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Offences and Penalties under the GST Act

Offences and Penalties under the GST Act

Offences and Penalties under the GST Act

  • On December 19, 2019
  • Appeals, automobile, Fraudulent Intent, GST, GST Act, GST Blog, GST Offences, GST Offences and Penalties, GST penalties, GST Updates, Invoicing and documentation, Minor And Major Breach, Obstruction
What is an offence under GST? An offence under GST is the breach of GST rules and violations of provisions of the GST Act. There are severe penalties for the lawbreakers and to avoid such penalties you must have the information about these offences. There are 21 offences in total that come under the GST Act in India. The list of these offences with the appropriate penalties is given below. 
 
Read the whole article to know more about such offence and penalties under GST in India.

Offences under the GST Act – 

Under the GST act, there are 21 distinct offences, if broken, can result in penalties. Obviously, there are more offences, apart from these 21 offences, which attract GST penalties depending upon the case. We are providing you with the list of offences, bifurcating them under various sections to ease it up, along with specific details of the 21 GST offences under GST regime. 

Invoicing and Documentation related offences under the GST Act – 

  1. Supplying goods and services without issuing an invoice or with issuing a false or incorrect invoice. 
  2. Using GSTIN of a different GST registered person or entity for issuing invoice or document. 
  3. Transporting taxable goods without the appropriate or correct documentation.
  4. Issuing a GST invoice without supplying goods or services in reality. 
  5. Failing to maintain relevant documents and records as per the requirements of the GST Act. 

 Tax Evasion related offences under the GST Act –

  1. Tax evasion by deliberately under-reporting or suppressing overall turnover. 
  2. Collecting the tax from a receiver of goods/services but failing to pay tax to the government within three months of the due date. 
  3. Collecting the GST in contravention of provisions specified by the GST Act but failing to pay tax to the government within three months of the due date.
  4. Trying to take and utilise the Input Tax Credit (ITC) without the actual receipt or supply of goods or services. 
  5. Avoiding tax liability under subsection 2 of Section 52 of GST Act, i.e., Failing to deduct tax, or even if deducting tax, the amount deducted is less than the actual amount or not paying the tax owed to the government.
  6. Avoiding tax liability under subsection 3 of Section 52 of GST Act,i.e., Failing to deduct tax, or even if deducting tax, the deducted amount is less than the actual amount deducted or not paying the tax owed to the government.
  7. Breaching Section 20 and its sub-sections of GST Act by taking and utilising Input Tax Credit(ITC). 

 Fraudulent Intent related offences under the GST Act – 

  1. Submitting false information at the time of GST registration or a later date.
  2. Supplying fraudulent information to obtain a GST refund. 
  3. Fabricating documents or records and provide incorrect information with the intention of tax evasion.
  4. Avoiding registration under GST when it is necessary to do so as per the GST Act. 
  5. Damaging and disposing of the goods that have been seized or detained under the GST Act.
  6. Intentionally, supplying, transporting and storing the confiscated goods as per the GST rules. 

 Obstruction related offences under the GST Act – 

  1. Obstructing any official from performing his/her duties as per the GST Act. For instance, hindering an officer during the audit by tax authorities. 
  2. Meddling with or destroying material pieces of evidence or documents. 
  3. Providing fabricated or false information to an officer during proceedings. 
 
GST Tip – The cases involving Fraud amounts to 100% penalty. The minimum of this type of penalty is 10,000 INR.
 

GST Act – Minor Breach and Major Breach 

According to the existing rules regarding GST Penalties, a minor breach situation can be detected when the amount of tax involves a sum of less than Rs. 5,000. Furthermore, easily rectifiable documentation errors/omission is also included in a minor breach. As per the current rules under GST Penalties, minor breaches are not accountable to severe GST penalties and the tax authorities may only issue a warning without any monetary penalty depending on them. 
 
But if the situation arises where the tax amount involves a sum of more than Rs. 5,000, then this is the case of a major breach under the GST Act. The major breach cases can attract the penalties including jail sentences depending and considering the tax amount. 
 
 
GST Tip – The minor versus major breach clause under the GST Act is added to help especially help those businesses which have small turnovers and SME so that these businesses are not penalised for genuine errors.
 

GST Penalties for the offences under the GST Act – 

GST Penalties for the offences under the GST Act, 2017 are accountable to fines depending on the number of various factors rather than limiting it to the severity of the offence. Below are the penalties under the GST Act for some key offences – 

In Case Of Fraud – 

The offenders committing fraudulent activities intentionally then under the provisions of GST, they shall be liable to pay 100% penalty. Resulting in an amount equivalent to the amount of tax evaded or short deducted, subject to a minimum of Rs. 10,000/-. 
But if the fraud has been committed without any fraudulent intent or the tax evasion is unintentional then the penalty to be paid in this case will be 10%, subject to a minimum of Rs. 10,000. 
 
The penalty applies to those as well who is not a taxable person but have:
  • Abated someone in committing the fraud. 
  • Acquired goods or services which are against the provisions of GST, even after having the information in this regard. 
  • Failed in/to issuing/issue a genuine invoice.
  • Failed to maintain the proper records or the books of accounts.
  • Failed to appear before the ad rem authority upon a summon issued to his/her name.
When the above-mentioned situations arise then the offender will also be liable to pay a penalty of Rs. 25,000.
 
There are also provisions under GST for the case of fraud is deemed ascertained. For such cases, apart from the fore-mentioned amount of penalty, the following shall also apply:
  1. If the amount of tax involved is up to Rs. 50 lakhs, then the person has to serve a jail term of 1 year along with paying the penalty.
  2. If the amount ranges between Rs. 50 lakhs to Rs. 1 crore, then the jail term shall rise up to three years with the penalty. 
  3. If the amount is more than Rs. 1 crore, then the person shall face a jail term up to 5 years plus the penalty.

Prosecution –

The criminal proceedings shall be held against the offender if the person commits the below-mentioned offences intentionally and deliberately to cause fraud.  
  • Issuing an invoice without making a supply of goods or services.
  • Claiming a refund of CGST/SGST by fraud.
  • Abetting in the fraud under GST. 
  • Submitting fake documents or returns.
 
The offender can go through Inspection, Search or Seizure under GST if – 
The Joint Commissioner of CGST/SGST has enough reason to believe that the taxpayer is purposely hiding and suppressing the transactions in order to evade taxes or has claimed disproportionate Input Tax Credit, then the order can be passed to inspect the whereabouts of such person. 
In the same manner, the Joint Commissioner can also order for search and seizure of the premises of a taxpayer if he has enough reason to believe that there are goods, which needs to be confiscated or the person is hiding some important documents somewhere. 
 
These are the GST offences and penalties for fraud, to know more about it stay tuned to our series of blogs!
 

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