Various measures have been laid down to check non-compliance under GST. These vary based on the severity of the offence. Penalties have been made stricter for tax evaders under GST, when compared to the current regime. In the current regime, tax authorities can arrest a taxable person if the amount of tax evaded exceeds Rs 2 Crores under Excise and Service Tax. In VAT, barring Gujarat, no other state has the arrest clause.
Under GST, a tax evasion of Rs. 50 Lakhs can attract prison sentence of up to 1 year with fine. Non-bailable arrest, with imprisonment of up to five years and fine, could follow if the value of tax evasion exceeds Rs. 1 crore.
Let us understand the various penalties laid down for non-compliance under GST.
|A person fails to furnish details of outward or inward supplies, monthly return or final return by the due date||Rs. 100 for every day during which the failure continues, subject to a maximum of Rs. 5,000|
|A person fails to furnish the annual return by the due date||Rs. 100 for every day during which the failure continues, subject to a maximum of quarter percent of the person’s turnover in the state where he/she is registered|
The rate of interest on the applicable offences is yet to be notified. The circumstances for levy of interest are:
|A person liable to pay tax fails to pay the tax||Interest on the tax due will be calculated from the first day on which the tax was due to be paid|
|A person makes an undue or excess claim of input tax credit or undue or excess reduction in output tax liability||Interest on the undue excess claim or undue or excess reduction|
|A recipient of a service fails to pay to the supplier of the service the amount towards the value of the service, along with tax payable thereon, within 3 months from the date of issue of invoice by the supplier||Interest on the amount due will be added to the recipient’s liability|
Cancellation of Registration
The circumstances under which a person’s registration will be cancelled are:
- A regular dealer has not furnished returns for a continuous period of 6 months.
- A composition dealer has not furnished returns for 3 quarters.
- A person who has taken voluntary registration has not commenced business within 6 months from the date of registration.
- Registration has been obtained by fraud, wilful misstatement or suppression of facts.
Offences on which penalty will be levied have been specifically laid down under GST.
|If a person:||Rs. 10,000 or an amount equivalent to the tax evaded|
|A person who aids or abets any of the offences listed above||Penalty may extend to Rs. 25,000|
|Any offence for which a penalty is not separately provided under the law||Penalty may extend to Rs. 25,000|
Confiscation of Goods and/or Conveyances and Penalty
Certain offences have been laid down which will lead to the confiscation of goods and/or conveyances and levy of penalty. The penalty will be Rs. 10,000 or an amount equal to the tax evaded. These offences are:
- A person does not account for the goods on which he is liable to pay tax
- A person supplies or receives goods in breach of any provisions or rules with the intent to evade payment of tax
- A person supplies any goods liable to tax without having applied for registration
- A person uses a conveyance for carriage of taxable goods in breach of any provisions or rules
Imprisonment and Fine
The circumstances under which imprisonment is applicable are:
|Commits or abets the following:|
Failing to supply any information required of him under the law or supplying false information
|6 months imprisonment with fine|
|Tax evaded or input tax credit wrongly availed or refund wrongly taken of an amount exceeding Rs. 50 Lakhs, but not exceeding Rs. 1 Crore||Imprisonment which may extend to 1 year with fine|
|Tax evaded or input tax credit wrongly availed or refund wrongly taken of an amount exceeding Rs. 100 Lakhs, but not exceeding Rs. 2.5 Crores||Non-bailable imprisonment which may extend to 3 years with fine|
|Tax evaded or input tax credit wrongly availed or refund wrongly taken of an amount exceeding Rs. 2.5 Crores||Non-bailable imprisonment which may extend to 5 years with fine|
As evident, non-compliance under GST will be treated strictly. However, various steps have been taken to facilitate and ease compliance for dealers. A notice in Form GSTR-3A is sent to every dealer who has not furnished the monthly return by the due date. Any mismatch between supplies reported by a supplier and the recipient are notified in Form GST ITC-1 every month. With invoice-wise matching and input tax credit of the recipient being dependent on the supplier’s compliance, the process of GST has an inbuilt check and balance to ensure that dealers can avoid the penalties of non-compliance. GST is also a technology based tax, by which compliance will become quicker and easier. Hence, businesses must leverage on the various facilities given and technology available to ensure compliance under GST.
Assessments under GST