This article is written by Ayushee Goyal during her internship with Le Droit India.
Introduction to GST
The Goods and Services Tax (GST) laws in India are designed to streamline the tax structure and ensure compliance across the board. To maintain the integrity of this system, the laws prescribe specific offenses and corresponding penalties. Understanding these can help businesses and individuals avoid infractions and adhere to the legal framework.
Offenses under GST
GST laws delineate a range of offenses to cover various aspects of non-compliance. Key offenses include:
- Issuing an Invoice without Supply
Creating an invoice without the actual movement of goods or services to claim undue input tax credit is a serious offense. This practice undermines the tax system by generating false claims. - Supplying Goods or Services without Invoice
Supplying goods or services without issuing an invoice results in tax evasion. This offense prevents the government from collecting due taxes, thereby affecting revenue. - Incorrectly Availing Input Tax Credit
Claiming input tax credit without actually receiving goods or services is another major offense. This fraudulent activity distorts the tax credit mechanism, leading to revenue losses for the government. - Non-Registration
Businesses required to register under GST but failing to do so are committing an offense. Registration is mandatory for businesses exceeding the specified turnover thresholds. - Non-Payment or Short Payment of Tax
Deliberately not paying or underpaying the tax due is a severe offense. This act directly affects the government’s tax collection and can lead to stringent penalties. - Non-Filing of Returns
- Failing to file GST returns within the prescribed time frame is also an offense. Timely filing ensures proper tax accounting and compliance.
Penalties under GST
Penalties under GST are designed to enforce compliance and deter violations. They are categorized based on the nature and severity of the offense:
- General Penalty
For any offense not specifically mentioned, a general penalty of up to Rs. 25,000 can be imposed. This provision ensures that even minor lapses are addressed. - Penalty for Issuing Fake Invoices
Issuing an invoice without the actual supply of goods or services can attract a penalty equal to the tax evaded or Rs. 10,000, whichever is higher. This measure aims to curb fraudulent invoicing. - Penalty for Fraudulent Activities
In cases involving fraud, the penalty can extend up to 100% of the tax evaded. Additionally, prosecution may be initiated, which can lead to imprisonment. - Late Filing Penalty
A late fee of Rs. 100 per day for Central GST (CGST) and Rs. 100 per day for State GST (SGST), subject to a maximum of Rs. 5,000, is levied for delayed filing of returns. This encourages timely compliance.
Conclusion
The penalty framework under GST laws is crucial for ensuring compliance and maintaining the system’s integrity. By clearly defining offenses and corresponding penalties, the GST regime promotes a culture of transparency and accountability among taxpayers. Understanding these provisions helps businesses and individuals avoid infractions and contribute to a robust tax system.
