GST: Penalty, Offences & Appeals Under GST Act 2017

The GST Act 2017 is a comprehensive indirect tax law that combines several indirect taxes, including the Value Added Tax (VAT), central sales tax, service tax, and excise duty, into one single tax regime. GST is a consumption-based tax levied on the supply of goods and services. It was implemented across India on July 1 2017. This article briefly describes the GST Penalty & Appeals Under GST Act 2017, What are the Benefits/Advantages/Disadvantage of GST?

 What is GST?

GST means Goods and Services Tax, an indirect tax levied on India’s supply of goods and services. It is a comprehensive tax that includes all previous indirect taxes such as Central Excise Duty, Service Tax, Value Added Tax (VAT), etc. and is designed to simplify the taxation system. The GST was introduced in India on July 1, 2017, and it is governed by the GST Council, which the Union Finance Minister chairs. GST is a destination-based tax, which means that it is collected by the state where the goods or services are consumed rather than where they are produced. The GST rates vary depending on the category of goods and services, with some items being taxed at higher rates than others.

What is the applicability of GST?

GST, or Goods and Services Tax, applies to all goods and services provided in India, except for a few exempted items. It applies to all individuals, businesses, and organizations involved in producing or distributing goods and services or supplying or importing goods and services.

GST applies to all registered businesses with an annual turnover of more than Rs. 20 lakhs (Rs. 10 lakhs for the northeastern and hill states of India). GST registration is mandatory irrespective of their turnover for businesses engaged in inter-state supplies and businesses registered under special economic zones (SEZs).

Overall, the applicability of GST is broad and covers most goods and services sold or provided in India.

What are the documents necessary for GST Registration?

• PAN card of the applicant
• Aadhaar card of the applicant
• Proof of business registration, such as partnership deed, memorandum of association etc.
• ID and address proof of all partners or directors of the company
• Bank account statement or cancelled cheque of the applicant’s bank account
• Digital signature of the authorized signatory
• Photograph of the applicant
• Proof of business premises such as rent/lease agreement or electricity bill
• List of goods or services to be traded or provided
• Email ID and contact number of the applicant.

What is the Process of GST registration?

The process of GST registration in India is as follows:

• Visit the GST portal – https://www.gst.gov.in/ and click ‘Register Now’ under the ‘Taxpayers (Normal)’ category.
• Select the ‘New Registration’ option and enter all the necessary details, such as the legal name of the business, PAN, email, and mobile number.
• You will get an OTP on your mobile and email ID. Enter the OTP to proceed further.
• Once verified, you will receive a Temporary Reference Number (TRN) on your registered mobile number and email ID.
• Use the TRN to log in to the GST portal and fill the registration form with all the required details such as business details, Promoters or Partners details, authorized signatory details, and other details required for registration.
• Upload supporting documents such as PAN card, identity proof, address proof, bank account details, and business registration documents.
• Once the form is filled and all documents are uploaded, click the ‘Submit’ button.
• After applying, an Application Reference Number (ARN) will be generated and sent to your registered email ID and mobile number.
• The GST authority will verify the application, and the condition of the request will be updated on the GST portal within 7-15 working days.
• If your request is accepted, the applicant will get the GSTIN (Goods and Services Tax Identification Number); if it is rejected, you will get a reason for rejection.

What are the Benefits/Advantages of GST?

• Simplification of Tax Structure: GST replaces multiple indirect taxes with a single tax, simplifying the structure.
• Avoidance of Double Taxation: Under the GST system, taxes are imposed only at the point of consumption, avoiding double taxation and making goods and services cheaper.
• Removal of Cascading Effect: In the pre-GST era, taxes were levied on taxes, creating a cascading effect. GST eliminates this and ensures that tax is paid only on the value added at each stage.
• Increased Compliance: Due to the digitization of the GST system, tax compliance has increased, reducing tax evasion.
• Boost Small Businesses: GST provides a level playing field to small businesses, making it easier for them to compete with more significant players.

What are the Penalties, Offences and Appeals under GST Act 2017?

Penalties under GST Act 2017

• Late filing penalty: If taxpayers fail to file their GST returns on time, they will be subject to a late filing penalty of Rs. 100 per day for each day of delay (up to a maximum of Rs. 5,000).
• Late payment penalty: If a taxpayer fails to pay their GST dues on time, they will be subject to a late payment penalty of 18% per annum, computed from the due date of payment until the actual payment date.
• Incorrect return penalty: If a taxpayer submits an incorrect or false GST return, they will be subject to a penalty of Rs. 10,000 or 10% of the tax amount due, whichever is higher.
• Fraud penalty: If a taxpayer deliberately commits fraud under the GST Act, they will be subject to a penal liability of 100% of the tax amount due, along with potential legal action.

Offences under GST Act 2017

• Failure to register: A person required to register under GST but fails to do so will commit a punishable offence.
• False registration: A person who provides false information during registration will be guilty of an offence.
• Supply of goods without an invoice: Any person who supplies goods without the issuance of a proper tax invoice in violation of GST Act will be committing an offence.
• Submission of false information: If a taxpayer submits false or deceptive information about his GST return, he will commit an offence.

Appeals under GST Act 2017

• First appellate authority:A taxpayer dissatisfied with an assessment order passed by a GST officer may appeal to the first appellate authority within 30 days  of the issuance of the order.
• Second appellate authority: Suppose the taxpayer is still dissatisfied with the decision of the first appellate authority. In that case, they may appeal to the second appellate authority (the GST tribunal) within 30 days of the receipt of the first appellate authority order.
• High Court: Suppose the taxpayer still needs to be satisfied with the decision of the second appellate authority. In that case, they may appeal to the respective High Court within 180 days of receiving the second appellate authority order.

Conclusion

In conclusion, the Goods and Services Tax (GST) is a comprehensive tax legislation introduced in India in 2017, which replaced multiple indirect taxes levied by the Central and State Governments. The GST Act has significantly changed tax administration, procedures, and compliance requirements. The GST applies to all businesses engaged in the supply of goods or services, including importers, exporters, and e-commerce platforms. Non-compliance with GST rules and regulations may result in penalties, fines, and prosecution. The GST Act provides for various offences, such as tax evasion, issuance of fake invoices, and claiming false input tax credits, among others, which are punishable under the law. The Act also provides for appeals in case disputes arise during the GST registration, assessment, or other proceedings. Overall, the GST Act has transformed the indirect tax regime in India and has significantly contributed to the ease of doing business in the country.v