Offences under the GST Act and their Subsequent Penalties

Last Update Date : April 30, 2019
Estimated Read Time: 4 min

The GST Act lists down 21 offences and penalties applicable on each of them. Severe penalties have been mentioned for those who disobey the law.

21 Offences Listed under GST Law India

The offences provided in the GST law are as follows:

  • Missed to issue invoice or issued wrong invoice for a supply;
  • Did not supply anything but still issued invoice;
  • Failing to pay collected TCS for a period exceeding 3 months;
  • If TCS is collected against the law but not paid to the government within 3 months;
  • Non-collection, lower collection or non-payment of TCS undersection 43;
  • Failing to deduct TDS or submit TDS;
  • Availing input tax credit without receipt of any goods or services;
  • Committing fraud to obtain refund;
  • Getting input tax credit illegally from a distributor;
  • Furnishing wrong information, financial records, etc. while filing with the intention to evade tax;
  • Failing to pay tax;
  • Furnishing incorrect information at the time of registration;
  • Causing hindrance while an officer is performing his duty;
  • Failing to send required documents while transporting goods;
  • Not showing the actual turnover which results in tax evasion;
  • Failing to maintain documents or books of accounts as prescribed;
  • Not providing information asked by an officer during any proceeding;
  • Supplying such goods which need to be confiscated
  • Using someone else’s TIN to issue invoice;
  • Destroying and damaging an evidence;
  • Disposing detained goods.

Penalties under GST

Penal provisions have been prescribed for all kinds of offences in GST law. The law also mentions certain principles on which these penalties should be based.

General Principles for Imposing Penalties:

1) No penalty for minor breach:

Often a person can make mistakes which may appear as fraud or an attempt to evade tax. Sometimes, these mistakes are committed unknowingly or without any malicious intention. The reason could be poor understanding of tax laws or carelessness in following procedures.

Therefore, to save innocent persons from hassles of penalties or associated processes, the model GST law has laid down some guidelines:

  • If the error in taxes is Rs. 5,000 or less, then the breach should be considered minor & no penalty should be imposed.
  • If the mistake committed by the person is easily rectifiable, then the breach should be considered minor & no penalty should be imposed.

2) Penalty should align with severity of breach

Severity of breach of law should be established by analysing the facts & situations & penalty should be imposed accordingly.

3) Reason behind penalty should be disclosed

Model GST law asks the tax authorities to ensure that the person on whom penalty is to be imposed has been provided all the relevant information before being penalised. The concerned person should be informed why he is being penalised.

4) Lower penalty on voluntary disclosure of breach

Penal provisions of model GST law are lenient for those who voluntarily disclose the breach they committed. This will give encourage offenders to admit their wrongdoings without worrying about the repercussions. As per clause 68(5) of model GST law, a tax official may consider this action while establishing penalty. However, this provision will not be applicable in cases where the law prescribes a fixed amount or fired percentage of money as penalty as per clause 68(6) of model GST law.

Amount of Penalty as per GST Law

  • Any offender who commits an offence which results in tax evasion can be punished with a penalty which is higher than the amount of tax evaded as per sec 66 (1).
  • If a person pays insufficient tax then he can be penalised with Rs 10,000 or 10% of tax deficit, whichever is higher. as per section 66 (2).

Penalty for any Offence Where No Separate Penalty has been Prescribed

  • If a person commits any offence for which separate penalty has not been prescribed, then the quantum of penalty can go as high as Rs. 25,000 as per section 67.

Punishments as a Result of Prosecution

If the person is convicted for any offence under section 73(1), then he shall be punishable with a penalty as under the following:

Amount of Tax Evaded Punishment
1. Between Rs.25 lakh and Rs.50 lakh 1 year imprisonment + fine
2. Between Rs.50 lakh and Rs.250 lakh 3 years imprisonment + fine
3. More than Rs. 250 lakh 5 years imprisonment + fine

Minimum Amount of Punishment as a Result of Prosecution

In the absence of special grounds to the contrary to be recorded in a judgment of the court, the Act provides that the term of imprisonment shall not be for a period of six months.

Other Rules Related to Offences

Cognizance of Offences

The law specifies that any court is not allowed to take cognizance of any offence without proper sanction from concerned authority. Any court which holds a lower position than a Magistrate of the First class cannot hold trial against an offence under GST.

Presumption of “Mens Rea” or Guilty Mind

When prosecuting an offender, the court shall assume that the accused had a guilty mind or the law was broken with the intention to break it. The accused shall have the liberty to prove it otherwise.

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CA Chetan Shinde
CA Chetan Shinde
Chetan is the Lead Tax Advisor at H&R Block (India) with an experience of almost half a decade in audit and taxation. His professional areas of interest are GST advisory and statutory audit. Apart from taxation, he is passionate about social causes and works extensively towards rural school development and literacy.