GST Jamku AICHAPTER XIX
OFFENCES AND PENALTIES
Penalty for certain offences.
Section 122(1)
Where a taxable person who—
(i) supplies any goods or services or both without issue of any invoice or issues an incorrect or false invoice with regard to any such supply;
(ii) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder;
(iii) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
(iv) collects any tax in contravention of the provisions of this Act but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
(v) fails to deduct the tax in accordance with the provisions of sub-section (1) of section 51, or deducts an amount which is less than the amount required to be deducted under the said sub-section, or where he fails to pay to the Government under sub-section (2) thereof, the amount deducted as tax;
(vi) fails to collect tax in accordance with the provisions of sub-section (1) of section 52, or collects an amount which is less than the amount required to be collected under the said sub-section or where he fails to pay to the Government the amount collected as tax under sub-section (3) of section 52;
(vii) takes or utilizes input tax credit without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder;
(viii) fraudulently obtains refund of tax under this Act;
(ix) takes or distributes input tax credit in contravention of section 20, or the rules made thereunder;
(x) falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax due under this Act;
(xi) is liable to be registered under this Act but fails to obtain registration;
(xii) furnishes any false information with regard to registration particulars, either at the time of applying for registration, or subsequently;
(xiii) obstructs or prevents any officer in discharge of his duties under this Act;
(xiv) transports any taxable goods without the cover of documents as may be specified in this behalf;
(xv) suppresses his turnover leading to evasion of tax under this Act;
(xvi) fails to keep, maintain or retain books of account and other documents in accordance with the provisions of this Act or the rules made thereunder;
(xvii) fails to furnish information or documents called for by an officer in accordance with the provisions of this Act or the rules made thereunder or furnishes false information or documents during any proceedings under this Act;
(xviii) supplies, transports or stores any goods which he has reasons to believe are liable to confiscation under this Act;
(xix) issues any invoice or document by using the registration number of another registered person;
(xx) tampers with, or destroys any material evidence or document;
(xxi) disposes off or tampers with any goods that have been detained, seized, or attached under this Act,
shall be liable to pay a penalty of ten thousand rupees or an amount equivalent to the tax evaded or the tax not deducted under section 51 or short deducted or deducted but not paid to the Government or tax not collected under section 52 or short collected or collected but not paid to the Government or input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher.
In certain situations, a taxable person may face non-appealable decisions and orders. These include instances where the person:
- Supplies goods or services without issuing an invoice or issues an incorrect or false invoice.
- Issues an invoice or bill without actually supplying goods or services, violating the Act or its rules.
- Collects tax but fails to pay it to the government within three months of the due date.
- Collects tax in contravention of the Act but doesn't pay it to the government within three months.
- Fails to deduct tax according to the Act or deducts an insufficient amount, or fails to pay the deducted tax to the government.
- Fails to collect tax as per the Act or collects less than required, or fails to pay the collected tax to the government.
- Takes input tax credit without receiving goods or services, going against the Act or its rules.
- Fraudulently obtains a tax refund under the Act.
- Takes or distributes input tax credit against Section 20 or its rules.
- Falsifies financial records, produces fake accounts, or provides false information to evade tax payment.
- Is liable for registration but fails to obtain it.
- Furnishes false information during registration or later.
- Obstructs or prevents an officer from performing duties under the Act.
- Transports taxable goods without specified documents.
- Suppresses turnover to evade tax.
- Fails to maintain books of account and documents as required.
- Fails to provide information or documents requested by an officer or provides false information during proceedings.
- Supplies, transports, or stores goods believed to be liable to confiscation.
- Issues an invoice using another person's registration number.
- Tampers with or destroys material evidence or documents.
- Disposes of or tampers with goods detained, seized, or attached under the Act.
For these violations, a penalty of ten thousand rupees or an amount equivalent to the evaded tax or the tax not deducted or collected, input tax credit irregularities, or fraudulently claimed refunds will be imposed, whichever is higher.
Section 112(1A)
Any person who retains the benefit of a transaction covered under clause (i), (ii), (vii) or clause (ix) of sub-section (1) and at whose instance such transaction is conducted, shall be liable to a penalty of an amount equivalent to the tax evaded or input tax credit availed of or passed on.
If a person retains the benefit of a transaction covered under specific clauses and is responsible for initiating the transaction, they will face a penalty equivalent to the evaded tax, input tax credit, or passed-on credit.
Section 112(1B)
Any electronic commerce operator who—
(i) allows a supply of goods or services or both through it by an unregistered person other than a person exempted from registration by a notification issued under this Act to make such supply;
(ii) allows an inter-State supply of goods or services or both through it by a person who is not eligible to make such inter-State supply; or
(iii) fails to furnish the correct details in the statement to be furnished under sub-section (4) of section 52 of any outward supply of goods effected through it by a person exempted from obtaining registration under this Act, shall be liable to pay a penalty of ten thousand rupees, or an amount equivalent to the amount of tax involved had such supply been made by a registered person other than a person paying tax under section 10, whichever is higher.
An electronic commerce operator who allows certain transactions by unregistered or ineligible persons will be liable to pay a penalty. This includes allowing inter-State supplies by ineligible persons or failing to provide correct details in a statement. The penalty is ten thousand rupees or an amount equivalent to the tax involved, whichever is higher.
Section 112(2)
Any registered person who supplies any goods or services or both on which any tax has not been paid or short-paid or erroneously refunded, or where the input tax credit has been wrongly availed or utilised,—
(a) for any reason, other than the reason of fraud or any wilful misstatement or suppression of facts to evade tax, shall be liable to a penalty of ten thousand rupees or ten per cent of the tax due from such person, whichever is higher;
(b) for reason of fraud or any wilful misstatement or suppression of facts to evade tax, shall be liable to a penalty equal to ten thousand rupees or the tax due from such person, whichever is higher.
Any registered person who provides goods or services without paying the required tax, pays less tax than necessary, or receives an erroneous refund, or incorrectly takes advantage of input tax credit, will face penalties under Section 112(2).
Penalty for Non-compliance (Other Than Fraud or Wilful Misstatement):
If a registered person violates tax regulations without engaging in fraud, wilful misstatement, or the suppression of facts to avoid tax, they will be subject to a penalty. This penalty is set at ten thousand rupees or ten percent of the tax owed, whichever amount is higher.
Penalty for Fraud, Wilful Misstatement, or Suppression of Facts:
In cases where the violation is a result of fraud, wilful misstatement, or the intentional suppression of facts to evade tax, the registered person will incur a penalty equal to ten thousand rupees or the tax amount due, whichever is higher.
This strict enforcement aims to ensure compliance with tax obligations and discourage fraudulent practices in the supply of goods and services.
Ensuring Tax Compliance
To uphold the integrity of the tax system, penalties are imposed on registered individuals who fail to meet their tax obligations. These penalties act as deterrents against both unintentional errors and deliberate attempts to evade taxes. By enforcing consequences for non-compliance, tax authorities seek to maintain a fair and transparent taxation framework.
Section 112(3)
Any person who—
(a) aids or abets any of the offences specified in clauses (i) to (xxi) of sub-section (1);
(b) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with any goods which he knows or has reasons to believe are liable to confiscation under this Act or the rules made thereunder;
(c) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder;
(d) fails to appear before the officer of central tax, when issued with a summon for appearance to give evidence or produce a document in an inquiry;
(e) fails to issue invoice in accordance with the provisions of this Act or the rules made thereunder or fails to account for an invoice in his books of account, shall be liable to a penalty which may extend to twenty five thousand rupees.
The law specifies certain actions that can lead to penalties under Section 112(3). Let's break down these actions.
Aiding or Abetting Offences (Clause a): If anyone supports or encourages any of the specified offences listed in clauses (i) to (xxi) of sub-section (1), they can face penalties.
Dealing with Goods Liable to Confiscation (Clause b): If a person is involved in acquiring, transporting, removing, depositing, keeping, concealing, supplying, purchasing, or dealing with any goods that they know or have reason to believe might be confiscated under this Act or its rules, they can be penalized.
Dealing with Services in Contravention (Clause c): Engaging in the supply of services that violate the provisions of this Act or its rules can result in penalties.
Failure to Appear Before the Officer (Clause d): If someone does not appear before the officer of central tax after being summoned to provide evidence or produce documents in an inquiry, they may face penalties.
Invoice Violations (Clause e): Failing to issue an invoice in accordance with the provisions of this Act or its rules, or neglecting to account for an invoice in their books of account, can lead to penalties of up to twenty-five thousand rupees.
Consequences of Violations: In summary, these actions outlined in Section 112(3) can result in penalties, emphasizing the importance of compliance with the law to avoid legal consequences.