Offences under GST

Offences under GST

Subject: Government Schemes

Context:

The Goods and Services Tax (GST) Council meeting is likely to discuss decriminalization of offenses under GST law.

Concept:

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

Offences liable for prosecution

Any person committing the following offences (i.e., deliberate intention of fraud) becomes liable to prosecution, i.e., face criminal charges.

• Supplies any goods/services without an invoice in order to evade tax
  • GST officers can launch prosecution against GST offenders in cases where the amount of evasion or misuse of input tax credit is more than ₹5 crore.
• Issues any invoice without supplying any goods/services- thus taking input credit or refund by fraud
• Collects any GST (even if in contravention of provisions) but does not submit it to the government within 3 months.
• Obtains refund of any CGST/SGST by fraud.
• Submits fake financial records/documents or files fake returns to evade tax
• Obstructs the proper officer during his duty (for example, he hinders the officer during the audit by tax authorities)
• Acquires/receives any goods/services with full knowledge that it is in violation of GST rules and is liable for confiscation
• Destroys any evidence
• Does not provide information/gives false information during proceedings
• Helps any person to commit fraud under GST

Punishment:

The person committing any of the offences above shall be punished as follows:

• Tax amount involved between 100-200 lakhs– bailable and jail term upto 1 year
• Tax amount involved between 200-500 lakhs- bailable and jail term upto 3 years
• Tax amount involved between above 500 lakhs-bailable and jail term upto 5 years

Compounding:

• GST Act also allows for compounding of offences.
• Compounding of offences is a shortcut method to avoid litigation.
• In compounding, the accused is not required to appear personally and can be discharged on payment of compounding fee.
• The amount payable for compounding of offences shall be 50% of the tax involved subject to a minimum Rs. 10,000. Maximum amount for compounding is 150% of the tax or Rs. 30,000 -Whichever is higher.
• Compounding will be allowed only after payment of all tax, interest and penalty dues.

Arrest under GST:

• Section 69 in the Central Goods and Service Tax (CGST) Act gives power to authorities to arrest any person if there is “reason to believe” that he has committed tax evasion.
  • A person under the CGST Act can only be arrested, if the amount of tax evasion is more than ₹2 crore.
  • All offences in which tax evasion is less than ₹5 crore are bailable and only grave offences involving tax evasion of ₹5 crore and above are non-bailable and cognisable.