Penalties

GST Offences and Penalties

First of all one thing which you should be knowing that penalties under GST are not special by any means. There were several penalties under excise act, sales tax act and service tax act earlier. Penal provisions of the GST Act has also got inspired by earlier acts only. So actually do not need to worry much as far as these penalties are concerned. Penalties under CGST Act 2017 have been specified from the section 122 to section 138. We are here to simplify every concept of the tax laws as much as we can. So we have summarized the offences and penalties and tried to explain in the very simple word.

Following are the Offences and their Penalties under the CGST Act 2017

S.No. Section Offence Penalty
1 122(1) (i)

Supplies any goods or services or both without the issue of any invoice or issues an incorrect or false invoice with regard to any such supply

Amount of the tax evaded/sought to be evaded or rs. 10000 whichever is higher
2 122(1) (ii) Issues any invoice or bill without the supply of goods or services or both in violation of the provisions of this act or the rules Amount of the tax evaded/sought to be evaded or rs. 10000 whichever is higher
3 122(1) (iii) Collects any amount as the tax but fails to pay the same to the government beyond a period of three months from the date on which such payment becomes due Amount of the tax evaded/sought to be evaded or rs. 10000 whichever is higher
4 122(1) (iv) Collects an amount of tax which is higher than the amount which should be collected Amount of the tax evaded/sought to be evaded or rs. 10000 whichever is higher
5 122(1) (v)/(vi) Fails to deduct or collect the tax (TDS or TCS) or short deduction or the short collection of tax Amount of the tax which was not collected or deducted or short collected or short deducted or Rs. 10000 whichever is more
6 122(vii) Takes or utilises input tax credit without actual receipt of goods or services or both either fully or partially Amount of input tax credit availed of or Rs. 10000 whichever is more
7 122(viii) Fraudulently obtains a refund of tax i.e. Gst Amount of tax refund or Rs. 10000 whichever is more
8 122(x) Falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax due Amount of tax sought to be evaded or  Rs. 10000 whichever is more
9 122(xi)/(xii) Fails to obtain a GST registration where he was liable to obtain the registration or furnishes wrong particulars for GST registration Rs. 10000
10 122(xvi) Fails to keep, maintain or retain books of account and other documents in accordance with the provisions of this act Rs 10000
11 125 *Residual penalty

Rs 25000

*A Residual penalty is always provided under all acts which are charged to any contravention or the offences for which no separate penalty is prescribed.

No Penalty for Minor breaches.

An Officer can not impose any penalty for minor breaches of tax regulations or procedural requirements and in particular, any omission or mistake in the documentation which is easily rectifiable and made without fraudulent intent or gross negligence.

Explanation-

(a) a breach shall be considered a ‘minor breach’ if the amount of tax involved is less than five thousand rupees;

(b) an omission or mistake in documentation shall be considered to be easily rectifiable if the same is an error apparent on the face of the record.

Imprisonment under GST Act 2017

Till here we have discussed offences and their penalties in the table. Now we also tell you the prosecution part under GST Act 2017. Imprisonment under GST act is categorized into three major parts and we are describing them below:

Note: The Imprisonment described under point no. (i) to (iii) are related for all of the offences as described in section 122 of CGST Act 2017 except the (iv) point.

(i) In cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds five hundred lakh i.e. 5 crores rupees with imprisonment for a term which may extend to five years and with fine.

(ii) In cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds two hundred lakh i.e. 2 crores rupees but does not exceed five hundred lakh rupees, with imprisonment for a term which may extend to three years and with fine.

(iii) In the case of any other offence where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds one hundred lakh i.e. 1 crore rupees but does not exceed two hundred lakh rupees, with imprisonment for a term which may extend to one year and with fine.

(iv) In the case where a person falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information with an intention to evade payment of tax due or obstructs or prevents any officer in the discharge of his duties under this Act or  tampers with or destroys any material evidence or documents then  he shall be punishable with imprisonment for a term which may extend to six months or with fine or with both.

Law of Natural Justice in CGST Act 2017

It is also to be noted that law of natural justice should be held good for CGST Act also. It means that penalty cannot be imposed on any person without giving him an opportunity of being heard.

Penalties for E way bill | Transporters | Sender of Goods | Recipient of Goods

Section 129 of the CGST Act 2017 provides that

A taxable person, Registered person and any person, transport any taxable goods without the cover of documents as may be specified in this behalf i.e. E-way bill; shall be liable to a penalty of Rs. 10,000/- or tax sought to be evaded, whichever is higher.

Documents to be carried with the conveyance i.e. transport vehicle. Things which a transporter must take care of.

A person in charge will carry the following document with the conveyance:

a. Invoice, Bill of supply or delivery challan

b. Copy of EWB or number of EWB required only in case of transport by road.

Invoice reference number (IRN) can also be obtained in place of actual invoice copy. Such IRN shall be valid for 30 days. Such IRN can be obtained by filling GST INV-1

EWB not required in exception cases: commissioner by notification, allow to keep the following document with conveyance in place of EWB.

Penalties for the subsequent offence under GST Act

Where any person convicted of an offence under this section is again convicted of an offence under this section, then, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to five years and with fine.

Whether the offences under GST Act are bailable or not?

Section 132 (4) of the CGST Act 2017 provides that Notwithstanding anything contained in the Code of Criminal Procedure, 1973, all offences under this Act, except the offences referred below shall be noncognizable and bailable.

When will an offence be Non-bailable i.e. cognizable?

An offence will be Non-bailable one If an offence is falling under the points 1,2,3 and or 6 of the table above and In cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds five hundred lakh i.e. 5 crores rupees with imprisonment for a term which may extend to five years and with fine.