The Goods and Services Tax (GST) framework in India operates with a robust system of penalties and appeals to ensure compliance and deter offenses. Staying informed about these regulations is crucial for business owners, Chartered Accountants (CAs), and tax professionals. Let’s explore the latest updates, offenses, penalties, and the appeal process under GST.

Latest Updates

11th July 2023:

The GST Council deliberated on the establishment of state benches of the appellate tribunal, with the tribunal set to be operational from 1st August 2023.

Manual filing of appeals against TRAN-1 or 2 forms orders for migrated taxpayers is now permitted.

Authorities are set to introduce manual appeal filing under GST.

31st March 2023:

CBIC has revised late fees for delayed GSTR-9 filing from FY 2022-23 onwards, with varying rates based on Annual Aggregate Turnover (AATO).

A reduced maximum late fee of Rs 20,000 is set for pending GSTR-9 filings for FYs 2017-18 to 2021-22, applicable from 1st April 2023 to 30th June 2023.

Overview

In the realm of GST, strict provisions are in place to address offenses, accompanied by penalties, prosecution, and even arrest to curb tax evasion and corruption.

Offenses & Penalties

Offenses

There are 21 offenses under GST, covering a range of actions that are considered non-compliant. Some notable offenses include:

Failure to register under GST when mandated.

Supplying goods/services without an invoice or using a false invoice.

Submitting false information during GST registration.

Deliberate suppression of sales to evade tax.

Obtaining refunds through fraudulent means.

Penalties

Late Filing:

Late filing incurs a penalty of Rs. 100 per day per Act, totaling Rs. 200 per day (CGST and SGST). The maximum is capped at Rs. 5,000.

Interest at 18% per annum is also applicable on the tax amount due, calculated from the next day of filing to the date of payment.

Not Filing:

Non-filing of any GST return hampers subsequent filings, leading to cascading fines and penalties.

Offenses without Fraud:

An offender not paying tax or making short payments faces a penalty of 10% of the tax amount due, with a minimum of Rs. 10,000.

Offenses with Fraud:

Offenders engaging in fraud or tax evasion must pay a penalty equal to 100% of the tax evaded/short deducted, with a minimum of Rs. 10,000.

Additional penalties vary based on the tax amount involved, ranging from imprisonment up to 5 years.

Inspection, Search & Seizure

Inspection:

Authorized officers may inspect business premises if there’s reason to believe that transactions have been suppressed to evade tax.

Search & Seizure:

Search orders may be issued if there are goods subject to confiscation or if incriminating documents are hidden.

Seizure can occur, and goods will be released upon payment of tax and penalty, with an option to pay a fine instead of confiscation.

Goods in Transit

The person in charge of a vehicle carrying goods exceeding Rs. 50,000 must carry specified documents.

The proper officer can intercept goods in transit, and non-compliant goods, documents, and the vehicle can be seized, with an option for fines instead of confiscation.

Compounding of Offenses

Compounding offers a shortcut to avoid litigation, with the accused paying a compounding fee instead of facing criminal charges.

Compounding is not available for cases where the value involved exceeds 1 crore.

Prosecution & Arrest

Prosecution under GST involves legal proceedings against a person for criminal charges, such as issuing invoices without supplying goods/services with the intent to defraud.

Arrest under GST can be initiated by authorized officers for certain offenses, and the arrested person must appear before the magistrate within 24 hours for cognizable offenses.

Appeals

Appeals can be made against decisions or orders under GST.

The first appeal goes to the First Appellate Authority, followed by the National Appellate Tribunal, High Court, and Supreme Court.

A taxpayer can also seek an advance ruling to avoid lengthy appeal processes by clarifying 

GST treatment before a proposed activity.

Understanding the intricacies of penalties, appeals, and legal proceedings under GST is imperative for businesses to maintain compliance, minimize financial implications, and navigate the complexities of the taxation system.