Section 122 of GST – Penalty for certain offences

Section 122 of GST – Penalty for certain offences. In this GST Section you may find all details for Penalty for certain offences as per GST Act 2017Detailed Analysis of GST Section 122 of GST Act 2017. We Provide Complete Details for All GST Section’s and In this article you may find all details for GST Section 122Check Section Wise Analysis of GST Act 2017, Chapter Wise Analysis of GST All Sections. in this article you may find complete details regarding Section 122 of GST Act 2017 – Penalty for certain offences, gst all sections and definitionsNow Check more details from below…..

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Section 122 of GST – Penalty for certain offences

Statutory Provision

(1) Where a taxable person who –

  • (i) supplies any goods or services or both without issue of any invoice or issues an incorrect or false invoice with regard to any such supply;
  • (ii) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder;
  • (iii) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
  • (iv) collects any tax in contravention of the provisions of this Act but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;
  • (v) fails to deduct the tax in accordance with the provisions of sub-section (1) of section 51, or deducts an amount which is less than the amount required to be deducted under the said sub-section, or where he fails to pay to the Government under sub-section (2) thereof, the amount deducted as tax;
  • (vi) fails to collect tax in accordance with the provisions of sub-section (1) of section 52, or collects an amount which is less than the amount required to be collected under the said sub-section or where he fails to pay to the Government the amount collected as tax under sub-section (3) of section 52;
  • (vii) takes or utilises input tax credit without actual receipt of goods or services or both either fully or partially, in contravention of the provisions of this Act or the rules made thereunder;
  • (viii) fraudulently obtains refund of tax under this Act;
  • (ix) takes or distributes input tax credit in contravention of section 20, or the rules made thereunder;
  • (x) falsifies or substitutes financial records or produces fake accounts or documents or furnishes any false information or return with an intention to evade payment of tax due under this Act;
  • (xi) is liable to be registered under this Act but fails to obtain registration;
  • (xii) furnishes any false information with regard to registration particulars, either at the time of applying for registration, or subsequently;
  • (xiii) obstructs or prevents any officer in discharge of his duties under this Act;
  • (xiv) transports any taxable goods without the cover of documents as may be specified in this behalf;
  • (xv) suppresses his turnover leading to evasion of tax under this Act;
  • (xvi) fails to keep, maintain or retain books of account and other documents in accordance with the provisions of this Act or the rules made thereunder;
  • (xvii) fails to furnish information or documents called for by an officer in accordance with the provisions of this Act or the rules made thereunder or furnishes false information or documents during any proceedings under this Act;
  • (xviii) supplies, transports or stores any goods which he has reasons to believe are liable to confiscation under this Act;
  • (xix) issues any invoice or document by using the registration number of another registered person;
  • (xx) tampers with, or destroys any material evidence or document;
  • (xxi) disposes off or tampers with any goods that have been detained, seized, or attached under this Act,

he shall be liable to pay a penalty of ten thousand rupees or an amount equivalent to the tax evaded or the tax not deducted under section 51 or short deducted or deducted but not paid to the Government or tax not collected under section 52 or short collected or collected but not paid to the Government or input tax credit availed of or passed on or distributed irregularly, or the refund claimed fraudulently, whichever is higher.

(2) Any registered person who supplies any goods or services or both on which any tax has not been paid or short-paid or erroneously refunded, or where the input tax credit has been wrongly availed or utilised-

  • (a) for any reason, other than the reason of fraud or any wilful misstatement or suppression of facts to evade tax, shall be liable to a penalty of ten thousand rupees or ten per cent. of the tax due from such person, whichever is higher;
  • (b) for reason of fraud or any wilful misstatement or suppression of facts to evade tax, shall be liable to a penalty equal to ten thousand rupees or the tax due from such person, whichever is higher.

(3) Any person who–

  • (a) aids or abets any of the offences specified in clauses (i) to (xxi) of sub-section (1);
  • (b) 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;
  • (c) 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;
  • (d) fails to appear before the officer of central tax, when issued with a summon for appearance to give evidence or produce a document in an inquiry;
  • (e) fails to issue invoice in accordance with the provisions of this Act or the rules made thereunder or fails to account for an invoice in his books of account,

shall be liable to a penalty which may extend to twenty-five thousand rupees.

Analysis and Updates

Introduction

For effective implementation of any tax-law and to do justice to tax abiding society, provisions to take strict action against offenders are required. The discussion in the following paragraphs deal with the punitive provisions of GST law.

Analysis

At the outset, the section declares the offences that attract penalty as a consequence, apart from the requirement to pay the tax and applicable interest. Some of the offences listed under this section may also attract prosecution under section 132 but that depend on the gravity of the offence defined in that section.

The Section is divided in three main parts:

(i) The first sub-section prescribes 21 types of offences, any one of which if committed, can attract penalty of ten thousand rupees or equal to amount of tax involved, whichever is higher.

(ii) The second sub-section deals with two situations, firstly, where certain offences committed are not due to either fraud or wilful misstatement or suppression of facts. In such a case, penalty will get reduced to 10% of tax involved subject to a minimum of ten thousand rupees. Secondly, where the offence committed is due to either fraud or any wilful misstatement or suppression of facts to evade tax will result in a penalty equal to tax involved subject to a minimum of ten thousand rupees.

(iii) The third sub-section deals with offences where the person is not directly involved in any evasion but may be a party to evasion or if he does not attend summons or produce documents. Penalty in such a case would be upto twenty five thousand rupees.

While this section describes the offence and prescribes the penalty applicable, the procedure for adjudicating the imposition of this penalty is under section 73 and section 74 in which there is no express reference to this section. Persons found to have committed the offences listed in this section are liable to payment of penalty as follows:

A. Penalty equivalent to higher of Rupees 10,000/- or tax evaded/ tax not deducted/ collected or short deducted/collected or tax deducted/collected but not paid, whichever is higher in the following cases:

  • 1. Supplies any goods/services:
    • Without issue of any invoice or
    • Issues an incorrect/false invoice in respect of such supply
  • 2. Issues an invoice without supply of goods/services in violation of the provisions of the Act/ Rules.
  • 3. Collects any amount as tax but fails to deposit the same with the Government beyond a period of three months from due date.
  • 4. Collects any tax in contravention of law but fails to deposit the same with the Government beyond a period of three months from due date.
  • 5. Fails to –
    • (a) Deduct tax/deduct appropriate tax, as per Section 51 (Section 51 is applicable to certain specific persons. The said section requires such specified persons to deduct tax at the rate of one per cent out of the payment to the supplier if the value of supply under a contract exceeds two lakh and fifty thousand rupees) or
    • (b) deposit the tax deducted with the Government
  • 6. Fails to –
    • (a) collect tax/collect appropriate tax as per provisions of Section 52 (Section 52 is applicable to electronic commerce operator to collect tax from the supplier of goods at the time of payment to such supplier at the rate of one per cent )
    • (b) deposit the tax collected with the appropriate Government
  • 7. takes or utilizes input tax credit without actual receipt of goods/services either fully or partially in contravention of provisions of Act/ Rules.
  • 8. fraudulently obtains refund of tax.
  • 9. takes or distributes input tax credit in contravention of section 20, or the rules made thereunder (Section 20 prescribes manner of distribution of credit by input service distributor)
  • 10. With an intention to evade payment of tax
    • (a) falsifies or substitutes financial records, or
    • (b) produces fake accounts or documents, or
    • (c) furnishes any false information or return
  • 11. fails to obtain registration.
  • 12. furnishes any false information with regard to registration particulars, either at the time of applying for registration, or subsequently.
  • 13. obstructs or prevents any officer in discharge of his duties.
  • 14. transports any taxable goods without the cover of specified documents.
  • 15. suppresses his turnover leading to evasion of tax.
  • 16. fails to keep, maintain or retain books of account and other documents as specified in law.
  • 17. fails to furnish information or documents called for by an officer or furnishes false information or documents during any proceedings.
  • 18. supplies, transports or stores any goods which he has reason to believe are liable to confiscation.
  • 19. issues any invoice or document by using the registration number of another taxable person.
  • 20. tampers with, or destroys any material evidence or document.
  • 21. disposes off or tampers with any goods that have been detained, seized, or attached under this Act.

B. Penalty at a reduced rate of 10% of the tax involved subject to minimum of Rs.10,000 will be levied in cases where any registered taxable person who supplies any goods or services by whom any tax has not been paid or short-paid or erroneously refunded, or where the input tax credit has been wrongly availed or utilized for any reason, other than the reason of fraud or any wilful misstatement or suppression of facts to evade tax. Penalty of 100% of the tax involved subject to minimum of 10,000 where fraud or any wilful misstatement or suppression of facts to evade tax.

C. Penalty up to rupees twenty-five thousand where any person:

  • 1. aids or abets any of the offences specified in clause A above;
  • 2. 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 reason to believe are liable to confiscation;
  • 3. 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 reason to believe are in contravention of any provisions of this Act or the rules made thereunder;
  • 4. fails to appear before the officer of central tax, when issued with a summon for appearance to give evidence or produce a document in an enquiry
  • 5. fails to issue invoice in accordance with the provisions of this Act or rules made thereunder, or fails to account for an invoice in his books of account

FAQs

Q1. Whether penalty becomes automatically leviable without any adjudication?

Ans. Though not specifically mentioned in section 122 relating to penalties, in the light of section 126 dealing with general disciplines related to penalty and in view of principles of natural justice, penalties cannot be imposed without affording him an adequate opportunity of being heard.

Q2. Can there be any liability even if a person is not a taxable person?

Ans. Yes, penalty under sub-section (3) of Section 122 can be levied on any person even if he is not a taxable person.

MCQs

Q1. If a person has failed to obtain the registration the penalty is equivalent to:
(a) amount of tax
(b) 10% of tax
(c) upto 10,000
(d) the amount of tax or 10,000 whichever is higher

Ans. (d) the amount of tax or 10,000 whichever is higher

Q2. If a person fails to appear before GST officer, the maximum penalty that can be levied is:
(a) amount of tax
(b) 10% of tax
(c) upto 10,000
(d) none of the above

Ans. (d) none of the above

Q3. Penalty of 10% of the tax can be levied if:
(a) a person repeatedly had not appeared before GST officer for 3 times
(b) the taxable person has not filed returns for 6 consecutive months or more
(c) a taxable person has been served with show cause notice for 3 times repeatedly
(d) registered taxable person has not paid under bona fide belief

Ans. (d) registered taxable person has not paid under bona fide belief.

Q4. There is no penalty for not carrying specified documents during transportation of goods
(i) True
(ii) False

Ans. (ii) False

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