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Question 13 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 13 – Q 13. After confiscation, is it required to give option to the person to redeem the goods? Ans. Yes. In terms of section 70(6), the Owner or the person in-charge of the goods liable to confiscation is to be given the option for fine (not exceeding market price of confiscated goods) in lieu of confiscation. This fine shall be in addition to

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Question 5 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 5 – Q 5. What will be considered as repeated short payments for the purpose of levy of penalty? Ans. Section 66(2) explains that three short payment in respect of three returns during any six consecutive tax periods shall be considered as repeated short payment for the purpose of levy of penalty. – Statutory Provisions, Acts, Rules, Regulations,

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Question 3 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 3 – Q 3. Who can order for carrying out Inspection and under what circumstances? Ans. As per Section 60 of MGL, Inspection can be carried out by an officer of CGST/SGST only upon a written authorization given by an officer of the rank of Joint Commissioner or above. A Joint Commissioner or an officer higher in rank can give such authorization only if he has

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Question 6 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 6 – Q 6. Is any penalty prescribed for any person other than the taxable person? Ans. Yes. Section 66(3) provides for levy of penalty extending to ₹ 25,000/- for any person who• aids or abets any of the 21 offences, deals in any way (whether receiving, supplying, storing or transporting) with goods that are liable to confiscation, rec

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What is the penalty provided for any contravention for which no separate penalty has been prescribed under MGL – Question 7 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 7 – Q 7. What is the penalty provided for any contravention for which no separate penalty has been prescribed under MGL? Ans. Section 67 of the MGL provides that any person who contravenes any provision of the Act or the rules made und

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Question 4 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 4 – Q 4. Can the proper officer authorize Inspection of any assets/premises of any person under this Section? Ans. No. Authorization can be given to an officer of CGST/ SGST to carry out inspection of any of the following: i. any place of business of a taxable person; ii. any place of business of a person engaged in the business of transporting goods whether

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Question 8 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 8 – Q 8. What action can be taken for transportation of goods without valid documents or attempted to be removed without proper record in books? Ans. If any person transports any goods or stores any such goods while in transit without the documents prescribed under the Act (i.e. invoice and a declaration) or supplies or stores any goods that hav

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Question 4 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 4 – Q 4. What is the quantum of penalty provided for in the MGL? Ans. Section 66(1) provides that any taxable person who has committed any of the offences mentioned in section 66 shall be punished with a penalty that shall be higher of the following amounts: The amount of tax evaded, fraudulently obtained as refund, availed as credit, or not ded

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Question 1 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 1 – Q 1. What is the meaning of the term Search ? Ans. As per law dictionary and as noted in different judicial pronouncements, the term search , in simple language, denotes an action of a government machinery to go, look through or examine carefully a place, area, person, object etc. in order to find something concealed or for the purpose of discovering evi

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Question 2 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 2 – Q 2. What is the meaning of the term Inspection ? Ans. Inspection is a new provision under the MGL. It is a softer provision than search to enable officers to access any place of business of a taxable person and also any place of business of a person engaged in transporting goods or who is an owner or an operator of a warehouse or godown. – Statutory Pro

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Question 1 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 1 – Q 1. What are the prescribed offences under MGL? Ans. The Model GST Law codifies the offences and penalties in Chapter XVI. The Act lists 21 offences in section 66, apart from the penalty prescribed under section 8 for availing compounding by a taxable person who is not eligible for it. The said offences are as follows:- 1) Making a supply without invoice or with false/ incorrect invoice; 2) Issuing an invoice without making supply; 3) Not paying tax collected for a period exceeding three months; 4) Not paying tax collected in contravention of the MGL for a period exceeding 3 months; 5)

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or preventing any official in discharge of his duty; 14) Transporting goods without prescribed documents; 15) Suppressing turnover leading to tax evasion; 16) Failure to maintain accounts/documents in the manner specified in the Act or failure to retain accounts/documents for the period specified in the Act; 17) Failure to furnish information/documents required by an officer in terms of the Act/Rules or furnishing false information/documents during the course of any proceeding; 18) Supplying/transporting/storing any goods liable to confiscation; 19) Issuing invoice or document using GSTIN of another person; 20) Tampering/destroying any material evidence; 21) Disposing of /tampering with goods detained/seized/attached under the Act. – Statu

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Question 14 – Draft-Bills-Reports – Settlement Commission – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 14 – Q 14. What are the powers of Settlement Commission? Ans. The powers and procedures of Settlement Commission are given in sections 25 and 26 of IGST Act. It is vested with the powers of a civil court under the Code of Civil Procedure, 1908, for discovery and inspection, enforcing the attendance of a person and examining him on oath, and compelling production of books of account and other records. Settlement Commission is deemed to be a civil court for the purposes of section 195 of the Code of Criminal Procedure, 1973. Any proceeding before it shall be deemed to be a judicial proceeding under section 193 and 228 an

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Question 2 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 2 – Q 2. What is meant by the term penalty? Ans. The word penalty has not been defined in the MGL but judicial pronouncements and principles of jurisprudence have laid down the nature of a penalty as: a temporary punishment or a sum of money imposed by statute, to be paid as punishment for the commission of a certain offence; a punishment impose

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Question 3 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 3 – Q 3. What are the general disciplines to be followed while imposing penalties? Ans. The levy of penalty is subject to a certain disciplinary regime which is based on jurisprudence, principles of natural justice and principles governing international trade and agreements. Such general discipline is enshrined in section 68 of the Act. Accordingly- no penalty is to be imposed without issuance of a show cause notice and proper hearing in the matter, affording an opportunity to the person proceeded against to rebut the allegations levelled against him, the penalty is to depend on the totalit

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Question 7 – Draft-Bills-Reports – Overview of the IGST Act – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 7 – Q 7. IGST Act is very small with very few definitions and major part catering to settlement commissioner. Whether provisions in CGST or SGST Act will apply to IGST Act? Ans. Yes, Section 27 of the IGST Act provides that various provisions as mentioned therein shall apply under IGST Act as they apply in relation to levy under the CGST Act. – Statutory Provisions, Acts,

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Question 12 – Draft-Bills-Reports – Settlement Commission – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 12 – Q 12. What are the circumstances in which order of Settlement Commission can be revoked? Ans. (i) Order of Settlement Commission shall be void if it is later found that it was obtained by fraud or misrepresentation of facts. Thereafter proceedings covered by the settlement shall stand revived from the stage at which the application was allowed to be proceeded with by t

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Question 8 – Draft-Bills-Reports – Overview of the IGST Act – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 8 – Q 8. How will the IGST be paid? Ans. The IGST payment can be done utilizing ITC or by cash. However, the use of ITC for payment of IGST will be done using the following hierarchy,- First available ITC of IGST shall be used for payment of IGST; Once ITC of IGST is exhausted, the ITC of CGST shall be used for payment of IGST; If both ITC of IGST and ITC of CGST are exha

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Question 9 – Draft-Bills-Reports – Overview of the IGST Act – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 9 – Q 9. How will the settlement between Centre, exporting state and importing state be done? Ans. There would be settlement of account between the centre and the states on two counts, which are as follows- Centre and the exporting state: The exporting state shall pay the amount equal to the ITC of SGST used by the supplier in the exporting state to the Centre. Centre and

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Question 13 – Draft-Bills-Reports – Settlement Commission – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 13 – Q 13. Who cannot use Settlement Commission? Ans. The following persons cannot avail of the facility of Settlement Commission? i. No person can avail the facility of settlement more than twice. (section 23) ii. A person cannot apply for settlement in any other matter where after passing of a settlement order, a person was convicted of any offence under the IGST Act in r

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Can the applicant withdraw his settlement application once filed? – Question 10 – Draft-Bills-Reports – Settlement Commission – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 10 – Q 10

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Question 3 – Draft-Bills-Reports – Overview of the IGST Act – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 3 – Q 3. How will the Inter-State supplies of Goods and Services be taxed under GST? Ans. IGST shall be levied and collected by Centre on inter-state supplies. IGST would be broadly CGST plus SGST and shall be levied on all inter-State taxable supplies of goods and services. The inter-State seller will pay IGST on value addition after adjusting available credit of IGST, C

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Question 4 – Draft-Bills-Reports – Overview of the IGST Act – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 4 – Q 4. What are the salient features of the draft IGST Law? Ans. The draft IGST law contains 33 sections divided into 11 Chapters. The draft, inter alia, sets out the rules for determination of the place of supply of goods. Where the supply involves movement of goods, the place of supply shall be the location of goods at the time at which the movement of goods terminate

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Question 11 – Draft-Bills-Reports – Settlement Commission – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 11 – Q 11. What orders can be passed by the Settlement Commission? Ans. Settlement Commission shall pass an order providing for terms of settlement which shall include: i. the amount of tax, interest, fine or penalty that is payable by the applicant (if this amount is not paid within thirty days or a further extended period of three months, it shall be recovered along with interest as sums due to Central Government in accordance with section 54 of CGST Act ); (section 16) ii. manner in which the sums due under the settlement shall be paid; (section 16) iii. granting immunity from prosecution for any offence under the I

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Question 5 – Draft-Bills-Reports – Overview of the IGST Act – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 5 – Q 5. What are the advantages of IGST Model? Ans. The major advantages of IGST Model are: a). A.Maintenance of uninterrupted ITC chain on inter-State transactions; b) No upfront payment of tax or substantial blockage of funds for the inter-State seller or buyer; c) No refund claim in exporting State, as ITC is used up while paying the tax; d) Self-monitoring model; e)

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Question 6 – Draft-Bills-Reports – Overview of the IGST Act – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 6 – Q 6. How will imports/exports be taxed under GST? Ans. All imports/exports will be deemed as inter-state supplies for the purposes of levy of GST (IGST). The incidence of tax will follow the destination principle and the tax revenue in case of SGST will accrue to the State where the imported goods and services are consumed. Full and complete set-off will be available

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