With the change of Taxing machinery in India, the GST regime ushered in a new era of single tax upholding ‘One Nation, One Tax.’ Now, as is the case with any other laws and acts, legalities are needed to keep this system functioning normally. We also need to check the loopholes that can result in fraud practices to come with a workaround for the same.
Precise definitions of the charges involved and appropriate actions to be taken in cases of violating GST are clearly mentioned in its legal working. Also, with the computerization of the entire tax filing system, the ease in detecting errors, frauds, and other offenses in taxing has increased tremendously.
Thus, with the proper recording and tracking of each transaction, all the taxpayers are required to give correct data.
In this article, the offenses, and penalties, which are entailed in the GST act, along with the appeals to repeal against the orders of the concerned authorities are listed.
Twenty-one offenses pertaining to various categories are listed in the GST act. They can be sub-categorized as follows:
GST Offences involving maintenance of Documents
* Furnishing improper invoice or not providing one against the products or services which have been supplied.
* Provision of GST invoice over no real supply of products or services.
* Giving out Invoices or related documents under the GSTIN which is registered under a different person or entity.
* Movement of taxable goods that don’t have appropriate transaction records and documents.
* Negligence in preserving documents and transaction records which are needed to be provided, under the GST regime, when asked for.
GST Offences involving Corrupt Intent
* Providing wrong information during the time of GST registration or at any date later.
* Acquiring GST refund by giving out wrong information.
* Fabrication of transaction details or records or misinforming so as to evade paying the due taxes.
* Being noncompliant in registering under GST even after the strict requirement to do so under the GST act.
* Altering or destroying goods in any way which has already been submitted, held, or seized under the GST act.
* Intentionally providing, transporting, or holding any goods which are likely to be held or seized as per the rules of the GST act.
GST Offences involving evading due Tax Pays
* Incorrect reporting of total turnover so as to evade paying due taxes.
* Failure to forward the tax to the government after charging the tax for the transaction of products and services within three months from collecting it.
* Failure to forward the tax to the government within three months from collecting it, despite the collected tax being against the norms of GST act.
* Making use of Input Tax Credit (ITC) without providing a correct receipt for goods or supply of goods.
* Deliberately not deducting TDS or deducting an amount less than the prescribed TDS as per the given GST norms.
* Deliberating not collecting TDS or collecting an amount less than the prescribed TDS as per the given rules.
* Improper usage of Input Tax Credit (ITC), which is a breach of the norms provided in the GST regime.
GST Offences involving Obstruction
* Deliberately preventing an official from dispensing their duties as per the rules of the GST act.
* Altering or destroying the evidence or documents.
* Fabricating the data, thereby preventing the authority in charge of collecting the proper records.
The penalties due to the violation against the rules of the GST regime results in fines to be paid, which depends upon the offenses.
A late fee penalty is charged when filings are done late, which amounts to Rs 100 per day per act, charged separately for SGST and CGST. In this case, there are no penalties on IGST.
It is important to note here that if tax filing for a particular month has not been done, then it is not possible to file the returns for the subsequent month, leading to an overlapping effect in total fines.
If any of the above-mentioned offenses are done without any ill intent, then the offender has to pay 10% of the total tax payable, minimum being Rs 10,000.
If any of the above-mentioned offenses are done with ill intent, then the offender has to pay 100% of the total tax payable, minimum being Rs 10,000.
Other than this, the offender is also subjected to additional penalties:
* For tax amounts ranging from 100 to 200 lakhs, jail term up to 1 year has to be served.
* For tax amounts ranging from 200 to 500 lakhs, jail term up to 3 years has to be served.
* For tax amounts ranging above 500 lakhs, jail term up to 5 years has to be served.
As with any other charges, the charges made on a person by an adjudicating authority can be challenged if the person is not convinced about it. As per the GST regime, there is a specific appeal process. The procedure followed remains the same for all the types of offenses or penalties charged as per the GST act.
There are different levels of appeal to which a person can go to challenge the charges made on them. The first appeal against any charges under the GST act is lodged in the First Appellate Authority.
The further levels of appeal can be challenged if the decision made by the First Appellate Authority isn’t satisfactory. These are the National Appellate Tribunal, High Court, and the Supreme Court, in this order. For any decision found unsatisfactory in the lower appeal, a further appeal can be done in the higher levels.