GST Offences, and Penalties

To ensure the effective implementation of GST act, and to prevent the fraudulent activities in order to avoid the serious pecuniary liability for such activities it is very much important to understand the provisions of offences, penalties, and appeals provided under the GST Act, which shall be discussed in this article.

Offence

Offence means an illegal act or an act of doing something which results in a breach of law.

Offences listed under GST Act

Offences shall be liable to Penalty and some offences may liable to prosecution. Offences under GST are Broadly classified as follows

• Cognizable offences- Offences which results in arrest without warrant by the specially empowered officers.
• Non-bailable offences – Offences for which bail cannot be granted without the discretion of the court.
• Non-cognizable- Offences for which specially empowered officers have no authority to arrest without warrant.
• Bailable offences- Offences which has a right to grant of bail.

Following are the list of 21 types of offences, provided under the GST Act

Offences in relation to Registration

• Failure to obtain registration under the GST act despite being such a person is liable to get registration.
• Furnishing false information at the time of getting registration under GST or later on.

Offences in relation to Invoice

• A person supplies Goods/Services or both without invoice or with false/ incorrect invoice. 
• Person issues an invoice or bill without making any supply of Goods/Services or both
• Person Issues an invoice or bill using unauthorised or other persons GSTIN.

Offences in relation to Tax Payment

• Not remitting the collected tax to the government within the period of three months; 
• Not remitting the  tax collected in contravention to the provisions of the CGST/SGST Act within the period of 3 months; 
• Failure to deduct or lower deduction of tax deducted at source or not depositing tax deducted at source to the credit of government under section 51; 
• Failure to collect or lower collection of tax or not paying the tax collected at source under section 52. 
• Suppressing/Filing less turnover which leads to tax evasion.

Offences in relation to Input Tax Credit

• Input tax credit (ITC) utilization without actual receipt of goods and/or services; 
• Input tax credit (ITC) distribution in contravention to the provisions of the Act.

Offences in relation to Refund

• Obtaining Refund by means of fraudulent manner

Offences in relation to Accounts and documents

• With an intention to evade tax payments, the taxpayer provides false information or falsification of financial records or furnishing of fake accounts/ documents.
• Not maintaining accounts/documents in the manner specified in the Act or not retaining accounts/documents for the period specified in the Act.
• Not furnishing the information/documents required by an officer in terms of the Act/Rules or furnishing false information/forms during the course of any proceeding.
• Transporting goods without a proper set of documents as prescribed.

Offences in relation to Other matters

• Obstructing or stopping any officials in discharge of duties
• Supplying or transporting or storing any kind of goods which may lead to or liable to confiscation.
• Tampering any kind of significant material evidence.
• Tampering the goods which are detained or seized or attached under the Act.

Penalties under GST

Penalty

Penalty is a kind of punishment imposed to compensate for the loss made due to breach of law or non-compliance of the act.

Penalty for Certain Offences

The aforesaid offences or offences mentioned under section 122 of the GST act shall be liable to a penalty which shall be higher of the following

• Tax evaded amount, the amount obtained fraudulently as a refund, amount availed as credit or not deducted or collected or short deducted or short collected 

or

• Rs.10,000/- 

Penalty for Failure to Furnish Information in Return

Person who is required to furnish a return under Section 150 fails to furnish such information within the time specified in the notice issued under sub-section [3] thereof, the proper officer may direct that such person shall be liable to pay a penalty of Rs.100/- for each day of the period up to the date of furnishing such return.

Provided that the penalty imposed under this section shall be restricted to Rs.5,000/-.

General Penalty

As per section 125 of GST Act, a Penalty of up to Rs.25,000/- shall be levied on such person who contravenes any of the provisions of this Act or any rules made thereunder for which no penalty is separately provided under the Act.

General Disciplines related to penalty

Section 126 of the GST Act, lays down the following General Disciplines related to penalty:

The penalty under GST shall not be levied by the officer in case of minor breaches of tax regulations or procedural requirements and in particular, any omission or mistake in documentation which is easily rectifiable and which is made without any fraudulent intention or gross negligence.