What are GST Penalties and Appeals?

Offences under GST

In addition to penalty under sction8 which includes wrong/ fake invoices, tax evasion and fraud, there are 21 more offences which are covered under GST rules. Some of GST penalties and offences are listed below:

  • Opting for the composition scheme while being ineligible for the same
  • Suppression of sales deliberately in order to evade tax
  • Submission of fake returns or financial documents/ records
  • Not registering under GST even when one is required to get registered by the law
  • Claiming fraud refunds
  • Submission of false data while registration
  • Not issuing invoice or issuing a false invoice in the supply of goods/ services
  • Issuing invoices with someone else’s identification number

GST Penalties and Appeals in India

For cases where there is no intention of tax evasion or fraud

If an offender is making short payments or not paying tax, he needs to pay a penalty of 10% of the amount of tax subject to a minimum of Rs 10,000.

For fraud cases

In cases of willful default in depositing tax, the offender needs to pay a penalty of 100% of the amount under paid or unpaid subject to a minimum of Rs 10,000. Additionally there is imprisonment involved with this default subject to the amount of tax evaded. For Rs 50 lakh, the jail term is up to one year, for Rs 100 lakh it is up to three years and for 250 lakh and above, the jail term is up to 5 years.

Inspection under GST

If an officer equivalent or above the rank of Joint Commissioner of CGST or SGST has any strong grounds to believe that a person has claimed excess input tax credit, suppressed any transaction, etc, in order to evade tax, then he can ask any other officer of SGST or CGST to inspect the business place.

Search and seizure under GST

A Joint Commissioner of SGST or CST can give such orders if on the basis of inspection it is clear/ suspicious that:

  • The books/ documents useful in proceedings are hidden somewhere
  • There is liability for confiscation for some goods

Goods in transit

The person in charge of any vehicle which is carrying goods more than the specified quantity/ value needs to carry certain documents all along. An officer above a prescribed rank is authorized to intercept such goods and carry out inspection of such goods or relevant documents. If the goods loaded contravene to GST Act, the goods along with the vehicle and related documents will be seized. The release of such goods will only be possible after payment of tax along with the penalty under section 89.

Compounding of offences under GST

In order to avoid litigation a shortcut method is adopted i.e. compounding of offences. Under prosecution in a criminal court accused has to appear before the Magistrate on each hearing through an advocate. Compounding is not possible in cases where the value involved is more than Rs 1 crore.

Prosecution under GST

Any person who is involved in conduct of a deliberate fraud or such intention is liable for prosecution. A few such examples are listed below:

  • Fraud claim of refund for SGST or CGST
  • Submission of fake documents, returns or financial records to evade tax
  • Issuing invoice without making supply of any goods or services
  • Helping someone else in carrying out of any fraud under GST

Arrest under GST

A person can be arrested by an authorized SGST or CGST officer if the Commissioner believes that the person has committed any offence under section 92. The grounds of arresting will be told to the person arrested who will be made to appear before the Magistrate in 24 hours if the offence is cognizable.

GST Appeals

Any person who is dissatisfied with any decision taken or order passed by an adjudicating authority under GST against him can appeal to First Appellate Authority. Again, with any dissatisfaction with the decision of First Appellate Authority one can claim justice from National Appellate Authority, then High Court and finally at Supreme Court.