Goods and Services Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 16-2-2018 – The provisions in relation to compounding of offences are provided for in section 138 of the GST Act, 2017. Rule 162 of the GST Rules, 2017 deal with procedure for compounding of offences. Meaning of Compounding Compounding has not been defined in GST Act or Rules. However, Compounding means payment of monetary compensation or fine, instead of undergoing prosecution for an offence committed, which warrants such prosecution. Section 320 of the Code of Criminal Procedure defines compounding as to forbear from prosecution for consideration or any private motive. Aiyar s Law Lexicon defines it variously as arranging, coming to terms; condone for money . Compounding is thus, a legally recognized arrangement, whereby the person charged with an offence is offered the option of avoiding prosecution and imprisonment in lieu of monetary considerations by way of penalty; compounding is essentially a contract between th
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ds will be safe from inquiry (England) Oxford Law Dictionary, 5th Edn, 2003). Compounding is a compromise arrangement between administrator of statute and the person who has committed an offence. Compounding involves receipt of consideration in return of non-prosecution of person who has committed an offence (1997) 24 CLA 214 (CLB). Compounding results in dropping of prosecution proceedings and once the offence is compounded, penalty or prosecution proceedings cannot be taken up for same offence. Compounding order cannot be challenged by either of the parties and appeal against such order does not lie. Such matters cannot be revived or reopened. Compounding is not a right but discretion of the compounding authority. In State of Andhra v Ballamkonoda Venkata Subbaiah & Another 1956 (12) TMI 35 – ANDHRA PRADESH HIGH COURT , it was held that compounding of an offence at the request of the defaulter party is neither an agreement nor a contract. It is a sort of compromise between the tw
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ffences, as per proviso to section 138(1) of the GST Act, 2017 shall not apply in the following cases a) a person who has been allowed to compound once in respect of the specified offences under section 132(1)(a to f) and (l) related to such offences of the GST Act. b) a person who has been allowed to compound once in respect of any offence [other than those in clause (a) above] under the Act or under the provisions of any other SGST Act or IGST Act or UTGST Act in relation to supplies of value exceeding INR one crore; c) a person who has been accused of committing an offence under the Act which is also an offence under any other Act; d) a person who has been convicted for an offence under this Act by a court; e) a person who has been accused of committing an offence specified in clause (g) or clause (j) or clause (k) of sub-section (1) of section 132; and f) any other class of persons or offences as may be prescribed. Specified offences as mentioned in (a) above are offences mentioned
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obtains refund and where such offence is not covered under clauses (a) to (d); (f) falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information with an intention to evade payment of tax due under this Act; (g) obstructs or prevents any officer in the discharge of his duties under this Act; (h) acquires possession of, or in any way concerns himself in transporting, removing, depositing, keeping, concealing, supplying, or purchasing or in any other manner deals with, any goods which he knows or has reasons to believe are liable to confiscation under this Act or the rules made thereunder; (i) receives or is in any way concerned with the supply of, or in any other manner deals with any supply of services which he knows or has reasons to believe are in contravention of any provisions of this Act or the rules made thereunder; (j) tampers with or destroys any material evidence or documents; (k) fails to supply any information which he is
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of compounding shall be prescribed subject to minimum and maximum monetary limits. Both minimum and maximum amounts have been stipulated in law as under: (a) Minimum: Minimum amount not being less than INR 10,000 or fifty per cent of the tax involved, whichever is greater. (b) Maximum: Maximum amount not being less than INR 30,000 or one hundred and fifty per cent of the tax, whichever is greater. The compounding payment would be between the minimum of INR 10,000 or 50% of the tax involved, whichever is higher and would be subject to a maximum of INR 30,000 or 150% of the tax involved, whichever is higher. What does tax include The term tax shall include- the amount of tax evaded; or the amount of input tax credited wrongly availed or utilized or wrongly taken under: the provisions of GST Act, the State Goods and Services Tax Act, the Integrated Goods and Services Tax Act, or the Union Territory Goods and Services Tax Act, and cess levied under the Goods and Services Tax (Compensation
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