GST Offences, Penalties and Appeals Means

Posted on 10 June 2022 Category : GST terms

Term Offences, Penalties and Appeals under GST

A brief description about GST Offences, Penalties and Appeals is explained here. You may contact concerned government agency for latest update.

GST Offences, Penalties and Appeals:

Overview

To prevent tax evasion and corruption, GST has brought in strict provisions for offenders regarding penalties, prosecution and arrest.

Offences & Penalties

Offences

There are 21 offences under GST apart from the penalty under section 8 covering fake/wrong invoices, fraud, tax evasion and others.

i. Supply of any goods/services without any invoice or issue of a false invoice.

ii. Issue of invoices by a taxable person using the identification number of other bona fide taxpayer(s).

iii. Submission of false information while registering under GST.

iv. Submission of fake financial records/documents or files, or fake returns to evade tax.

v. Obtaining refunds by fraud.

vi. Deliberate suppression of sales to evade tax.

vii. Non-registration under GST by a taxpayer, although required to by law.

viii. Opting for composition scheme even though a taxpayer is ineligible.

Penalty

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 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, subject to a minimum of Rs. 10,000.

Additional penalties as follows-

Tax amount involved	50 lakhs	100 lakhs	250 lakhs
Jail term	Upto 1 year	Upto 3 years	Upto 5 year
Fine	Same as above	Same as above	Same as above

Cases of fraud also face penalties, prosecution and arrest.

Inspection under GST

If Joint Commissioner of SGST/CGST (or a higher officer) “has reasons to believe” that –

In order to evade tax, a person has suppressed any transaction or claimed excess input tax credit etc., then he can authorize any other officer of CGST/SGST (in writing) to inspect places of business.

Search & Seizure under GST

Joint Commissioner of SGST/CGST can order for a search on the basis of results of inspection or any other reason, if he has “reasons to believe” –

There are goods which are liable for confiscation
Any documents or books or other things which will be useful during proceedings and are hidden somewhere.

Goods in Transit

The person in charge of a vehicle carrying goods exceeding a specified value is required to carry certain prescribed documents.

The proper officer has the power to intercept goods in transit and inspect the goods and the prescribed documents.

If the goods are in contravention to the GST Act then the goods, related documents, and the vehicle carrying them will be seized. The goods will be released only on payment of tax and penalty u/s 89.

Before confiscating the goods, the tax officer shall give an option of paying a fine instead of confiscation.

Compounding of Offences under GST

Compounding of offences 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 an advocate. Compounding will save time and money. However compounding is not available for cases where the value involved exceeds 1 crore.

Prosecution under GST

Prosecution is the conducting of legal proceedings against someone in respect of a criminal charge.

A person committing an offence with the deliberate intention of fraud, becomes liable to prosecution, i.e., face criminal charges. A few examples of these offences are-

i. Issue of an invoice without supplying any goods/services- thus taking input credit or refund by fraud

ii. Obtaining refund of any CGST/SGST by fraud.

iii. Submitting fake financial records/documents or files, and fake returns to evade tax.

iv. 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 authorised CGST/SGST officer.

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

Appeals

A person unhappy with any decision or order passed against him under GST by an adjudicating authority can appeal to the First Appellate Authority.

If they are not happy with the decision of the First Appellate Authority they can appeal to the National Appellate Tribunal, then to the High Court, and finally to the Supreme Court.

This post describes about GST Offences, Penalties and Appeals. Comment below your thoughts about this post GST Offences, Penalties and Appeals.

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Section 67 of CGST Act, 2017 Power of inspection, search and seizure

Section 20 of IGST Act,2017 Application of provisions

Tax wrongfully collected and paid to Central Government or State Government, IGST Act,2017

Zero rated supply, section 16 of IGST Act,2017

section 14 of IGST Act,2017, Special provision for payment of tax by a supplier

Section 59 of CGST Act, 2017 Self-assessment

Consumer Welfare Fund, Section 57 of CGST Act, 2017

Refund of tax, Sec 54 of CGST Act, 2017

Transfer of input tax credit, Section 53 of CGST Act, 2017