Penalty Provisions under GST Act as per Model GST Law

Penalty Provisions under GST (From Model GST Law)

gst-penaltyIn GST law penalty provisions are harsher and stricter for tax evader. Taking the intention forward, the penalty provisions in Model GST Law, suggest that the penalty for tax evasions are much harsher.

  • In the following cases, Penalty shall be rupees ten thousand or an amount equivalent to tax evaded or tax not deducted, short deducted or deducted but not paid to the credit of appropriate government or input tax credit taken or passed wrongly or the refund is claimed fraudulently, as the case may be, whichever is higher.

GST Act is fairly simple to understand but the Penalty Provisions under the Act are harsh and can lead to stiff financial penalties and some provisions are even non bail able. Ensure due care to comply with the provisions of GST Act

When a taxable person

  1. Supplies goods and/or services without issue of invoice or issue a false or incorrect invoice
  2. Issues the invoice but without supply of good and/or services, in violation of provisions of this Act
  3. Collects any amount of tax but fails to deposit the same to the credit of appropriate government, beyond the period of three months from the date when such payment becomes due
  4. Collects any amount in contravention of provisions of this Act but fails to deposit the same to the credit of appropriate government, beyond the period of three months from the date when such payment becomes due
  5. Fails to deduct the tax in terms of sub section (1) of section 37 or sub section (1) of section 43C or collects and amount which is less than amount required to be deducted
  6. Taken/ Utilised input tax credit fraudulently
  7. Obtained refund of CGST / SGST fraudulently
  8. Falsifies or substitute the financial records with an intention to evade tax
  9. Fails to obtain registration, when he is liable to get registered
  10. Furnishes false information at the time of registration or subsequently
  11. Obstructs or prevent any officer from discharge of his duty under this Act
  12. Transport any goods without any cover document as specified
  13. Supresses his turnover leading to tax evasion
  14. Fails to keep or maintain or retain books as per provisions of this Act
  15. Fails to furnish or furnishes false document to the officer of CGST/SGST during the proceeding under this Act
  16. Supplies, stores or transport such goods which he has reasons to believe are liable to confiscation
  17. Issues invoices or document by using identification of another person
  18. Destroys or tampers with the evidence
  19. Disposes off or tampers with any good that have been seized, detained or attached.
READ  Demand and Recovery under GST Act - A Quick Walk Through

Any person who repeatedly i.e. If there were any three short payments in three returns during any six consecutive tax period, shall be liable to penalty of rupees ten thousand or ten percent of short paid tax, whichever is higher.

  • Any person who aids or abets any of the above offence shall be liable to a penalty which may extend to rupees twenty-five thousand.
  • Residuary clause for Penalties

If a person contravenes any provisions or rules under this Act, for which no penalty is separately provided, shall be liable to a penalty which may extend to rupees twenty-five thousand rupees.

  • Penalty table
Monetary Limit Punishment Nature of offence
Amount of tax evaded exceeds two hundred and fifty lakhs rupees (in case of above Specified offences) Imprisonment up to 5 Years but not less than 6 months and fine

 

Cognizable and non- bailable
Amount of tax evaded exceeds fifty lakhs but below two hundred and fifty lakhs (in case of above Specified offences) Imprisonment up to 3 Years but not less than 6 monthsand fine

 

Non-Cognizable and bailable
Amount of tax evaded exceeds two hundred and fifty lakhs rupees (in offences other than specified above) Imprisonment up to 1 Year but not less than 6 months and fine

 

Non-Cognizable and bailable
If a person is convicted of an offence under the same section again, then in subsequent cases Imprisonment up to 5 Years but not less than 6 months and fine

 

Non-Cognizable and bailable

 

Sources – http://finmin.nic.in/reports/modelgstlaw_draft.pdf