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Author - Santosh Maurya

GST is an indirect tax reforms in India. This is the biggest indirect tax in the form of Goods and Services Tax (GST). GST was introduced in India from 1 July 2017.

It is a comprehensive multistage, destination based tax. It is comprehensive because it has subsumed almost all the indirect taxes, except few multi-staged as it is imposed at every step in the production process and is meant to be refunded to all parties in the stages of production instead of the final consumer. It is collected from point of consumption and not point of origin like the previous tax model.

The Central government approved four GST bills on 12 April 2017.

• Central GST (CGST Bill)
• Integrated GST (IGST Bill)
• Union Territory GST (UTGST) Bill
• The GST (Compensation to States) Bill.

GST are divided into different tax slab for collection 0%, 5%, 12%, 18% and 28%.

Petroleum products, alcoholic drinks for human consumption and electricity are not taxed under it but, taxed separately by the individual state governments. On rough precious and semi-precious stones, it is 0.25% and it is 3% on gold.

On the compliance front, all registered people have to file monthly returns in the Form GSTR-3B (containing a summary of outward and inward supplies) by the 20th of the succeeding month. Additionally, an invoice-wise return of outward supplies needs to be submitted in the Form GSTR-1 by the 10th of the succeeding month. Taxpayers with turnover up to INR 5 crores can file Form GSTR-1 on quarterly basis.

The taxpayers will be required to file only one monthly return as approved by the GST council. On invoice details of the outward supplies uploaded by the supplier, input tax credit will be given.

There is provision for the electronic way bill (e-way Bill) if the consignment value exceeds INR 50,000. This can be generated through various modes such as web, App, SMS using Bulk Upload Tool and API-based site to site integration.

GST has developed gradually from the time of its formation. Industry’s active Participation and Government’s pro active measures will make it truly a simple tax in the time to come.

Non compliance of GST and Consequences

To encourage compliance and effective implementation of any tax law, sting action against tax offenders will happen. The Government has come up with three different tax penalty approaches; Interest, Monetary penalties and Prosecution.

Some of the monetary penalties and prosecution are given below under the Central Goods and Services Tax Act 2017. Under GST, 21 offences are filed and they have penalty of INR 10,000 or more depending on the tax amount. Some of the offence prescribed below may attract prosecution but, it depends on the magnitude of the offence. (Sec 122 (1)):

• Providing an invoice without supplying goods/services.
• Giving goods and services without issuing an invoice. Also, issuing a wrong and incorrect invoice.
• Collecting tax but failing to deposit it to government within 3 months.
• Collecting full input tax credit or part input tax credit without having the original bill of goods and services.
• Obtaining tax refund by wrongful ways.
• Providing inaccurate information during registration.
• Providing a complete invoice with the identity of another person.
• Failing to deposit tax return to the government.
• Transporting goods without documents.
• Taking the refund of tax illegally.

Under Sec 122, any action can be taken and failure of an information could lead to penalties up to INR.25, 000

The Central Goods and Services Tax Act permits for a reduction in penalties, if a person fails to pay the tax owed inadequately, rather than indulging in providing misguidedly information. In such case, the penalty is reduced by 10 % of tax or a minimum of INR 10,000.

If deliberately an element of fraud or misinformation has taken place, then as per sec 122 (2b) penalty will be the tax owed and minimum of INR 10,000. 

If a person fails to give right information or intentionally provides wrong information, then he is liable for the following penalties:  

• For the first time, a fine of INR 10,000.   
• For repeated offences, a fine of INR 10,000 along with INR 100/per day provided the maximum fine of INR 25,000.

Late filing Penalty

Late filing fine is INR 100/per day. Sums up to INR 200 per day will be charged, under CGST INR 100 & under SGST INR 100. For IGST there is no fine of delay filing. An interest of 18% yearly also is paid besides late fee.

Not filing penalty

You are not eligible to file the next subsequent returns if you missed any GST return. Heavy penalties & subsequent repercussion could be face on late filing of returns.

Goods Confiscation

There is provision in act for some of the offence which can lead to penalty & impounding of goods. 

Imprisonment period 

• It depends on the type of offence & amount of tax default.
• Five years imprisonment along with penalty for offence committed more than INR 500 lakhs, for avoiding tax.
• Three years imprisonment along with penalty for offence committed more than INR 200 lakhs, for avoiding tax.
• One year imprisonment along with penalty for offence committed more than INR 100 lakhs, for avoiding tax.

Many organizations and industries feel that Government should deal initially with soft hands for noncompliance of tax rather than with imprisonment.

Conclusion

Prevention is better than cure. So to avoid penalty and imprisonment, you must abide by the rules of GST.