Know all Penalty Provision under GST Law

Introduction

Penalty is basically a punishment imposed for breaking a law, rule, or contract. The GST regime imposes a number of penalties for offences committed. It is crucial to know what these offences with their penalties are in order to avoid committing such wrongdoings. Penalties under the CGST Act are summarized as under for an easier understanding.

Penalties under the CGST Act

Offence	Penalty
Penalty of those 21 offences mentioned in Note I	Amount of tax evaded/short deducted etc., i.e., 100% penalty, subject to a minimum of Rs. 10,000.
Any goods or services supplied on which tax has not been paid, short-paid, erroneously refunded, or where the ITC has been wrongly availed or utilized – Other than fraud case	Higher of 10% of tax due or Rs. 10,000
Any goods or services supplied on which tax has not been paid, short-paid, erroneously refunded, or where the ITC has been wrongly availed or utilized – Fraud case	Higher of 100% of tax due or Rs. 10,000
Offences mentioned in Note II	Penalty extending upto Rs. 25,000
Failure to furnish information return u/s 150	Rs. 100 per day till the failure continues (Maximum is Rs. 5,000)
If any person required to furnish any information/return under section 151:- Fails to do soProvides wrong information	Fine extending to Rs 10,000 Further fine extending to Rs 100 per day (for continuing offence) (Maximum is Rs. 25,000)
No separate penalty is prescribed in law	Penalty upto Rs. 25,000
Goods and Vehicle carrying goods in contravention is seized & the owner of the goods comes forward for payment of such tax and penalty	For taxable goods 100% of the tax payable on such goods For exempted goods, lower of:- 2% of the value of goods or Rs 25,000
Goods and Vehicle carrying goods in contravention is seized & the owner of the goods does not come forward for payment of such tax and penalty	For taxable goods 50% of the value of goods (-) tax paid For exempted goods, lower of:- 5% of the value of goods or Rs 25,000

Punishment for Offences mentioned in Note 3

Offence	Punishment
Tax evaded or ITC wrongly availed or utilized or refund wrongly taken exceeds Rs 500 lakhs	Imprisonment which may extend to 5 years (+) Fine
Tax evaded or ITC wrongly availed or utilized or refund wrongly taken exceeds Rs 200 lakhs	Imprisonment which may extend to 3 years (+) Fine
Tax evaded or ITC wrongly availed or utilized or refund wrongly taken exceeds Rs 100 lakhs	Imprisonment which may extend to 1 year (+) Fine
Commits or Abets commission of an offence – clause f, g or j	Imprisonment which may extend to 6 years or Fine or both
Second or subsequent offence	Imprisonment which may extend to 5 years (+) Fine
Offences mentioned in clause a ,b, c & d	Imprisonment which may extend to 5 years (Cognizable and Non-bailable)

Note 1 – Certain Offences by a Taxable Person

1. supplies goods or services without issue of invoice or issues an incorrect invoice
2. issues any invoice/bill without supply of goods or services in violation of the provisions of this Act
3. collects tax but fails to pay the same to the Government beyond 3 months from the date on which such payment becomes due
4. collects tax in contravention of the provisions of this Act but fails to pay the same to the Government beyond 3 months from the date on which such payment becomes due
5. fails to deduct the tax under section 51(1) or deducts an amount which is less than the amount required to be deducted or fails to pay to the Government the amount deducted as tax
6. fails to collect tax under section 52(1) or collects an amount which is less than the amount required to be collected, or fails to pay to the Government the amount collected as tax
7. Utilises input tax credit without actual receipt of goods or services
8. fraudulently obtains refund of tax
9. takes or distributes input tax credit in contravention of section 20
10. falsifies or substitutes financial records, produces fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax due
11. fails to obtain registration, when person is liable to be registered
12. furnishes any false information with regard to registration particulars
13. obstructs or prevents any officer in discharge of his duties
14. transports any taxable goods without the cover of documents specified
15. suppresses his turnover leading to evasion of tax
16. fails to keep, maintain or retain books of account and other documents
17. fails to furnish information or documents called for by an officer or furnishes false information or documents
18. supplies, transports or stores any goods which he has reasons to believe are liable to confiscation
19. issues any invoice or document by using the registration number of another registered person
20. tampers with, or destroys any material evidence or document
21. disposes off or tampers with any goods that have been detained, seized, or attached

Note 2 – Not only the taxable person but any person who does the following will have to pay a penalty extending upto Rs. 25,000

1. Helps any person to commit fraud under GST
2. Acquires/receives any goods/services with full knowledge that it is in violation of GST rules
3. Fails to appear before the tax authority on receiving a summons
4. Fails to issue an invoice according to GST rules
5. Fails to account/vouch any invoice appearing in the books

Note 3 – Offences under Section 132 of the CGST Act

1. supplies any goods or services without issue of invoice with the intention to evade tax
2. issues any invoice or bill without supply of goods or services leading to wrongful availment or utilisation of ITC or refund of tax
3. avails ITC using such invoice or bill referred to in clause (b)
4. collects any amount as tax but fails to pay the same to the Government beyond a period of 3 months from the date on which such payment becomes due
5. evades tax, fraudulently avails ITC or fraudulently obtains refund and where such offence is not covered under clauses (a) to (d)
6. falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information with an intention to evade payment of tax
7. obstructs or prevents any officer in the discharge of his duties
8. 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
9. 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
10. tampers with or destroys any material evidence or documents;
11. fails to supply any information which he is required to supply or supplies false information
12. attempts to commit, or abets the commission of any of the offences mentioned in clauses (a) to (k) of this section.

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