furnished under this Act or rules made thereunder otherwise than in execution of his duties under the said sections or for the purposes of prosecution for an offence under this Act or under any other Act for the time being in force, he shall be punishable with imprisonment for a term, which may extend to six months or with fine which may extend to twenty-five thousand rupees, or with both. Any person: who is a Government servant shall not be prosecuted for any offence under this section except with the previous sanction of the Government; who is not a Government servant shall not be prosecuted for any offence under this section except with the previous sanction of the Commissioner. 14

15 Offences by Companies and certain other persons(section 137 of the CGST Act, 2017) (1) Where an offence committed by a person under this Act is a company, every person who, at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. (2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any negligence on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. 15

16 Offences by Companies and certain other persons(section 137 of the CGST Act, 2017) (3) Where an offence under this Act has been committed by a taxable person being a partnership firm or a Limited Liability Partnership or a Hindu Undivided Family or a trust, the partner or karta or managing trustee shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly and the provisions of sub-section (2)shall, mutatis mutandis, apply to such persons. (4) Nothing contained in this section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence 16

17 Compounding of Offences (Section 138 of the CGST Act, 2017) Offences that may be compounded: Any offence under the act; before or after institution of prosecution; can be compounded by a competent authority on payment of a compounding amount; to be paid by the accused; to the Central/ State Government, as the case may be. Compounding shall be allowed only after making payment of Tax, Interest and Penalty involved in such an offence. Compounding of offence shall also not effect, the proceedings, if any, instituted under any other law. 17

18 Compounding of Offences (Section 138 of the CGST Act, 2017) Offences which cannot be compounded In terms of the first proviso to section 138(1) of the CGST Act, 2017, the offences cannot be compounded in respect of the following persons:- a person who has been allowed to compound once in respect of any of the offences specified in clauses (1) to (6) of sub-section (1) of section 132 and the offences specified in clause (12) which are relatable to offences specified in clauses (1) to (6) of the said sub-section; a person who has been allowed to compound once in respect of any offence, other than those in clause (a), under this Act or under the provisions of any State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act or the Integrated Goods and Services Tax Act in respect of supplies of value exceeding one crore rupees; a person who has been accused of committing an offence under this Act, which is also an offence under any other law for the time being in force; a person who has been convicted for an offence under this Act by a court; a person who has been accused of committing an offence specified in clause (7) or clause (10) or clause (11) of sub-section (1) of section 132; and any other class of persons or offences as may be prescribed: 18

19 Other provisions Amount of Compounding fees Minimum: Rs. 10,000/- or 50% of Tax, whichever is higher Maximum: Rs. 30,000/- or 150% of Tax, whichever is higher Abatement of further proceedings On payment of the compounding amount, no further proceedings shall be initiated against the accused person for the same offence and any criminal proceedings, ifalready initiated, shall stand abated. 19

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