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Punishment, Arrest and Imprisonment under GST


Punishment, Arrest and Imprisonment under GST

GST has come into force from the 1st of July 2017. Since the provisions and procedure for compliance under GST are new to taxpayers, the Government has announced that any contravention will be dealt with lightly. Under GST, for various types of offences and contraventions, a penalty could be levied or punishment including arrest can be ordered. The GST penalty amount for different types of offence is listed in an earlier article. In this article, we look at offences under GST that is punishable by imprisonment.

The following types of offences committed with an intent to evade tax is punishable with imprisonment under GST:

  1. Supply of goods or services or both without the cover of  GST tax invoice with an intent to evade tax.
  2. If any person issues any invoice or bill without actual supply of goods or services or both leading to wrongful input tax credit or refund of tax.
  3. Any person who avails input tax credit using invoice referred in point 2 above;
  4. Collection of taxes without payment to the government for a period beyond 3 months of the due date.
  5. Evasion of tax, availment of credit or obtaining refund with an intent of fraud where such offence is not covered in point 1 to 4 above.
  6. Falsifying records or production of false records/ accounts/ documents/ information with an intent to evade tax.
  7. Obstructs or prevents any officer from doing his duties under the act.
  8. Acquires or transports or in any manner or deals with any goods which he knows are liable for confiscation under this Act.
  9. Receives or in any way, deals with any services or has reason to believe are in contravention of any provisions of this law.
  10. Tampers with or destroys any material evidence or documents.
  11. Fails to supply any information which he is required to supply under this law or supply false information.
  12. Attempts or abets the commission of any of the offences mentions above.

For all of the above types of offences, the taxpayer can be imprisoned for a period of upto 5 years. All offences mentioned in this section are non-cognizable and bailable except the following cases:

  • Where the amount exceeds 5 Crores
  • Instances covered by Points 1 to 4 above.

Click here to read on GST Turnover Limit

The quantum of fine and time of imprisonment varies depending on the amount of tax evaded or seriousness of the offence:

Imprisonment for Offences under GST

Amount of Tax Evaded Period of Imprisonment
More than 5 Crores Upto 5 Years
Rs.2 to Rs.5 Crores Upto 3 Years
Rs. 1 to Rs.2 Crores Upto 1 Year
Less than 1 Crore No Imprisonment

In case the offender is a company, every person who, at the time the offence was committed oversaw the conduct of the business of the company, will be deemed to be guilty of the offence and would be liable to be proceeded against and punished accordingly.

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