GST OFFENCES PENALTIES Surat Chapter of WIRC of

GST: OFFENCES & PENALTIES Surat Chapter of WIRC of ICAI Dated 08/07/2017 A Presentation by CMA. (Dr. ) Shailendra Saxena CMA B. COM, SAP(FICO), ACS, FCMA, FCA, DISA(ICAI). Ph. D. 1

GST OFFENCES 2 shailendra. saxena@jlnus. com

OFFENCES BY TAXABLE PERSON Offences relating to invoices § Supplies any goods and/or services without issue of any invoice or § Issues an incorrect or false invoice with regard to any such supply; § Issues any invoice or bill without supply of goods and/or services Collection and Non Payment of taxes § Collects tax but fails to pay the same within 3 month from due date of payment § Collects tax in contravention of provisions of GST and fails to pay the same within 3 month from due date of payment TDS & TCS § Fails to deduct tax, deducts lower tax, fails to pay tax deducted § 3 Fails to collect tax, collects lower tax, fails to pay tax collected

OFFENCES BY TAXABLE PERSON ITC § Avails and/or utilizes ITC without actual receipt of goods and/or services either fully or partially, in violation of the provisions of this Act, or the rules made thereunder; § Refund § Fraudulently obtains refund of any CGST/SGST under this Act; ISD § Avails or distributes ITC in violation of S. 20 Registration § Is liable to be registered under this Act but fails to obtain registration; § Furnishes false information at the time of registration or subsequently 4

OFFENCES BY TAXABLE PERSON Falsification/ Cooking of Records § Falsifies or substitutes financial records or produces fake accounts and/or documents or furnishes any false information or return with an intention to evade payment of tax due under this Act; Obstruction to Officers § Obstructs or prevents any officer in discharge of his duties Handling of Goods § Transports taxable goods without the cover of documents § Supplies, transports or stores any goods which he has reason to believe are liable to confiscation Suppression § Suppression of turnover leading to evasion of tax 5

OFFENCES BY TAXABLE PERSON Books of Accounts § fails to keep, maintain or retain books of account and other documents Proceedings before officer § fails to furnish information and/or documents called for by a CGST/SGST officer § furnishes false information and/or documents during any proceedings Impersonation § issues any invoice or document by using the identification number of another taxable person Tampering § tampers with, or destroys any material evidence § disposes off or tampers with any goods that have been detained, seized, or 6 attached

GST PENALTIES 7 shailendra. saxena@jlnus. com

PENALTY NOT LEVIABLE IN CERTAIN CIRCUMSCHANCES o Lenient view in case of bonafide or technical lapses ( Not deliberately in defiance of law) o o No penalties if there are conflicting and divergent views (Indifference of opinion between two benches of CESTAT/H. C) o o Maruti Suzuki Ltd v. CCE 2009 240 ELT 641(SC) No penalties for clerical error. (Detected and corrected by assessee him self before detection by department) o o Marsha Pharma Pvt. Ltd 2009 (248) ELT 687 (Tri. Ahmedabd) No penalties for difference in interpretation (Due to repeated amendments in CCR 2004, huge litigation in country) o o CCE Vs. Sudarshan Cable industries (2012)76 ELT 300 No penalties if the matter referred to Larger bench o o Hindusthan Steel v. State of orissa 2 ELT(J 159)(SC) Dabur (P) Ltd 1982 ELT 480, DCW Ltd v. CCE 1996(81) ELT 381 No penalties for incorrect classification of goods (Between Importer & Department) o Bahar Agrochem v. CCE (2012)277 ELT 382 (CESTAT) 8

SEC. 122(1) PENALTY FOR CERTAIN OFFENCES A Taxable person shall be liable to pay penalty of higher of below Ø Rs. 10000/- or Ø An amount of tax evaded or Ø TDS not deducted / short deducted / deducted but not paid to the Government or Ø TCS not collected / short collected / collected but not paid to the Government or Ø ITC availed / passed on / distributed irregularly or Ø Refund claimed fraudulently 9 o

SEC. 122(1) PENALTY FOR CERTAIN OFFENCES Offences for Penalty i) Supplies without issue of invoice or incorrect / false invoice ii) Issue invoice/bill without supply iii) Collects tax but fails to pay to Govt. beyond a period of 3 months from the date it becomes due iv) Collects tax in contravention but fails to pay to Govt. beyond a period of 3 months from the date it becomes due v) Fails to deduct TDS / short deducted / deducted but not paid to the Government vi) Fails to collect TCS / short deducted / deducted but not paid to the Government vii) ITC without actual receipt of Goods & Service either fully or partially 10

SEC. 122(1) PENALTY FOR CERTAIN OFFENCES viii. ix. x. xi. xiii. xiv. xvi. Fraudulently obtains refund of tax Takes/Distributes ITC in contravention of Sec. 20 or rules Falsifies/substitutes financial records or produces fake accounts/documents or false information or return with an intention of evade tax Fails to obtain registration Furnishes False information at the time of registration Obstructs/Prevent officer in discharge of his duties Transports any taxable goods without the cover of documents Suppresses Turnover to evade tax Fails to keep, maintain or retain books of accounts and other 11 documents

SEC. 122(1) PENALTY FOR CERTAIN OFFENCES xvii. Fails to furnish or Furnishes false information or documents xviii. Supplies, xix. xx. xxi. transport or stores any goods which are liable to confiscation. Issues any invoice or document by using registration number of another registered person. Tampers with or destroys any material evidence or document Disposes off or tampers with any goods that have been detained, seized or attached. 12

SEC. 122(2) PENALTY FOR CERTAIN OFFENCES Any Registered Person who supplies any G & S on which any tax has not been paid or short paid or erroneously refunded or where ITC has been wrongly availed or utilised – a) For any reason other than fraud or wilful misstatement or suppression of facts to evade tax shall be liable to a penalty of Rs. 10000/- or 10% of tax due whichever is higher b) In case of fraud or wilful misstatement or suppression of facts to evade tax shall be liable to penalty of Rs. 10000/- or 100% of tax due 13 whichever is higher

SEC. 122(3) PENALTY FOR CERTAIN OFFENCES A Taxable person shall be liable to a penalty which may be extend to Rs. 25, 000/- in following offences a. Aids or abets any of the offences specified in clauses (i) to (xxi) of Section 122(1) b. Acquires possession of or in any way concerns himself in transporting, removing, depositing, keeping etc any goods which are liable to confiscation. c. Receives or supplies any services which are in contravention. d. Fails to appear before officer in case of summon e. Fails to issue invoice or fails to account for an invoice in the books of accounts. 14

SEC. 123 PENALTY FOR FAILURE TO FURNISH INFORMATION RETURN If a person, who is required to furnish Information Return u/s 150(1), fails to submit the Information Return within period specified u/s 150(3) (i. e. within 90 days from notice) shall be liable to pay penalty of : Rs. 100 per day subject to maximum of Rs. 5000/ Person u/s 150(1) being: > Taxable person, Local Authority, Authority of State Govt, Income Tax Authority, Banking Company, State Electricity Board, Any Registering authority, Collector, Recognised Stock Exchange, Depository, RBI Officer, GSTN, Person having UIN, Any other person specified by the Govt. 15

SEC. 124 FINE FOR FAILURE TO FURNISHS TATISTICS SEC. 125 GENERAL PENALTY 124. If any person fails to furnish or wilfully furnishes false information or return as required u/s 151 Ø shall be punishable with A fine of Rs. 10, 000/Ø Which may extend to Rs. 100/- per day subject to Max. of Rs. 25, 000/125. General Penalty – Maximum of Rs. 25000/- for contravention for any of the provision & Rules which no separate penalty provided. 16

SEC. 126 GENERAL DISCIPLINES RELATED TO PENALTY No Penalty for minor breaches of tax regulations or procedural requirements, any omission or mistake in documentation which is rectifiable and made w/o fraudulent intent or gross negligence. Expl. a) minor breach – tax involved < Rs. 5000/ b) omission or mistake rectifiable – apparent from record. 2. Depend on facts & circumstances and degree & severity of breach 3. No Penalty – without reasonable opportunity of being heard. 4. Officer shall specify the nature of breach and applicable law, regulation or procedure under which breach has been specified. 5. Voluntary disclosure by person – may consider the fact. 6. This section shall not apply where penalty is either fixed sum or expressed 17 as a fixed % 1.

SEC. 127 POWER TO IMPOSE PENALTY IN CERTAIN CASES SEC. 128 WAIVER OF PENALTY OR FEES OR BOTH 127. Officer may impose such penalty (after giving reasonable opportunity of being heard) in cases not covered by: Sec 62 - Assessment of Non Filers of Returns Sec 63 - Assessment of Unregistered Persons Sec 64 - Summary Assessment in certain special cases Sec 73 - Determination of Tax etc in cases other than fraud etc. Sec 74 - Determination of Tax etc in cases of fraud etc. Sec 129 - Detention, Seizure and release of goods and conveyances in transit Sec 130 - Confiscation of goods or conveyances 128. Govt may by notification waive in full or part any 18 penalty, fees or both

SEC. 129 DETENTION, SEIZURE & RELEASE OF GOODS AND CONVEYANCE IN TRANSIT Goods or Conveyance detained or seized shall be released a. Where owner of goods comes forward for payment - on payment of applicable tax and penalty equal to 100% of tax, (in case of exempted goods, 200% of value of goods or Rs. 25000/- whichever is less) b. Where owner of goods does not come forward for payment - on payment of applicable tax and penalty equal to 50% of the value of goods reduced by Tax amount paid thereon, (in case of exempted goods, 5% of value of goods or Rs. 25000/- whichever is less) c. Upon furnishing security equivalent to clause a or b No Detention or Seizure without serving an order for the same. 1. 19

SEC. 129 DETENTION, SEIZURE & RELEASE OF GOODS AND CONVEYANCE IN TRANSIT 2. 3. 4. 5. 6. Shall be released, on a provisional basis, upon execution of a bond or furnishing of a security or on payment of tax, interest and penalty. Proper Officer shall issue a notice and then pass an order for payment of tax and penalty. No tax, interest of penalty without reasonable opportunity of being of heard. On Payment all proceeding shall be concluded. Fails to pay tax & penalty within 7 days – further proceeding u/s 130 Provided if goods are perishable or hazardous or depreciable 7 days may be reduced. 20

SEC. 130 CONFISCATION AND LEVY OF PENALTY 1. i. iii. iv. v. 2. - Goods or conveyance shall be confiscated and penalised u/s 122 if : Supplies or received any goods with intent to evade tax. Does not account taxable goods Supplies any goods without having applied for registration Contravenes any of the provision to evade tax Uses any conveyance as means of transport for carriage of goods in contravention of the provision of this Act or Rules. On confiscation of goods – option to pay fine Fine shall not exceed market value of goods less tax chargeable Fine and Penalty shall be less than penalty leviable u/s 129(1) 21

SEC. 130 CONFISCATION AND LEVY OF PENALTY - 3. 4. 5. 6. Owner of the conveyance shall be given an option to pay fine equal to tax payable on the goods being transported thereon In addition to fine liable to pay tax, penalty and charges No order for confiscation or imposition of penalty – without giving opportunity of being heard On confiscation title of such goods or conveyance shall vest in the Government The proper officer may dispose of the confiscated goods or conveyance and deposit the sale proceed with the 22 Government.

SEC. 132 PUNISHMENT Offences a. b. c. d. e. for Punishment Supplies without issue of invoice or incorrect / false invoice Issue invoice/bill w/o supply, leading to wrong ITC Credit ITC without actual receipt of G &/ S either fully or partially Collects tax but fails to pay to Govt. beyond a period of 3 months from the date it becomes due Evades tax, Fraud ITC Credit or Fraud refund not covered by above. Falsifies/substitutes financial records or produces fake accounts/documents or false information or return with an 23 intention of evade tax

SEC. 132 PUNISHMENT g. h. i. j. k. l. Obstructs/Prevent officer in discharge of his duties Acquires possession of or in any way concerns himself in transporting, removing, depositing etc any goods liable for confiscation Received or concerned with supply of goods or services which are in contravention of the provision of the Act or Rules. Tampers with or destroys any material evidence or documents Fails to furnish or Furnishes false information or documents Attempts to commit or abets the commission of any of the offences mentioned in clauses (a) to (k) of this section. 24

SEC. 132 PUNISHMENT If the Tax Evasion, Wrong ITC, Wrong Refund Punishment Exceeds Rs. 500 Lakh With up to 5 years imprisonment and with fine Exceeds Rs. 200 Lakh but not exceed Rs. 500 Lakh With up to 3 years imprisonment and with fine Exceeds Rs. 100 Lakh but not exceed Rs. 200 Lakh With up to 1 year imprisonment and with fine Commits or abets the commission of an offence specified in clause (f) or (g) or (j) With up to 6 months imprisonment or with fine or with both Offences under clause a, b, c, d and i are cognizable and non bailable. Offences under clause e, f, g, h, j, k and l are non cognizable and bailable. 25

SEC. 134 COGNIZANCE OF OFFENCES No Court shall take cognizance of any offence under this Act or Rules made thereunder except with the previous sanction of the Commissioner and No court inferior to that of a Magistrate of the First Class, Shall try any such offences 26

SEC. 137 OFFENCES BY COMPANIES Offence committed by company, Firm, LLP, HUF or Trust, every person/ partner / karta or managing trustee who, at the time of offence was committed was in charge of and was responsible to the company etc, as well as company etc shall be deemed to be guilty and liable for proceeding and punishment. Offence committed with consent or connivance of or is attributable to any negligence on the part of any director, manager, secretary or other office of the company, liable for proceeding and punishment. 27

SEC. 138 COMPOUNDING OF OFFENCES (1) Any offence under this Act may, either before or after the institution of prosecution, be compounded by the Comm. on payment, by the person accused of the offence, to the CG or SG, of such compounding amount in such manner as may be prescribed: Provided that nothing contained in this section shall apply to— (a) a person who has been allowed to compound once in respect of any of the offences specified u/s 132(1) clause (a) to (f) and (l) (b) a person who has been allowed to compound once in respect of any offence, other than those in clause (a), under this Act or under the provisions of any S/UT GST Act or IGST Act in respect of supplies of value exceeding one crore rupees; 28

SEC. 138 COMPOUNDING OF OFFENCES (c) a person who has been accused of committing an offence under this Act which is also an offence under any other law for the time being in force; (d) a person who has been convicted for an offence under Act by a court; (e) a person who has been accused of committing an offence specified in clause (g) or clause (j) or clause (k) of sub-section (1) of section 132; and (f) any other class of persons or offences as may be prescribed: Provided further that any compounding allowed under the provisions of this section shall not affect the proceedings, if any, instituted under any other law: Provided also that compounding shall be allowed only after making payment of tax, interest and penalty involved in such offences. 29

THANKS!! ANY QUESTIONS ? CONTACT FOR POST SESSIONQUERY: CMA. (Dr. ) Shailendra Saxena Bharuch E-mail: saxena 20535@yahoo. com Cell: +91 -93774 -10260 | Website: www. jlnus. com 30