Prosecution is the institution or commencement of legal proceeding; the process of exhibiting formal charges against the offender. Section 198 of the Criminal Procedure Code defines “prosecution” as the institution and carrying on of the legal proceedings against a person.
Offences that warrant prosecution
Section 73 of the Model GST Law codifies the major offences under the Act which warrant institution of criminal proceedings and prosecution. The 12 major offences have been listed as follows:
- Making a supply without issuing an invoice or upon issuance of a false/incorrect invoice;
- Issuing an invoice without making supply;
- Not paying tax collected for a period exceeding 3 months;
- Not depositing any tax that has been collected in contravention of the Act for a period exceeding 3 months;
- Availing or utilizing credit of input tax without actual receipt of goods and/or services;
- Obtaining any fraudulent refund;
- Furnishing false information or falsification of financial records or furnishing of fake accounts/ documents with intent to evade payment of tax;
- Obstructing or preventing any official in the discharge of his duty;
- Dealing with goods liable to confiscation i.e. receipt, supply, storage or transportation of goods liable to confiscation;
- Receiving/dealing with supply of services in contravention of the Act;
- Failing to supply any information required of him under the Act/Rules or supplying false information;
- Attempting to commit or abetting the commission of any of the above 11 offences
Punishment prescribed on conviction of any offence
Section 73 (1) prescribes as follows:
|Tax evaded exceeding Rs.250 lakh
|5 years Imprisonment and fine
|Tax evaded between Rs.50 lakh and Rs.250 lakh
|3 years Imprisonment and fine
|Tax evaded between Rs.25 lakh and Rs.50 lakh
|1 years Imprisonment and fine
For second or any subsequent conviction of an offence in this section, imprisonment will be for a term that may extend to 5 years and a fine. However, no imprisonment for any of the offences shall be for a period less than six months.
Cognizance of offences
Section 74 of the Model GST Law provides that a person shall be prosecuted for any offence only with the prior sanction of the designated authority and no court inferior to that of a Magistrate of the First Class shall try any such offence.
Presumption of Mens Rea
- While committing an act, a “culpable mental state” is a state of mind wherein-
- the act is intentional;
- the act and its implications are understood and controllable;
- the person committing the act was not coerced and even overcomes hurdles to the act committed;
- the person believes or has reasons to believe that the act is contrary to law.
- Section 75 of the Model GST Law presumes the existence of a state of mind (i.e. “culpable mental state” or mens rea) required to commit an offence if it cannot be committed without such a state of mind.The burden of proof is on the accused in this regard. The fact of existence of mens rea is proved when Court believes it to exist beyond reasonable doubt.
Offences by companies and certain other persons
Prosecution of offences by companies
Section 77 of the Model GST Law provides that every person shall be liable to be proceeded against and punished for an offence committed by the company who was in-charge of or responsible to a company for the conduct of its business shall, along-with the company itself.
If any offence committed by the company which has been committed with the consent/ connivance of, oris attributable to negligence of any officer of the company, then such officer shall be liable to be proceeded against and punished accordingly.
Compounding of Offences (Section 78)
Compounding means forbearance from prosecution for consideration or any other private motive.
Compounding of all Offences under the act either before or after institution of prosecution that may be allowed to be compounded the by competent authority on payment of compounding amount by the accused to the Central/ State government, as the case may be.
Restrictions to compounding
The following offences cannot be compounded:
- offences prescribed in clause (a) to (g) of sub-section (1) of S. 73 and attempt or abatement to commit the said offences, if once compounded
- offences (other than the above offences) under any SGST Act/CGST Act/ IGST Act in relation to supplies exceeding value of Rs.1 Crore, if once compounded
- offences which is also an offence under NDPS Act or FEMA or any other Act other than CGST/SGST
- any other class of offences or persons that may be prescribed in this behalf.
Compounding of offence to not effect proceedings if any instituted under any other law. Also compounding to be allowed only after payment of tax, interest and penalty.
Monetary limits for compounding of offence
To be as per rules to be prescribed, subject to following minimum and maximum compounding amount limits.
- lower limit: greater of the following –
- 50% of tax involved, or
- upper limit: greater of the following –
- 150% of tax involved or
Consequence of compounding
On payment of the compounding amount, no further proceeding shall be initiated under this Act against the accused for the same offence & any criminal proceeding if already initiated shall stand abated.
More information on the said topic regarding offences and penalties is available at www.itrtoday.com/offences-penalties-gst-overview/ for your ready reference.