Offences and Penalties Under GST

The GST regime prescribes strict penalty provisions to deal with tax offenders who indulge in corrupt GST practices. If you are a taxpayer registered to GST, you must be aware of the offences and penalties under GST that can be imposed upon you under different scenarios.

Major Offences and Penalties under GST

Section 122 to Section 128 of the CGST Act prescribes the offences and corresponding penalties for different GST violations. 21 offences are prescribed under the GST. Here are some of the major offences –

1. Not Registering under GST

If you are running a business in India, you are a ‘taxable person. It is mandatory to register under GST. If you have not registered, it is considered an offence.

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2. Supplying Goods or Services without an Invoice or Issuing a False Invoice

An Invoice is a commercial document that a seller issues to a buyer. It is considered an indication or proof of the sale transaction and it will contain the terms and conditions of payments and the agreed-upon prices. In the case of sales that are exempt from tax, the service provider should give a Bill of Supply in place of a Tax invoice. 

The seller must supply an invoice (or a Bill of supply) along with the supply of the Goods/Services. 

Issuing an invoice using the GSTIN of another Bonafide taxpayer is also an offence.

3. Submitting False Information while Registering for GST

You are expected to submit accurate information while registering for GST. Abstain from forging documents as it will cause you a lot of trouble.

4. Obtaining Refunds by Fraud

Obtaining Refunds using fraud is an offence. The Deliberate suppression or misreporting of sales information to evade tax is a separate serious offence.

5. Opting for GST Composition Scheme If you are Ineligible

The GST composition scheme is a special GST levying method designed for smaller taxpayers with a turnover of fewer than ₹75 Lakhs. This is intended to make it simpler and easier for smaller taxpayers. 

The GST laws also prescribe who can and cannot opt for the composition scheme. For instance, Tobacco, Pan Masala and Ice Cream manufacturers cannot opt for the GST composition scheme. Nor can a person make inter-state supplies or businesses which supply goods through an e-commerce operator. 

If you were intending to make use of this scheme even if you are not eligible, we would warn you against it, as it would get you in trouble with the law.

Search and Seizure Under GST

If you are a business owner, the police or any other Government authority Section 67 of the CGST Act prescribes rules regarding search and seizure. The law also prescribes safeguards against arbitrary search. The rules are as follows.

1. A search and seizure under GST can only be carried out under the authorisation of an officer who was below the rank of Joint Commissioner. 
2. The search and seizure can be conducted if the officer has a reason to believe that the business has Goods that may be relevant to any proceedings hidden in the building.
3. The documents or objects that are seized can only be retained for the time required for examining, enquiring or conducting the proceedings and should be returned within 30 days from the issuance of the show cause notice.
4. A notice of the seizure of goods should be produced by the authorities within six months. If a notice of this kind has not been issued, all the seized goods have to be returned.
5. Search and seizure should be carried out as per the provisions of the Criminal Procedure Code,1973(CrPC) Any seizure should be made in the presence of two or more independent witnesses and a record of the entire proceedings should be made and forwarded to the Commissioner.

Inspection under GST

Inspection is similar to search and seizure but considered a softer provision. 

The inspection is a physical process of checking facts or evidence about the person's business transactions.

It enables officers to access 

• any place of business belonging to a taxable person
• Vehicle or warehouse or godown of a person engaged in transporting goods.

Interception and Inspection of Goods in Transit

The GST laws also lay down clear guidelines regarding the inspection of goods in transit. Only an officer authorised by the Jurisdictional Commissioner can intercept and inspect vehicles that transport goods inside or between states. 

Interception of Goods in Transit

If your goods are intercepted, the person in charge of the goods and how they are being transported must show documents about how the goods are being transported. The authorities who have intercepted the goods may request the following documents

1. E-way bill
2. GST invoice
3. Delivery Challan.

E-way Bill Number Verification

The officer can easily verify the documents produced and the e-way bill number electronically. The verification will be done using one of the two methods

1. You can log into http://mis.ewaybillgst.gov.in to verify 
2. You can use the Mobile app.
3. Send the SMS EWBVER to 77382 9989.

If the taxpayer can provide all the required documents, then the officer will release the goods.

Inspection of Goods in Transit

If you are transporting your goods and the Government officials request documents and one of the following happens

1. You are not able to produce the documents requested by the officials
2. There is some discrepancy in the documents,

The officer can inspect your goods once they record the statement of the person in charge of the conveyance, following which they can inspect the goods. The statement has to be recorded on GST Form MOV-01  before they can inspect the goods.

Compounding of Offences Under GST

Section 138 of the Central Goods and Services Tax Act, 2017 details the provisions for compounding of GST offences.

As per the Act, an offence can be compounded by the GST Commissioner.

The Commissioner can compound offences before or after the institution of prosecution. Compounding an offence can only be done upon payment of the compound amount.

The minimum penalty amount that is payable for GST under compounding of offence is the higher of the following

• 50% of the tax involved or
• ₹ 10,000.

The maximum amount payable under compounding of offence is the higher of the two

• 150% of the tax involved or 
• ₹ 30,000.

If you want to request the compounding of the offence, you can do it before or after the prosecution has been instituted. You have to fill out Form GST-CPD-01, and the application has to be submitted to the commissioner.

If the commissioner is satisfied with the full and true disclosure, the commissioner can issue an order in Form GST CPD-02. If the commissioner is not satisfied, they may reject the same. But the commissioner is required to allow the applicant to be

Prosecution Under GST

Here are some of the offences that would lead to prosecution under GST Laws

• Supplying goods and services without a proper GST invoice.
• Issuing false invoices.
• Availing fraudulent GST
• GST Tax evasion,
• Dealing with Goods that can be confiscated by the Government 

Punishment for GST Offences

Generally, the penalty and punishment for GST offences are as follows

1. Tax evasion exceeding ₹5 Crore – 5 years imprisonment and fine.
2. The Repeated offence of ₹ 250 Lakh – 5 years of imprisonment and fine.
3. Record Tampering, Obstructing an Officer, Tampering Records, Record Falsification – 6 months imprisonment.

How Can NoBroker Help

GST is an innovation in the Indian Taxation System, and so it has evolved over the years. It can be difficult for a businessperson to keep track of the changes. At the same time, GST and its processes may be intimidating to someone who is unfamiliar with business processes and taxation. 

Don't worry, NoBroker Legal Services will take care of all your legal needs related to the GST process.

You can reach the NoBroker Legal Services team at +918068530745. You are guaranteed the lowest prices and top-tier services. Contact NoBroker Legal Services now and put an end to your GST-related worries.

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