Goods and Services Tax

Question 9 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 9 – Q 9. Under which circumstances can goods be confiscated under CGST/SGST Act? Ans. Under Section 70 of the CGST Act, goods shall be liable to confiscation if any person: • supplies or receives any goods in contravention of any provision of this Act and such contravention results in evasion of tax payable under the Act, or • does not account for a

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Question 8 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 8 – Q 8. What is meant by confiscation? Ans. The word confiscation has not been defined in the Act. The concept is derived from Roman Law wherein it meant seizing or taking into the hands of emperor, and transferring to Imperial fiscus or Treasury. The word confiscate has been defined in Aiyar s Law Lexicon as to appropriate (private property) to the public t

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Question 7 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 7 – Q 7. What is the penalty prescribed for a person who opts for composition scheme despite being ineligible for the said scheme? Ans. Section 10(5) provides that if a person who has paid under composition levy is found as not being eligible for compounding then such person shall be liable to penalty to an amount equivalent to the tax payable by him under th

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Question 6. – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 6. – Q 6. 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 have not been r

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Question 6 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 6 – Q 6. What is the penalty provided for any contravention for which no separate penalty has been prescribed under CGST/SGST Act? Ans. Section 125 of the CGST/SGST Act provides that any person who contravenes any provision of the Act or the rules made under this Act for which no separate penalty has been prescribed shall be punishable with a penalty that may

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Question 5 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 5 – Q 5. Is any penalty prescribed for any person other than the taxable person? Ans. Yes. Section 122(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, •

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Question 4 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 4 – Q 4. What is the quantum of penalty provided for in the CGST /SGST Act? Ans. Section 122(1) provides that any taxable person who has committed any of the offences mentioned in section 122 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 n

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Question 3 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – 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 126 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 totali

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Question 2 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 2 – Q 2. What is meant by the term penalty? Ans. The word penalty has not been defined in the CGST/SGST Act 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 punishm

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Question 1 – Draft-Bills-Reports – Offences, Penalties, Prosecution and Compounding – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 1 – 20. Offences, Penalties, Prosecution and Compounding Q 1. What are the prescribed offences under CGST/SGST Act? Ans. The CGST/SGST Act codifies the offences and penalties in Chapter XVI. The Act lists 21 offences in section 122, apart from the penalty prescribed under section 10 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 contrave

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on regarding registration particulars either at the time of applying for registration or subsequently; 13) Obstructing 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/de

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Question 32 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 32 – Q 32. Are there any class of officers who are required to assist CGST/SGST officers? Ans. Under section 72 of CGST/SGST Act, the following officers have been empowered and are required to assist CGST/SGST officers in the execution of CGST/SGST Act. The categories specified are as follows: i. Police; ii. Railways iii. Customs; iv. Officers of State/UT/ Central Gov

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Question 31 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 31 – Q 31. What are the precautions to be observed while issuing summons? Ans. The following precautions should generally be observed when summoning a person: – (i) A summon should not be issued for appearance where it is not justified. The power to summon can be exercised only when there is an inquiry being undertaken and the attendance of the person is considered ne

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Question 30 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 30 – Q 30. What are the guidelines for issue of summons? Ans. The Central Board of Excise and Customs (CBEC) in the Department of Revenue , Mini s t r y of Finance has issued guidelines from time to time to ensure that summons provisions are not misused in the field. Some of the important highlights of these guidelines are given below: i. summons are to be issued as a last resort where assesses are not co-operating and this section should not be used for the top management; ii. the language of the summons should not be harsh and legal which causes unnecessary mental stress and embarrassment to the receiver; iii.

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Question 29 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 29 – Q 29. What can be the consequences of non- appearance to summons? Ans. The proceeding before the official who has issued summons is deemed to be a judicial proceeding. If a person does not appear on the date when summoned without any reasonable justification, he can be prosecuted under section 174 of the Indian Penal Code (IPC). If he absconds to avoid service of

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Question 28 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 28 – Q 28. What are the responsibilities of the person so summoned? Ans. A person who is issued summon is legally bound to attend either in person or by an authorized representative and he is bound to state the truth before the officer who has issued the summon upon any subject which is the subject matter of examination and to produce such documents and other things a

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Question 27 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 27 – Q 27. When can the proper officer issue summons under CGST Act? Ans. Section 70 of CGST/SGST Act gives powers to a duly authorized CGST/SGST officer to call upon a person by issuing a summon to present himself before the officer issuing the summon to either give evidence or produce a document or any other thing in any inquiry which an officer is making. A summons

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Question 26 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 26 – Q 26. What are cognizable and non-cognizable offences under CGST Act? Ans. In section 132 of CGST Act, it is provided that the offences relating to taxable goods and /or services where the amount of tax evaded or the amount of input tax credit wrongly availed or the amount of refund wrongly taken exceeds ₹ 5 crore, shall be cognizable and nonbailable. Other

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What is a non-cognizable offence? – Question 25 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 25 – Q 25. What is a non-cognizable offence? Ans. Non-cognizable offence means relatively less serious offences in respect of which a police officer does not have the authority to make an arrest without a warrant and an investigation cannot be initiated without a court order. – Statutory Provisions, Acts, Rules, Regulations, Taxation

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What is a cognizable offence? – Question 24 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 24 – Q 24. What is a cognizable offence

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Question 23 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 23 – Q 23. What are the broad guidelines for arrest followed in CBEC? Ans. Decision to arrest needs to be taken on case-to- case basis considering various factors, such as, nature and gravity of offence, quantum of duty evaded or credit wrongfully availed, nature and quality of evidence, possibility of evidences being tampered with or witnesses being influenced, coope

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Question 22 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 22 – Q 22. What are the precautions to be taken during arrest? Ans. The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) relating to arrest and the procedure thereof must be adhered to. It is therefore necessary that all field officers of CGST/SGST be fully familiar with the provisions of the Code of Criminal Procedure, 1973. One important provision to be taken note of is section 57 of Cr.P.C., 1973 which provides that a person arrested without warrant shall not be detained for a longer period than, under the circumstances of the case, is reasonable but this shall not exceed twenty four hours (exclu

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e tags with their designations. The particulars of all such police personnel who handle interrogation of the arrestee must be recorded in a register. ii. The police officer carrying out the arrest shall prepare a memo of arrest at the time of arrest and such memo shall be attested by at least one witness, who may be either a member of the family of the arrestee or a respectable person of the locality from where the arrest is made. It shall also be counter signed by the arrestee and shall contain the time and date of arrest. iii. A person who has been arrested or detained and is being held in custody in a police station or interrogation center or other lock up, shall be entitled to have one friend or relative or other person known to him or

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f the person who has been informed of the arrest and the names and particulars of the police officials in whose custody the arrestee is. vi. The arrestee should, where he so requests, be also examined at the time of his arrest and major and minor injuries, if any present on his/her body, must be recorded at that time. The Inspection Memo must be signed both by the arrestee and the police officer effecting the arrest and its copy provided to the arrestee. vii. The arrestee should be subjected to medical examination by the trained doctor every 48 hours during his detention in custody by a doctor on the panel of approved doctors appointed by Director, Health Services of the concerned State or Union Territory, Director, Health Services should p

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Question 21 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 21 – Q 21. What are the safeguards provided under CGST /SGST Act for a person who is placed under arrest? Ans. There are certain safeguards provided under section 69 for a person who is placed under arrest. These are: a. If a person is arrested for a cognizable offence, he must be informed in writing of the grounds of arrest and he must be produced before a magistrate

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Question 20 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 20 – Q 20. When can the proper officer authorize arrest of any person under CGST / SGST Act? Ans. The Commissioner of CGST/SGST can authorize a CGST/SGST officer to arrest a person if he has reasons to believe that the person has committed an offence attracting a punishment prescribed under section 132(1) (a), (b), (c), (d) or Sec 132(2) of the CGST/SGST Act. This ess

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Question 19 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 19 – Q 19. What is meant by the term arrest ? Ans. The term arrest has not been defined in the CGST/SGST Act. However, as per judicial pronouncements, it denotes the taking into custody of a person under some lawful command or authority . In other words, a person is said to be arrested when he is taken and restrained of his liberty by power or colour of lawful warrant

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Question 18 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST (2nd Edition) dated 31.3.2017 – Question 18 – Q 18. Is there any special document required to be carried during transport of taxable goods? Ans. Under section 68 of CGST /SGST Act, a person in charge of a conveyance carrying any consignment of goods of value exceeding a specified amount may be required to carry a prescribed document as may be prescribed. – Statutory Provisions, Acts, Rules, Regulations, Taxa

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