About Penalty In GST

GST returns had to be compulsorily filed who has GST registration whether there is any turnover or not. Normal GST registered persons have to file monthly return and dealers who are registered under Composition Scheme are required to file quarterly GST returns and non-resident taxable persons are required to file one return every month. To make sure registered taxpayers file return at given frequency government has imposed fines, penalties and prosecution.

This would also help in preventing Tax Evasion and corruption as there are strict provisions or GST offenders.

Also government has introduced a system of compliance score, late filing, penalty and prosecution impacts that score very much.

Offenses In GST

Purchase Amount INR 1, 00,000

1. False Invoice or sale of goods/services without any GST Invoice.
2. Issue of GST invoice by using GST number of other Taxpayer.
3. Providing false information while registration of GST.
4. Collects any tax amount but fails to pay that amount to the credit of the appropriate authority beyond a period of 3 months from the date of which such payment becomes unpaid.
5. Obtaining refunds by fraud.
6. Deliberate suppression of sales to evade tax.
7. Non-registration under GST by a taxpayer, although required to by law.
8. Opting for composition scheme even though a taxpayer is ineligible.
9. Utilizes input tax credit without actual receipt of product or services either fully or partially.
10. Obstructs or prevents any officer in the discharge of his duty under this rule.
11. Transportation of any taxable goods without the cover of documents as may be described.
12. Fails to maintain the books of account and other documents in accordance with the provisions the rules made under the act.
13. Transportation of any goods which has a reason to be liable to confiscation under this act.
14. Disposal off or tampers with any materials that have been seized, detained, or attached under this act, then there will be a penalty of Rs. 10,000 or an amount equivalent to the tax evaded, the tax not deducted or short deducted or deducted but not paid to the Government or input tax credit availed of or distributed irregularly, or the refund claimed fraudulently, whichever the case is higher.
15. Acquires possession of, or concerns himself in transporting, eliminating, depositing, retaining, concealing, supplying, or buying or in any other manner deals with any goods in which the person is liable to confiscation under this act.
16. Receives or supply of services in any way or in any other manner deals with, which has a reason to believe are in contravention of any provisions of this rules under this act.
17. Fails to appear before the CGST/SGST officer, when issued with a summon for appearance to provide evidence or produce a data in an inquiry.
18. Fails to issue account for an invoice in the book of account in accordance with this provisions shall be liable to a penalty which may extend to Rs 25,000.

Opportunity To Hear

The First Appellate Authority shall give an opportunity to the appellant of being heard if he so desires.

1.Up to 3 Adjournment of hearing

The First Appellate Authority may, grant time, from time to time, to the parties or any of them and can adjourn the hearing of the appeal for reasons which needs to be recorded in writing. However, no such adjournment can be granted more than 3 times to a party during a hearing of the appeal.

2.Additional grounds at the time of hearing

The First Appellate Authority may, at the hearing of an appeal, allow an appellant to go into any ground of appeal not specified in the grounds of appeal if he is satisfied that the omission of that ground from the grounds of appeal was not willful or unreasonable.

Order by First Appellate Authority

The order of the First Appellate Authority disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reasons for the decision.

1.Time limit for passing order

The First Appellate Authority shall, hear and decide every appeal within a period of 1 year from the date on which it is filed. If there is stay on order of a Court or Tribunal, stay period wouldn’t be counted

2. Distribution of copies of order

Communication of order should be send to the appellant and to the adjudicating authority, also to jurisdictional Commissioner of CGST or the authority designated by him in this behalf and the jurisdictional Commissioner of SGST or the authority designated by him.

Penalty For Late Filing Of GST Return

A penalty of Rs.100 per day is applicable for late filing of GST return maximum upto INR 5,000.

If GST return for a month is not filed, then the next month GST return cannot be filed by the taxpayer. Further, if a taxpayer fails to file GSTR-1 return on the 10th, then the taxpayer would not be able to file GSTR-2 return on the 15th.

For cases with no intention of fraud or tax evasion

An offender not paying tax or making short payments has to pay a penalty of 10% of the tax amount due which is subject to a minimum of Rs. 10,000.

For cases of fraud

An offender has to pay a penalty amount of tax evaded/short deducted etc., i.e., 100% penalty which is subject to a minimum of Rs. 10,000.

Also additional penalties as follows may be imposed

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Goods In Transit

The person in charge of a vehicle carrying goods exceeding a specified value is required to carry certain prescribed documents as per GST Act, Officer has the power to intercept goods in transit and inspect the goods along with prescribed documents.

If the goods are in contravention to the GST Act then the goods along with related documents, and the vehicle carrying them will be seized, than the goods would be released only on payment of tax and penalty u/s 89.However before confiscating the goods, the tax officer shall give an option of paying a fine instead of confiscation.

Prosecution Under GST

Offence with deliberate intention of fraud, becomes liable to prosecution, i.e., face criminal charges. Few egs.

1. Taking input credit or refund by fraud.
2. Obtaining refund of any CGST/SGST by fraud.
3. Submitting fake financial records/documents/file/returns.
4. Helping another person to commit fraud under GST.

Arrest Under GST

If the Commissioner of CGST/SGST believes a person has committed an offence u/s 92 above, he can be arrested by any authorized CGST/SGST officer.

The arrested person will be informed about the grounds of his arrest. And he has to appear before the magistrate within 24 hours in case of a cognizable offence.

Compounding Of Offences

Compounding is a short cut method to avoid litigation. In case of prosecution for an offence in a criminal court, the accused has to appear before the Magistrate at every hearing through advocate. Compounding saves both time and money, compounding is not available for cases where the value exceeds 1 crore.