Offences and Penalties under GST

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.