Offences and Penalties Under GST

Introduction

The GST law provides detailed description of offences and penalties that are applicable in each and every scenario.  This is essential information for the entire businessman and business owners. Any mistake done by tax professionals and CAs can cause severe consequences. For prevention of corruption and tax evasion, GST has provided strict provisions for the offenders with regard to prosecution, arrest and penalties.

Offences

Under GST law, there are 21 offences. Some of the main offences under GST are as follows;

• Not getting the registration under GST, although required by law
• Supplying goods and/or services without issuing any invoice or issuing a fake invoice
• Providing false information at the time of registering under GST
• Claiming or obtaining refunds by fraud
• Intentional suppression of sale for evading tax
• Opting the composition scheme through a taxpayer who is not eligible
• To evade tax providing false documents, files, financial records and fake returns

Penalty

Any offences committed are liable to pay penalty under GST law. The principles basing on which the penalties are imposed is mentioned below;

For late filing

Late filing of GST attracts late fee which is also known as penalty.  The late fee under GST is Rs. 100 per day.  Thus, it is Rs. 100 under CGST as well as SGST. The total will be Rs. 200 per day. However, the maximum penalty is Rs. 5000. However, in case of IGST, if there is a late filing or delay in filing, no late fee will be charged.

It is to be noted that along with late fee, interest of 18% per annum has to be paid. Generally, it is calculated by taxpayer on the tax amount that has to be paid. The time limit for the same will be from next day of filing to payment date.

For not filing

In case, a taxpayer does not file GST returns then subsequent returns also cannot be filed. For example, if GSTR-2 return for the month of August is not filed in that case GSTR-3 the next return and subsequent returns for the month of September cannot be filed. Thus, late filing of GST return can have a negative impact which leads to heavy penalty and fines.

Regarding 21 offenses with no intention of tax evasion or Fraud

An offender who is avoiding to pay tax or short payments are being made then he  has to pay 10% penalty of the tax amount due subject to minimum amount of Rs. 10,000. Considering, the tax has not been paid or any short payment made with a minimum penalty of Rs. 10,000. For unpaid tax maximum penalty is 10% of the tax unpaid.

 Regarding the 21 offenses with the intention of tax evasion or Fraud

An offender is required to pay a penalty amount deducted or evaded i.e. 100% penalty or minimum of Rs. 10,000. The following are some additional penalties;

It is to be noted that cases that comes under tax evasion and fraud are also liable to face penalties, prosecution, and arrest.

Inspection under GST

The Joint Commissioner or any higher officer of SGST/CGST must have reasons to believe that the person has actually suppressed transactions or has obtained excess input tax credit with regard to evade tax. Accordingly, the Joint Commissioner has the authority to assign any other officer for SGST and CGST for inspection of business place of the tax evader.

 Search & Seizure under GST

The Joint Commissioner of SGST/CGST has the authority to order to conduct a search. He can order for a search basing on the results of inspection, in case he has the following reasons to believe;

• In case the goods are confiscated
• The books or documents are found to be hidden somewhere. The said items can act as evidence at the time of proceedings.
• The aforesaid incriminating documents and goods can be seized.

Prosecution under GST 

The prosecution is known as the legal proceeding conducted against someone with regard to a criminal charge. A person who commits an offence with intention of fraud is liable for penalty as well as prosecution under GST which also includes criminal charges. Some of the examples of such offences are as follows;

• Issuing invoices without supplying goods and/or services with an intention to take input tax credit or claiming refund by fraud
• Claiming refunds from CGST or SGST by fraud
• Submission of false financial documents, files, records for tax evasion
• To help another taxpayer to commit fraud under CGST or SGST

Arrest under GST

If the Joint Commissioner of CGST or SGST thinks that the person who has committed a certain offence must be arrested under GST law by any authorized officer of CGST or SGST. However, the grounds of arrest must be conveyed to the arrest person. He will have to appear within 24 hours in front of the magistrate where the offence is cognizable.