Goods & Service Tax (GST)
The Central Government passed four sets of GST Acts . They are Central GST Act, 2017; Integrated GST Act, 2017; Union Territory GST Act, 2017 and GST (Compensation to States) Act, 2017. The Acts were approved by the Parliament after they were introduced as part of the Money Bill. Following the passage of the GST Acts, the GST Council decided the rate slabs for the Goods and Services to be taxed under the GST regime.
GST (Goods and Services Tax) is the biggest indirect tax reform of India. GST is a single tax on the supply of goods and services. It is a destination based tax. GST has subsumed taxes like Central Excise, Service Tax, VAT, Entry Tax, Octroi, etc. GST is one of the biggest indirect tax reforms in the country. GST has brought together state economies and improved overall economic growth of the nation.
GST is a comprehensive indirect tax levied on manufacture, sale and consumption of goods as well as services at the national level. It has replaced almost all indirect taxes levied on goods and services by Center and States. Businesses are required to obtain a GST Identification Number in every state where they are registered.
Offences Provided in the GST Law
- Missed to issue invoice or issued wrong invoice for a supply;
- Did not supply anything but still issued invoice;
- Failing to pay collected Tax Collection at Source (TCS) for a period exceeding 3 months;
- If TCS is collected against the law but not paid to the government within 3 months;
- Non-collection, lower collection or non-payment of TCS under section 43;
- Failing to deduct TDS or submit TDS;
- Availing input tax credit without receipt of any goods or services;
- Committing fraud to obtain refund;
- Getting input tax credit illegally from a distributor;
- Furnishing wrong information, financial records, etc. while filing with the intention to evade tax;
- Failing to pay tax;
- Furnishing incorrect information at the time of registration;
- Causing hindrance while an officer is performing his duty;
- Failing to send required documents while transporting goods;
- Not showing the actual turnover which results in tax evasion;
- Failing to maintain documents or books of accounts as prescribed;
- Not providing information asked by an officer during any proceeding;
- Supplying such goods which need to be confiscated;
- Using someone else’s TIN to issue invoice;
- Destroying and damaging an evidence;
- Disposing detained goods.
Penalties under GST
Penal provisions have been prescribed for all kinds of offences in GST law. The law also mentions certain principles on which these penalties should be based.
General Principles for Imposing Penalties:
- No penalty for minor breach
- Penalty should align with severity of breach
- Reason behind penalty should be disclosed
- Lower penalty on voluntary disclosure of breach
Amount of Penalty
- Any offender who commits an offence which results in tax evasion can be punished with a penalty which is higher than the amount of tax evaded as per sec 66
- If a person pays insufficient tax then he can be penalised with Rs 10,000 or 10% of tax deficit, whichever is higher. as per section 66.
- If a person commits any offence for which separate penalty has not been prescribed, then the quantum of penalty can go as high as Rs. 25,000 as per section 67.
If the person is convicted for any offence under section 73(1), then he shall be punished with a penalty as under:
|Amount of Tax Evaded||Punishment|
|1. Between Rs.25 lakh and Rs.50 lakh||1 year imprisonment + fine|
|2. Between Rs.50 lakh and Rs.250 lakh||3 years imprisonment + fine|
|3. More than Rs. 250 lakh||5 years imprisonment + fine|
Show Cause Notice
Where the proper officer has reasons to believe that the registered person was not eligible to pay tax under section 10 or has contravened the provisions of the Act or provisions of this Chapter, he may issue a notice to such person to show cause within fifteen days of the receipt of such notice as to why the option to pay tax under section 10 shall not be denied.Upon receipt of the reply to the show cause notice, the proper officer shall issue an order within 30 days of the receipt of such reply, - either accepting the reply, or - denying the option to pay tax under section 10 from the date of the option or from the date of the event concerning such contravention, as the case may be.
Appeals & Revisions
Meeting compliance at par with statutory provisions including tax laws is one of the most important obligation for a tax payer / an assessee.
In cases where the proper officer passes an order which is prejudicial to the interest of the taxpayer, the tax payer deserves the right to make an appeal against such orders passed, provided the grounds of appeal are logical and legitimate & stands merit of law. The right to appeal being a statutory right, the tax payer or the proper officer shall have to file the appeals in the respective forms prescribed, following the prescribed procedure and after the payment of requisite fees.
A person who is aggrieved by a decision or order passed against him by an adjudicating authority, can file an appeal to the Appellate Authority . It is important to note that it is only the aggrieved person who can file the appeal. Also, the appeal must be against a decision or order passed under the Act. Non-appealable issues / orders:
- an order of the Commissioner or other authority empowered to direct transfer of proceedings from one officer to another officer;
- an order pertaining to the seizure or retention of books of account, register and other documents; or
- an order sanctioning prosecution under the Act; or d) an order passed under section 80 (payment of tax in instalments).
|Against Order issued by||Appellate Authorities||Limitation|
|Adjudicating Officer/ Proper Officer||Appellate Authority||3 months from the date of impugned order|
|Against Orders in appeal passed by Appellate Tribunal or Order in Revision passed by the Revisional Authority||Tribunal
>National/ Regional Bench
|3 months from the date of the order under appeal|
|Against Orders of Tribunal||High Court||180 days from the date of order passed by the Tribunal|
|Against Order of the High Court||Supreme Court||Only if the High Court certifies the matter as ‘fit’ to be appealed before the Apex Court|
Revision by the Commissioner: The GST Act also provides for the mechanism of revision, by the Revisional Authority, of the orders passed by his subordinate officers. If the Revisional Authority on examination of the case records is of the view that the decision or order passed by any officer subordinate to him is erroneous in so far as it is prejudicial to the interest of the revenue, and is illegal or improper or has not taken into account material facts, he may, if necessary, stay the operation of such decision or order for such period as he deems fit and after giving the person concerned an opportunity of being heard and after making such further inquiry as may be necessary, pass such order, as he thinks just and proper, including enhancing or modifying or annulling the said decision or order. The above power is subject to the condition that non-appealable orders and decision cannot be revised. Further the power of revision cannot be exercised if:
- the order has been subject to an appeal before AA or Tribunal or High Court or Supreme Court; or
- the period of six months (from the date of communication of order) has not yet expired or more than three years have expired after the passing of the decision or order sought to be revised; or
- the order has already been taken for revision at an earlier stage; or
- the order sought to be revised is a revisional order in the first place.
We at NN Legal Partners manage all the phases of the litigation which arise out of the disputes comprehensively. We provide end to end solutions to our clients starting from the issuance of show cause notice to the appellate stage up to the Supreme Court. Our services can vary based on the nature of the dispute. With an outstanding team of competent and experienced lawyers with convincing skills, we have represented our clients in the previous indirect tax regime and the new GST tax regime. NN Legal Partners is a one stop solution to all your legal troubles.