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Prosecution under GST

In legal term prosecution means any proceedings carried out against someone in the court of law for doing any criminal offence.

Offences under GST liable for Prosecution

Any individual who commits the following offence intentionally can be prosecuted in the court of law:

  1. Supplying good without an invoice to evade tax.
  2. Issuing an invoice without an actual supply of goods or/and services with the motive to take ITC fraudulently.
  3. Collecting GST (Goods and Service Tax) but not submitting the same to the government within 3 months.
  4. Fraudulently taking a refund of CGST or SGST.
  5. Furnishing fake returns by submitting a false financial record to evade tax.
  6. Obstructing the proper officer at the time of performing his duty.
  7. Acquiring goods that are liable for confiscation intentionally.
  8. Tampering the evidence
  9. Providing false information at the time of proceedings
  10. Helping any other person to commit fraud.

Punishment for offences

Any taxpayer who commits the following offences is punished accordingly. Here is a chart showing the punishment for the above-listed offences:

Tax Amount Bailable or Non-Bailable Jail Term
100-200 Lakhs INR Bailable Up to 1 year
200-500 Lakhs INR Bailable Up to 3 years
Above 500 Lakhs INR Bailable* Up to 5 years

*In case if the taxpayer commits the following offences and where the tax amount exceeds the mark of 500 Lakh INR then in such a case the offence committed becomes non-bailable.

  1. Supplying good without an invoice to evade tax.
  2. Issuing an invoice without an actual supply of goods or/and services with the motive to take ITC fraudulently.
  3. Collecting GST (Goods and Service Tax) but not submitting the same to the government within 3 months.

These stricter steps were taken to prevent tax evasion.

What is the Punishment for tampering with evidence?

The taxpayer can be punished with a 6 months imprisonment in case if he/she

  1. Tampers with any evidence
  2. Obstructs the officer to perform his/her duty
  3. Provides false information
  4. Helps someone to commit fraud

Punishment for repeated offenders

In case a taxpayer repeats the same offence twice then the jail term for the committed offence can extend up to 5 years along with fine. However, without the prior approval of the Commissioner, a taxpayer cannot be prosecuted.

Compounding of offences under GST

Prosecution for an offence in the court of law needs the taxpayer to appear before the Magistrate at every hearing. On the other hand Compounding of offences helps in avoiding litigation. Under compounding of offences under GST, the accused is not required to appear in the court of law and the charges can be relieved on the payment of compounding fee. Here the amount of compounding fee must not be higher than the maximum fine applicable under the relevant provisions.

Is compounding available for every case?

Compounding fee is available for a majority of the cases however there is some case where compounding will not be available and they are:

  1. Repeated offenders
  2. Any person who has previously taken the benefit of compounding for goods/services amounting over 1 Crore INR.
  3. Any person who is accused under the Narcotic Drugs Act, FEMA and so forth.
  4. Any taxpayer who is convicted by the court of law under GST
  5. Any person who obstructs the officer to perform his/her duty
  6. Any person who provides false information during a legal proceeding

The amount payable for compounding of offences

  1. The minimum amount payable for compounding of offences shall be 50% of the tax evaded or 10,000 INR whichever is higher.
  2. Whereas, the maximum amount payable for compounding of offences is 150% of the tax evaded or 30,000 INR whichever is higher.