Wednesday, 28 Feb 2024

Guide To All Offenses And Penalties Under The GST Regime

GST or Goods and Service Tax in India is introduced not only as tax reform, rather a complete refurbishment of the existing tax regime, which was a system of indirect tax mechanism. This whole mechanism has been replaced by a more unified and straightforward tax structure as GST.

The ease in the GST system stems from incorporating indirect tax mechanisms. The heightened amenability results from the process of digitisation. Each and every aspect of the new tax system has been duly computerised, from the registration process to tax filing, and even the act of refund processing also got automated.

At first blush, it’s easy to think that digitising the process of filing a gst return will make it more effective. However, the chances of tax evasion even under these circumstances are still pretty high. Therefore, the tax authority has enforced specific penal provisions.

These penalties are imposed to avert tax evasion as well as to penalise those people who break the law.

Types Of Offences

There are two categories of offences under the new tax system

Offences Drawing Trial And Prosecution  

These types of offences are generally dealt with under strict judicial proceedings by the court of law, and it may result in the imprisonment of the guilty, along with a fine.

Offences Inviting Financial Consequences

On the other hand, these types of offences attract heavy financial penalties and are generally prosecuted by the departmental officers in charge. Additionally, they are classified into two main segments, known as procedural issues and revenue Issues.

Guide To GST Offences And Penalties

There are altogether 21 felonies mentioned under GST. Few among them are stated here.

The significant faults mentioned under GST are:

  1. Not registering your business under the GST
  2. Supply or sale of good and service without proper invoice of the bill
  3. Issue of false gstin search number
  4. Submission of incorrect details while registration under GST
  5. Submission of false fiscal records/ files, or forged returns to avoid tax
  6. Procurement of refunds by scam
  7. Deliberate clampdown of sales to elude tax
  8. Opting for composition GST arrangement being ineligible for the scheme


Committing these offences mentioned above will attract expensive penalties under GST.

Penalty For Late Filing

Offences like late filing of details attract a late fee. These can span from Rs 100 per day to Rs 5000. Along with the penalty of a late fee, violators have to pay the interest charge as well, which is calculated at 18% per annum.

For Not Filing

If a violator fails to file for a GST return, then the subsequent GST returns cannot be submitted as well. Likewise, the penalties will keep on mounting, ultimately resulting in a massive amount of accumulated fines and penalties.

Penalty For Unintentional Tax Evasion

For tax evasion, which is unintentional or accidental, there will be a 10% penalty charge on the total tax amount, and subject to a minimum amount of Rs 10,000.

Penalty For Intentional Tax Evasion

In this case, a violator has to pay a fine of an amount calculated as 100% of the total tax amount and a minimum of Rs 10,000, if he is found to be guilty of evading tax payment deliberately.

Search And Seizure

The joint commissioner or officer of equivalent position can order a GST investigation if he or she believes that a person is suppressing his income or profit intentionally to evade tax. The concerned tax authorities can take extreme measures like search and seizure based on the GST inspection done.

The investigation typically takes place if these reasons are found to be true:

  1. Distribution of either illegal products or goods which are not allowed under GST
  2. Any  documents of financial transaction hidden from the GST officials
  3. Products which are still in transit
  4. Insufficient documents or challan

However, if there are goods found to be prohibited under the GST law, or in the absence of necessary documents, the officer in charge can opt for either to confiscate the items or to charge a hefty fine.

Final Words

It’s uncontroversial to say that people can be guilty of intentional tax evasion, in which case they should face arrest and prosecution by law. But in some cases, you may be falsely accused of trying to steal money from the government. To deal with this situation, you can register an appeal with the Appellate Authority to prove your innocence.