Goods and Services Tax

Question 13 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 13 – Q 13. Can a CGST/SGST officer access business premises under any other circumstances? Ans. Yes. Access can also be obtained in terms of Section 64 of MGL. This provision of law is meant to allow an audit party of CGST/SGST or C&AG or a cost accountant or chartered accountant nominated under section 50 of CGST/SGST Act, access to any business premis

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Question 24 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 24 – Q 24. Can offences under MGL be compounded? Ans. Yes. As per section 78 of the MGL, any offence, other than the following, may upon payment of the prescribed (compounding) amount be compounded and such compounding is permissible either before or after the institution of prosecution: Offences numbered 1 to 7 of the 12 major offences (outlin

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Question 12 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 12 – Q 12. What are the basic requirements to be observed during Search operations? Ans. The following principles should be observed during Search: No search of premises should be carried out without a valid search warrant issued by the proper officer. There should invariably be a lady officer accompanying the search team to residence. The officers before starting the search should disclose their identity by showing their identity cards to the person in-charge of the premises. The search warrant should be executed before the start of the search by showing the same to the person in-charge of the premise

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f search all the officers and the witnesses should again offer themselves for their personal search. A Panchnama / Mahazar of the proceedings of the search should necessarily be prepared on the spot. A list of all goods, documents recovered and seized/detained should be prepared and annexed to the Panchnama/Mahazar. The Panchnama / Mahazar and the list of goods/ documents seized/detained should invariably be signed by the witnesses, the in-charge/ owner of the premises before whom the search is conducted and also by the officer(s) duly authorized for conducting the search. After the search is over, the search warrant duly executed should be returned in original to the issuing officer with a report regarding the outcome of the search. The na

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What is meant by compounding of offences – Question 23 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 23 –

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Question 22 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 22 – Q 22. Can a company be proceeded against or prosecuted for any offence under the MGL? Ans. Yes. Section 77 of the MGL provides that every person who was in-charge of or responsible to a company for the conduct of its business shall, along-with the company itself, be liable to be proceeded against and punished for an offence committed by th

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Question 21 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 21 – Q 21. What is a culpable state of mind? Ans. While committing an act, a culpable mental state is a state of mind wherein• the act is intentional; the act and its implications are understood and controllable; the person committing the act was not coerced and even overcomes hurdles to the act committed; the person believes or has reason

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Question 11 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 11 – Q 11. What is the procedure for conducting search? Ans

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Question 20 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 20 – Q 20. Is mensrea or culpable mental state

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Question 10 – Draft-Bills-Reports – Inspection, Search, Seizure and Arrest – FAQ on GST dated 21.9.2016 based on Draft Model GST – Question 10 – Q 10. What powers can be exercised by an officer during valid search? Ans. An officer carrying out a search has the power to search for and seize goods (which are liable to confiscation) and documents, books or things (relevant for any proceedings under MGL) from the premises searched. During search, the officer has the power to break open the door of

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Is prior sanction of competent authority mandatory for initiating prosecution – Question 19 – Draft-Bills-Reports – Offences and Penalties, Prosecution and Compounding – FAQ on GST dated 21.9.2016 bas

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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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