The GST law defines strict penalty rules and offence guidelines for Indian taxpayers to follow and ensure frictionless intrastate or interstate goods movement, reduce corruption and an efficient tax collection system. GST or the Goods and Service Tax has been constantly bombarded with criticism about the compliance burden it mandates on the Taxpayer’s shoulders. To counter this point let’s look at some of the points below:
17% of the total world population lives in India. Out of the 1.21 billion people only 2.05 crore Indians or 1.7 percent pay taxes. Again out of these 2.05 crore taxpayers, 90% pay minuscule tax. In light of this, Don’t we need tax compliance? GDP and Tax Revenue are two important pillars of the Economy.
One of the main contributing factors towards GDP is the number of goods produced and the price that they can call when they are sold. Production depends on 3 factors, land, labour and capital and when any one or more of them are limited, then the GDP becomes lesser than normal. This is precisely why The LARR was passed i.e. to strengthen India’s GDP. However, it would be fair to say that as far as GDP is concerned, in the last twenty-five years India has been outshined only by China. However, to emulate China’s growth curve in the coming years, India needs to increase its taxpayer base and reduce the burden of Indirect taxes which were for a long time monopolies of the middlemen or the agents.
Hence, although GST increases tax compliance and increases operational costs, keeping in mind the demands of the future it for the time being seems the right step ahead. Powered by the GSTIN Network and the e-way bill, every transaction is now being recorded and tracked. The full cycle of a transaction from its source to the destination and vice versa is within the GST Radar now. Taxpayers must declare accurate details of their transactions to repel any concern or questions from the Tax Authorities. In this article, we throw light on the Offenses, Penalties, And Appeals In GST which every business owner should be aware of.
Hence we see that the above points have very clearly outlined the offences that are covered under GST. If the authorities discover any of the above misdoings on the part of a company then under GST norms the officer-in-charge would be responsible for the offence. Individual who are availing composition schemes but are not liable to do so may also attract the vigil of the authorities. In case of financial frauds committed by a HUF, LLP or a Trust, then the Karta, partners and managing trustee will be answerable and held responsible by GST norms.
| Tax amount involved | INR 100-200 lakhs | INR 200-500 lakhs | Above INR 500 lakhs |
| Jail term | Upto 1 year | Upto 3 years | Upto 5 year |
| Fine | In all three cases | ||
The GST law provides for a set number of penalties levied on all kinds of tax-evaders. The provisions are:
The GST radar equally takes into account the non-taxable people also. A person who is non-taxable under GST norms but is privy to fraudulent practices or is part of any, some or all of the below-mentioned offensive practices:
Under GST norms, even non-registered people under GST who are the partner to above practices attract a penalty of Rs. 25,000/. In addition to this fixed amount, other penalty provisions for any kind of tax evasion/fraud detected by the tax authority include:
Any deliberate intentions of fraud found in the following actions/activities of a person will attract criminal proceedings against them:
Based on the above findings If The Joint Commissioner CGST/SGST has enough proof that a registered person under GST has deliberately made attempts( successful or unsuccessful) to evade GST or has claimed excessive Input Tax Credit, then he can issue a notice as well as order GST officer to find the whereabouts of the concerned tax evader.
In addition to the above, the Joint Commissioner can order a search cum seizure probe across all registered properties/locations of the taxable person who may be supposedly concealing goods or some important documents.
GST provisions deal with tax evaders with an iron hand. This, however, does not mean that a person charged with fraudulent means of tax evasion cannot appeal against orders passed by the adjudicating officer. First Appellate Authority, is the first in the four appeal structure of the GST law. The adjudicating officer or the designated person entitled with the responsibility to pass a decision or an order under the GST Act section 107 is the first in line representative of the First Appellate Authority. The person charged under GST can further appeal to the next in line to The Appellate Authority i.e The Appellate Tribunal under GSTs Act section 109,110 followed by a High Court appeal under GST Act section 111-116. The last resort for a charged tax evader is to claim innocence under GST Act 111-116 is the Apex Court or the Supreme Court, the highest court in the land.
Any unintentional attempt to avoid paying or short deducting taxes will attract the vigilant eyes of the authorities. Under GST the right to appeal can be invoked against the deposition of a fixed amount of money. SMEs can be the most affected by this as it could cause a huge dent in the working capital.
The accused must make his appeal in the prescribed form as well as deposit the required fees beforehand.
The appropriate fee is determined as follows:
Conclusion: The GST has no doubt increased compliance burden but this is not a drawback but an advantage to the nation at large. The main objective of GST is simply to eradicate the termites that have long been slowing down and eating the growth of the people of the Nation. The wide economic gap between the haves and the have-nots has increased manifold across the globe. GST if properly implemented promises an ecosystem that will facilitate stupendous revenue generation for the government that will expedite infrastructure development as well as building world-class public services like schools, colleges, health centres etc.
New, as well as seasoned taxpayers, must remember that the GST Act, shows little mercy even for first-time offenders. In conclusion, we would like to remind our readers that the tougher and stricter compliance does not make the government synonymous with Big Brother. Taxpayers need to be alert as well as updated about their tax compliance. Also, taxpayers must stay away from Ponzi schemes that lure and provoke tax evasions. The days of such practices are over. There is an old Hindi saying that fits aptly to the GST Compliances which goes like this, “Savdhani Hati, Durghatna Ghati“.
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Subodh has done with numerous professional degrees ranging from Human Rights to Banking along with MBA in HR Marketing. He is also interested in the field of tax-related articles and blog as per the industry based norms. Having expert knowledge in diverse sectors, he assures facts and figures along with testimony, in his articles. Working in SAG Infotech, he is a trusted author among the readers globally. View more posts
8 thoughts on "Easy to Understand 21 Offences, Penalties and Appeals Under GST"
chandra vanu Dash says:if the GST Department impose on me illegally penalty, whenever I will go for filing an appeal before the GST authorities should I pay 10% of the disputed amount? please clarify.
Yes, payment of litigation fees is mandatory before filing an appeal. Mahendra K K says:dear sir, The article is worth and informative. However, it may be seen at few places the word ” capital punishment” is used. The same is not correct terminology. Capital punishment means death penalty. Here capital punishment is used with reference to penalty in cash. May like to amend. Thanks
