Goods and Services Tax

Question 18 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 18 – Q 18. What are cognizable and non-cognizable offences under MGL? Ans. In terms of Section 73(3) and 73(4) of MGL all offences where the evasion of tax is less than ₹ 250 lakh shall be non-cognizable and bailable, all offences where the evasion of tax exceeds ₹ 250 lakh shall be cognizable and nonbailable. – Statutory Provisions

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Question 9 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 9 – Q 9. When does goods become liable to confiscation under the provisions of MGL? Ans. As per section 70 of Model GST Law, goods become liable to confiscation when any person does the following: (i) supplies any goods in contravention of any of the provisions of this Act or rules made thereunder leading to evasion of tax; (ii) does not account for any good

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Question 17 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 17 – Q 17. What is the punishment prescribed on conviction of any offence under the MGL? Ans. The scheme of punishment provided in section 73(1) is as follows: Offence involving- Punishment (Imprisonment extending to-) Tax evaded exceeding ₹ 250 lakh 5 years and fine Tax evaded between ₹ 50 lakh and ₹ 250 lakh 3 years and fine

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Question 16 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 16 – Q 16. Which are the offences which warrant prosecution under the MGL? Ans. Section 73 of the MGL codifies the major offences under the Act which warrant institution of criminal proceedings and prosecution. 12 such major offences have been listed as follows: 1) Making a supply without issuing an invoice or upon issuance of a false/incorrect invoice; 2) Issuing an invoice without making supply; 3) Not paying tax collected for a period exceeding 3 months; 4) Not depositing any tax that has been collected in contravention of the Act for a period exceeding 3 months; 5) Availing or utilizin

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Question 8 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 8 – Q 8. What is a Search Warrant and what are its contents? Ans. The written authority to conduct search is generally called search warrant. The competent authority to issue search warrant is an officer of the rank of Joint Commissioner or above. A search warrant must indicate the existence of a reasonable belief leading to the search. Search Warrant should

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Question 15 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 15 – Q 15. What is Prosecution? Ans. Prosecution is the institution or commencement of legal proceeding; the process of exhibiting formal charges against the offender. Section 198 of the Criminal Procedure Code defines prosecution as the institution and carrying on of the legal proceedings against a person. – Statutory Provisions, Acts, Rules,

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Question 14 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 14 – Q 14. Can any conveyance carrying goods without cover of prescribed documents be subject to confiscation? Ans. Yes. Section 71 provides that any conveyance carrying goods without the cover of any documents or declaration prescribed under the Act shall be liable to confiscation. However, if the owner of the conveyance proves that the goods

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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 7 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 7 – Q 7. Is it mandatory that such reasons to believe has to be recorded in writing by the proper officer, before issuing authorization for Inspection or Search and Seizure? Ans. Although the officer is not required to state the reasons for such belief before issuing an authorization for search, he has to disclose the material on which his belief was formed.

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Question 12 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 12 – Q 12. What happens to the goods upon confiscation of goods by the proper officer? Ans. Upon confiscation, the title in the confiscated goods shall vest in the Government and every Police officer to whom the proper officer makes a request in this behalf, shall assist in taking possession of the goods. – Statutory Provisions, Acts, Rules, Re

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Question 11 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 11 – Q 11. Under which circumstances can goods be confiscated under MGL? Ans. Under Section 70 of the MGL, goods shall be liable to confiscation if any person: supplies 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 any goods in the manner r

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Question 6 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 6 – Q 6. What is meant by reasons to believe ? Ans. Reason to believe is to have knowledge of facts which, although not amounting to direct knowledge, would cause a reasonable person, knowing the same facts, to reasonably conclude the same thing. As per Section 26 of the IPC, 1860, A person is said to have reason to believe a thing, if he has sufficient caus

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Question 10 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 10 – Q 10. 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

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Question 5 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 5 – Q 5. Who can order for Search and Seizure under the provisions of MGL? Ans. An officer of the rank of Joint Commissioner or above can authorize an officer in writing to carry out search and seize goods, documents, books or things. Such authorization can be given only where the Joint Commissioner has reasons to believe that any goods liable to confiscatio

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Question 9 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 9 – Q 9. What is the penalty prescribed for a person who opts for composition scheme despite being ineligible for the said scheme? Ans. Section 8(3) provides that if a person who has opted for composition of his tax liability is found as not being eligible for compounding then such person shall be liable to penalty to an amount equivalent to the

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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 – 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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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 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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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 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 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 – 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 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 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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