ॐ असतो मा सद्गमय
In terms of Section 126(5) where a person voluntarily discloses to a tax authority the circumstances of a breach of the tax law, regulation or procedural requirement prior to the discovery of the breach by the tax authority, the tax authority may consider this fact as a potential mitigating factor when quantifying a penalty for that person.
(ICAI FAQ PUBLICATIONS 06-09-2017 General disciplines related to penalty, General Penalty and Waiver of penalty : FAQ NO. 11)
In terms of explanation to Section 126(1), a breach shall be considered a ‘minor breach’ if the amount of tax involved is less than five thousand rupees.
(ICAI FAQ PUBLICATIONS 06-09-2017 General disciplines related to penalty, General Penalty and Waiver of penalty : FAQ NO. 10)
The general guidelines to be followed while imposing penalties are as under:
Substantial penalties shall not be imposed for minor breaches of tax regulations or procedural requirements.
No penalty in respect of any omission or mistake in documentation which is easily rectifiable and obviously made without fraudulent intent or gross negligence shall be greater than necessary to serve merely as a warning.
The penalty imposed shall depend on the facts and circumstances of the case and shall commensurate with the degree and severity of the breach.
(ICAI FAQ PUBLICATIONS 06-09-2017 General disciplines related to penalty, General Penalty and Waiver of penalty : FAQ NO. 9)
Yes, If a person who is required to furnish an information return under section 150 fails to do so within the period specified in the notice issued under sub-section (3) thereof, the proper officer may direct that such person shall be liable to pay a penalty of ` 100 for each day of the period during which the failure to furnish such return continues However, the penalty imposed under this section shall not exceed ` 5,000/-. Similarly, if any person who is required to furnish any information or return under section 151,—
(a) without reasonable cause fails to furnish such information or return as may be required under that section, or
(b) wilfully furnishes or causes to furnish any information or return which he knows to be false, then, he shall be punishable with a fine which may extend to ten thousand rupees and in case of a continuing offence to a further fine which may extend to ` 100 for each day after the first day during which the offence continues subject to a maximum limit of ` 25,000.
(ICAI FAQ PUBLICATIONS 06-09-2017 Penalty for failure to furnish information or failure to furnish statistics : FAQ NO. 8)
Yes, any activity pertaining to aiding or abetting the offence would be an offence attracting a penalty to the extent of ` 25,000/-. Further, in terms of Section 122(3) following offences shall also be punishable with a penalty to the extent of ` 25,000/-:
(a) 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 reason to believe are liable to confiscation under this Act or the rules made thereunder;
(b) 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 reason to believe are in contravention of any provisions of this Act or the rules made there under;
(c) 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 enquiry;
(d) fails to issue invoice in accordance with the provisions of this Act or rules made there under, or fails to account for an invoice in his books of account;
(ICAI FAQ PUBLICATIONS 06-09-2017 Penalty for certain offences: FAQ NO. 7)
Yes. In terms of Section 122(2), the non-payment of tax or short payment of tax or erroneous refund without intention to evade (i.e. not involving fraud or any wilful misstatement or suppression of facts to evade tax) would attract a penalty of ` 10,000/- or 10% of the tax due, whichever is higher.
(ICAI FAQ PUBLICATIONS 06-09-2017 Penalty for certain offences: FAQ NO. 6)
` 10,000/- or an amount equivalent to the tax evaded or the tax not deducted 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, as the case may be, whichever is higher.
(ICAI FAQ PUBLICATIONS 06-09-2017 Penalty for certain offences: FAQ NO. 5)
The other activities which would be considered to be offences attracting penalty are as under:
(a) failure to deduct tax in terms of provisions of Section 51 or short deduction of tax or failure to remit tax so deducted (b) failure to collect tax by an E commerce operator in terms of Section 52 or short collection of tax or failure to remit tax so collected within
(c) taking or availment (or both) of input tax credit without actual receipt of goods or services in violation of the provisions
(d) fraudulently obtaining refund of any CGST/SGST under this Act
(e) takes or distributes input tax credit in violation of section 20, or the rules made there under;
(f) 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;
(g) failure to obtain registration even though liable to registration;
(h) furnishing of any false information with regard to registration particulars, either at the time of applying for registration, or subsequently;
(i) Obstruction or prevention of any officer in discharge of his duties under the GST provisions;
(j) Transports any taxable goods without the cover of documents as may be
specified;
(k) Suppression of turnover leading to evasion of tax under this Act;
(l) Failure to keep, maintain or retain books of account and other documents in
accordance with the provisions of this Act or the rules made thereunder;
(m) Failure to furnish information and/or documents called for by a CGST/SGST officer in accordance with the provisions of this Act or rules made there under or furnishes false information and/or documents during any proceedings under this Act;
(n) supplies, transports or stores any goods which he has reason to believe are liable to confiscation under this Act;
(o) issues any invoice or document by using the identification number of another taxable person;
(p) tampers with, or destroys any material evidence;
(q) disposes off or tampers with any goods that have been detained, seized, or
attached under this Act
(ICAI FAQ PUBLICATIONS 06-09-2017 Penalty for certain offences: FAQ NO. 4)
Yes, in terms of Section 122(1) (iv) of the CGST Act, 2017, collection of tax in
contravention to the provisions of the CGST Act, 2017 and subsequent failure to remit the same to the credit of the Government beyond a period of 3 months from the date on which such payment becomes due is an offence attracting penalty of ` 10,000/- or amount equal to the amount of tax so collected, whichever is higher. Further, in terms of Section 132(1) (d) read with Section 132(1) (I) of the CGST Act, 2017, the said offence attracts imprisonment which may extend from 1year to 5 years based on the quantum of tax evasion.
(ICAI FAQ PUBLICATIONS 06-09-2017 Penalty for certain offences: FAQ NO. 3)
Collection of tax and non-remittance of the same within 3 months to the Government from the due date for remittance is considered to be an offence under Section 122(1)(iii) of the CGST Act, 2017 attracting penalty of an amount equal to the tax so collected or an ` 10,000/- whichever is higher
(ICAI FAQ PUBLICATIONS 06-09-2017 Penalty for certain offences: FAQ NO. 2)