GST is a relatively new tax regime that people believe is difficult to comply with. Even though it has been almost 5 years since its implementation, no serious incidents, audits, or hearings have been seen relating to various violations of GST provisions. These relaxed laws have led to people taking the GST Act for granted. Audits and return scrutiny have recently risen to the top of the CBIC’s priority list, and many of the necessary steps have been taken.
Along with supervising and improving GST compliance, there are consequences for failing to follow it properly or violating it entirely. Aside from the penalties outlined in Section 122, there are provisions for imprisonment if a registered person commits any of the following offenses under section 132:
- Malafide Intent Situations
The legislators observed and designed 12 scenarios in which government revenue could be leaked, revised, or misused, and each of these scenarios will have its own set of consequences.
- Supplying goods or services, or both, ‘in black,’ without issuing an invoice to avoid paying taxes.
- ‘Bogus’ invoicing: issuing an invoice without actually supplying the goods.
- Obtaining ITC based on a ‘Bogus’ invoice
- Taking GST but failing to pay it to the government within three months of the due date.
Note: all of the offenses listed in this section are non-cognizable and bailable (Not So Serious in the eyes of the law) except for the 4 points mentioned earlier when such an offense involves an amount exceeding 5 crore rupees.
- Providing manipulated book records to avoid taxes
- Hindering the official duties of any officer in inspection, search, and seizure.
- Any tampering with or destruction of physical evidence or documents.
Note: These offenses are a clear indication of fraud and noncompliance, and the person who commits them shall be punishable by imprisonment for a term of maybe up to six months, a fine, or both. The three offenses mentioned above do not involve any evaded tax amount as these are offenses involving criminal intentions.
- Any activity that is not covered by the points above to evade tax or obtain an erroneous refund of ITC with the intent to defraud.
- A person who moves, conceals, ships, or destroys any goods is already liable for confiscation by the officials.
- Receives or deals, in any way, any services in contravention of the law.
- Fails or denies providing information necessary for the person to provide.
- Attempts or helps in commissioning any of the offenses as mentioned earlier.
All of the offenses mentioned above currently carry prison sentences if the tax amount evaded or the serious offenses exceed the threshold limit shown below:
Tax Amount Evaded or ITC amount wrongly availed or refunded
More than 1 Crore up to 2 Crores
Up to 1 year
More than 2 Crores up to 5 Crores
Up to 3 years
More than 5 Crores
Up to 5 years
- Every prosecution that is initiated requires the commissioner’s prior approval. These charges are not small charges that can be handed over by the assessment officer.
- In any case, if the court records repeated offences without a specific reason, such an action will result in a jail term of at least 6 months, but which may be extended to 5 years with the necessary fine amount.
Any registered person who fails to comply or violates any of these conditions will face penalties and punishments. Usually, an honest and compliant taxpayer would not be affected by any of the situations mentioned above; however, if you have another person handling your books of accounts and ITC reconciliation, the following two contraventions may occur knowingly or unknowingly due to the inherent factor of human error or negligence:
- Failure to provide information as a result of inaccurate records
- Wrongfully claiming ITC or claiming ITC refund as a result of incorrect ITC reconciliation
Finsights GST Reconciliation software is here to free you from such contravention possibilities as well. We are a platform that focuses on the automated and accurate maintenance of records through our Tally on the Go product. Also, our reconciliation product helps users with quick and accurate GST ITC reconciliation with GSTR-2A and GSTR-2B.
The interface intelligently arranges and presents the data so that analyzing and acting on the data is efficient and straightforward. It reduces compliance time and the likelihood of any infringements or violations by providing users with accurate and up-to-date information. Visit finsights to learn more about the accurate book-keeping and automated GST reconciliation ecosystem.