GST-offences & Penalty

Offences Under GST
What is an offence?
An offence is a breach of a law or rule, i.e., an illegal act. Similarly, an offence

under GST is a breach of the provisions of the GST Act and Rules.
What are the offences under GST?
When has anyone committed an offence under GST?
There are 21 offences under GST. For easy understanding, these have been
grouped into heads as given below:
Fake or wrong invoices:
1. A taxable person supplies any goods/services without any invoice or

issues a false invoice.
2. He issues any invoice or bill without supply of goods/services in violation

of the provisions of GST
3. He issues invoices using the identification number of another bonafide

taxable person
Fraud:
1. He submits false information while registering under GST

2. He submits fake financial records/documents or files fake returns to
evade tax
3. Does not provide information/gives false information during proceedings
Tax evasion:
1. He collects any GST but does not submit it to the government within 3
months
2. Even if he collects any GST in contravention of provisions, he still has to

deposit it to the government within 3 months. Failure to do so will be an
offence under GST.
3. He obtains a refund of any CGST/SGST by fraud.
4. He takes and/or utilizes input tax credit without actual receipt of goods
and/or services
5. He deliberately suppresses his sales to evade tax
Supply/transport of goods:
1. He transports goods without proper documents
2. Supplies/transports goods that he knows will be confiscated
3. Destroys/tampers goods that have been seized
Others:
1. He has not registered under GST although he is required to by law
2. He does not deduct TDS or deducts less amount where applicable.

3. He does not collect TCS or collects less amount where applicable.
4. Being an Input Service Distributor, he takes or distributes input tax credit

in violation of the rules
5. He obstructs the proper officer during his duty (for example, he hinders
the officer during the audit by tax authorities)
6. He does not maintain all the books that he required to maintain by law
7. He destroys any evidence
For the 21 offences above, for fraud cases, penalty will be 100% (minimum
Rs. 10,000)
For cases mentioned in 1, 2 under fake invoicing and 4th under both tax
evasion and others heads, the penalty is equal to the tax evaded or ITC
availed or passed on.
Offences under GST by Companies, LLPs, HUFs and

others
For any offence committed by a company, both the officer in charge (such as
director, manager, secretary) as well as the company will be held liable. For
LLPs, HUFs, trust, the partner/Karta/managing trustee will be held liable.
Read our article on liability to pay unpaid GST dues in certain cases.
Penalties under GST

What does penalty mean?
The word “penalty” is not specifically defined in GST and so it takes the
meaning from various judicial pronouncements and principles of
jurisprudence. A penalty is a punishment imposed by law for committing an
offence or failing to do something that was the duty of a party to do. A penalty
can be both corporal or pecuniary, civil or criminal. Both corporal (jail) and
pecuniary (monetary) penalties are applicable under GST.
Common Offences Under GST And Their Penalties
Type of offence Amount of penalty
Penalty for delay in The late fee is Rs. 100 per day per Act. So it is 100 under
filing GSTR CGST & 100 under SGST. Total will be Rs. 200/day. The
maximum is Rs. 5,000. There is no late fee on IGST.
Penalty for not filing Penalty 10% of the tax due or Rs. 10,000 – whichever is
GSTR higher
Penalty for committing Penalty 100% of the tax due or Rs. 10,000 – whichever is
a fraud higher (High-value fraud cases also have jail term)
Penalty for helping a Penalty extending up to Rs. 25,000

person to commit fraud
Penalty for opting for Demand & recovery provisions of sections 73 & 74 will
composition scheme apply.
even though he is not (i) Fraud case- Penalty 100% of the tax due or Rs. 10,000 –
eligible whichever is higher
(ii) Non-fraud casePenalty 10% of the tax due or Rs.
10,000 – whichever is higher
Penalty for wrongfully Penalty 100% of the tax due or Rs. 10,000 -whichever is
charging GST rate— higher (if the additional GST collected is not submitted
charging a higher rate with the govt)
Penalty for not issuing Penalty 100% of the tax due or Rs. 10,000 – whichever is
an invoice higher
Penalty for not Penalty 100% of the tax due or Rs. 10,000 – whichever is
registering under GST higher
Penalty for incorrect A penalty of Rs. 25,000

invoicing
Situations where there is no penalty (but interest may

apply)
Type of offence Action

Penalty for incorrect type of GST No penalty. Pay the correct GST and get a
charged (IGST instead of refund of the wrong type of GST paid earlier
CGST/SGST)
Penalty for incorrect filing of GST No penalty. But interest @18% on shortfall
return amount
Penalty for delay in payment of ITC will be reversed if not paid within 6
invoice. months. No penalty as such
Penalty for wrongfully charging GST Interest @18% applicable on the shortfall
rate— charging a lower rate
What are the penalties under GST?
If any of the offences are committed then a penalty will have to be paid under
GST. The principles on which these penalties are based are also mentioned
by law.
Penalty in 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. For the 21 offences
above, for fraud cases, the penalty will be 100% (minimum Rs. 10,000).
What is the penalty for helping someone to commit
fraud under GST?
Not only the taxable person but any person who does the following will have
to pay a penalty extending up to Rs. 25,000
1. Helps any person to commit fraud under GST
2. Acquires/receives any goods/services with full knowledge that it is in

violation of GST rules
3. Fails to appear before the tax authority on receiving a summons
4. Fails to issue an invoice according to GST rules
5. Fails to account/vouch any invoice appearing in the books
Are there any jail punishments?
Yes, GST has corporal punishments (jail) for high-value fraud cases as
follows-
Tax amount involved 100-200 lakhs 200-500 lakhs Above 500 lakhs
Jail term Up to 1 year Upto 3 years Upto 5 year
Fine In all three cases
These punishments are applicable along with monetary penalty. For more
details please read our article on the prosecution.
Penalty for Other Cases (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.
Therefore, the penalty will be high at 100% of the tax amount when the
offender has evaded i.e., where there is a deliberate fraud. For other
non-fraud cases, the penalty is 10% of tax.
General Penalty
Any offence under GST for which penalty is not specifically mentioned will be
liable to a penalty extending Rs. 25,000.
Minor Breaches under GST

1. Minor breaches (where tax amount is less than Rs.5000) or errors are
easily rectifiable and clearly made without any motive of fraud.
2. There will not be substantial penalties for minor breaches
3. The tax authority may issue a warning in such cases.
This will be beneficial to businesses, especially SMEs, who may make

genuine mistakes especially in the first few months of GST implementation.
Being penalized for genuine errors will be a hard blow to the SMEs who do
not have as many resources as the larger organizations to adapt to GST.
General Rules Regarding Penalty
These rules of penalty are generally the same in all laws whether tax laws or
contract law or any other law.
1. Every taxable person, on whom the penalty is imposed, will be served

with a show-cause notice first and will have a reasonable opportunity of
being heard.
2. The tax authority will give an explanation regarding the reason for the
penalty and the nature of the offence
3. When any person voluntarily discloses a breach of law, the tax authority
may use this fact to reduce the penalty

GST-offences & Penalty

Uploaded by

Copyright:

Available Formats

GST-offences & Penalty

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

GST-offences & Penalty

Uploaded by

Copyright:

Available Formats

Offences Under GST

An offence is a breach of a law or rule, i.e., an illegal act. Similarly, an offence

What are the offences under GST?

When has anyone committed an offence under GST?

Fake or wrong invoices:

1. A taxable person supplies any goods/services without any invoice or

2. He issues any invoice or bill without supply of goods/services in violation

3. He issues invoices using the identification number of another bonafide

1. He submits false information while registering under GST

3. Does not provide information/gives false information during proceedings

2. Even if he collects any GST in contravention of provisions, he still has to

3. He obtains a refund of any CGST/SGST by fraud.

5. He deliberately suppresses his sales to evade tax

1. He transports goods without proper documents

2. Supplies/transports goods that he knows will be confiscated

3. Destroys/tampers goods that have been seized

1. He has not registered under GST although he is required to by law

2. He does not deduct TDS or deducts less amount where applicable.

4. Being an Input Service Distributor, he takes or distributes input tax credit

7. He destroys any evidence

Offences under GST by Companies, LLPs, HUFs and

Penalties under GST

Common Offences Under GST And Their Penalties

Type of offence Amount of penalty

Penalty for helping a Penalty extending up to Rs. 25,000

Penalty for incorrect A penalty of Rs. 25,000

Situations where there is no penalty (but interest may

Type of offence Action

What are the penalties under GST?

Penalty in cases of fraud

An offender has to pay a penalty amount of tax evaded/short deducted etc.,

1. Helps any person to commit fraud under GST

2. Acquires/receives any goods/services with full knowledge that it is in

3. Fails to appear before the tax authority on receiving a summons

4. Fails to issue an invoice according to GST rules

5. Fails to account/vouch any invoice appearing in the books

Are there any jail punishments?

Jail term Up to 1 year Upto 3 years Upto 5 year

Fine In all three cases

An offender not paying tax or making short-payments has to pay a penalty of

Minor Breaches under GST

2. There will not be substantial penalties for minor breaches

3. The tax authority may issue a warning in such cases.

This will be beneficial to businesses, especially SMEs, who may make

1. Every taxable person, on whom the penalty is imposed, will be served

You might also like

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.