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CHAPTER XIX OFFENCES AND PENALTIES

OFFENCES AND PENALTIES

26-12-2018_Rate
21-2019 G.O.Ms_.No_.456-2019-Rate
ra06-02-2017

122. Penalty for certain offences

 (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 subsection

(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 subsection

(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 subsection

(3) of section 52 ;

(vii) takes or utilizes 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 documents ;

(xxi) disposes off or tampers with any goods that have been detained,

seized, or attached under this Act,

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 utilized,-

(a) for any reason, other than the reason of fraud or any willful

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 willful 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 State 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.

123. Penalty for failure to furnish information return

If a person who is required to furnish an information return under

section 150 fails to do so within the period specified in the notice issued

under sub-section (3) thereof, the proper officer may direct, that such person

shall be liable to pay a penalty of one hundred rupees for each day of the

period during which the failure to furnish such return continues :

Provided that the penalty imposed under this section shall not exceed

five thousand rupees.

124. Fine for failure to furnish statistics

If any person required to furnish any information or return under

section 151,—

(a) without reasonable cause fails to furnish such information or

return as may be required under that section, or

(b) wilfully furnishes or causes to furnish any information or return

which he knows to be false,

he shall be punishable with a fine which may extend to ten thousand rupees

and in case of a continuing offence to a further fine which may extend to one

hundred rupees for each day after the first day during which the offence

continues subject to a maximum limit of twenty-five thousand rupees.

125. General penalty

Any person, who contravenes any of the provisions of this Act or

any rules made thereunder for which no penalty is separately provided for

in this Act, shall be liable to a penalty which may extend to twenty five

thousand rupees.

126. General disciplines related to penalty

(1) No officer under this Act shall impose any penalty for minor

breaches of tax regulations or procedural requirements and in particular,

any omission or mistake in documentation which is easily rectifiable and

made without fraudulent intent or gross negligence.

Explanation.––For the purpose of this sub-section,––

(a) a breach shall be considered a ‘minor breach’ if the amount of tax

involved is less than five thousand rupees ;

(b) an omission or mistake in documentation shall be considered to

be easily rectifiable if the same is an error apparent on the face of record.

(2) The penalty imposed under this Act shall depend on the facts and

circumstances of each case and shall commensurate with the degree and

severity of the breach.

(3) No penalty shall be imposed on any person without giving him an

opportunity of being heard.

(4) The officer under this Act shall while imposing penalty in an order

for a breach of any law, regulation or procedural requirement, specify the

nature of the breach and the applicable law, regulation or procedure under

which the amount of penalty for the breach has been specified.

(5) When a person voluntarily discloses to an officer under this Act the

circumstances of a breach of the tax law, regulation or procedural requirement

prior to the discovery of the breach by the officer under this Act, the proper

officer may consider this fact as a mitigating factor when quantifying a penalty

for that person.

(6) The provisions of this section shall not apply in such cases where

the penalty specified under this Act is either a fixed sum or expressed as a

fixed percentage.

127. Power to Impose penalty in certain cases

Where the proper officer is of the view that a person is liable to a

penalty and the same is not covered under any proceedings under section 62

or section 63 or section 64 or section 73 or section 74 or section 129 or section

130, he may issue an order levying such penalty after giving a reasonable

opportunity of being heard to such person.

128. Power to waive penalty or fee or both

          The Government may, by notification, waive in part or full, any

penalty referred to in section 122 or section 123 or section 125 or any late fee

referred to in section 47 for such class of taxpayers and under such mitigating

circumstances as may be specified therein on the recommendations of the

Council.

129. Detention, seizure and release of goods and conveyances in transit

 (1) Notwithstanding anything contained in this Act, where any

person transports any goods or stores any goods while they are in transit in

contravention of the provisions of this Act or the rules made thereunder, all

such goods and conveyance used as a means of transport for carrying the

said goods and documents relating to such goods and conveyance shall be

liable to detention or seizure and after detention or seizure, shall be

released,—

(a) on payment of the applicable tax and penalty equal to one

hundred per cent. of the tax payable on such goods and, in case of

exempted goods, on payment of an amount equal to two per cent. of the

value of goods or twenty five thousand rupees, whichever is less, where

the owner of the goods comes forward for payment of such tax and

penalty ;

(b) on payment of the applicable tax and penalty equal to the fifty

per cent. of the value of the goods reduced by the tax amount paid thereon

and, in case of exempted goods, on payment of an amount equal to five

per cent. of the value of goods or twenty five thousand rupees, whichever

is less, where the owner of the goods does not come forward for payment

of such tax and penalty ;

(c) upon furnishing a security equivalent to the amount payable

under clause (a) or clause (b) in such form and manner as may be

prescribed :

Provided that no such goods or conveyance shall be detained or

seized without serving an order of detention or seizure on the person

transporting the goods.

(2) The provisions of sub-section (6) of section 67 shall, mutatis mutandis,

apply for detention and seizure of goods and conveyances.

(3) The proper officer detaining or seizing goods or conveyances shall

issue a notice specifying the tax and penalty payable and thereafter, pass an

order for payment of tax and penalty under clause (a) or clause (b) or

clause (c).

(4) No tax, interest or penalty shall be determined under sub-section

(3) without giving the person concerned an opportunity of being heard.

(5) On payment of amount referred in sub-section (1), all proceedings in

respect of the notice specified in sub-section (3) shall be deemed to be

concluded.

(6) Where the person transporting any goods or the owner of the goods

fails to pay the amount of tax and penalty as provided in sub-section (1) within

seven days of such detention or seizure, further proceedings shall be initiated

in accordance with the provisions of section 130 :

Provided that where the detained or seized goods are perishable or

hazardous in nature or are likely to depreciate in value with passage of time,

the said period of seven days may be reduced by the proper officer.

130. Confiscation of goods or conveyances and levy of penalty

(1) Notwithstanding anything contained in this Act, if any person—

(i) supplies or receives any goods in contravention of any of the

provisions of this Act or the rules made thereunder with intent to evade

payment of tax ; or

(ii) does not account for any goods on which he is liable to pay tax

under this Act ; or

(iii) supplies any goods liable to tax under this Act without having

applied for registration ; or

(iv) contravenes any of the provisions of this Act or the rules made

thereunder with intent to evade payment of tax ; or

(v) uses any conveyance as a means of transport for carriage of goods

in contravention of the provisions of this Act or the rules made

thereunder unless the owner of the conveyance proves that it was so

used without the knowledge or connivance of the owner himself, his

agent, if any, and the person in charge of the conveyance,

then, all such goods or conveyances shall be liable to confiscation and the

person shall be liable to penalty under section 122.

(2) Whenever confiscation of any goods or conveyance is authorised by

this Act, the officer adjudging it shall give to the owner of the goods an option

to pay in lieu of confiscation, such fine as the said officer thinks fit :

Provided that such fine leviable shall not exceed the market value of the

goods confiscated, less the tax chargeable thereon :

Provided further that the aggregate of such fine and penalty leviable

shall not be less than the amount of penalty leviable under sub-section (1) of

section 129 :

Provided also that where any such conveyance is used for the carriage

of the goods or passengers for hire, the owner of the conveyance shall be

given an option to pay in lieu of the confiscation of the conveyance a fine

equal to the tax payable on the goods being transported thereon.

(3) Where any fine in lieu of confiscation of goods or conveyance is

imposed under sub-section (2), the owner of such goods or conveyance or the

person referred to in sub-section (1), shall, in addition, be liable to any tax,

penalty and charges payable in respect of such goods or conveyance.

(4) No order for confiscation of goods or conveyance or for imposition of

penalty shall be issued without giving the person an opportunity of being

heard.

(5) Where any goods or conveyance are confiscated under this Act, the

title of such goods or conveyance shall thereupon vest in the Government.

(6) The proper officer adjudging confiscation shall take and hold

possession of the things confiscated and every officer of Police, on the

requisition of such proper officer, shall assist him in taking and holding such

possession.

(7) The proper officer may, after satisfying himself that the confiscated

goods or conveyance are not required in any other proceedings under this

Act and after giving reasonable time not exceeding three months to pay fine

in lieu of confiscation, dispose of such goods or conveyance and deposit the

sale proceeds thereof with the Government.

131. Confiscation or penalty not to interfere with other punishments

Without prejudice to the provisions contained in the Code of

Criminal Procedure, 1973(2 of 1974), no confiscation made or penalty imposed under the provisions of this Act or the rules made thereunder shall prevent the

infliction of any other punishment to which the person affected thereby is

liable under the provisions of this Act or under any other law for the time

being in force.

132. Punishment For certain offences

 (1) Whoever commits any of the following offences, namely :—

(a) supplies any goods or services or both without issue of any

invoice, in violation of the provisions of this Act or the rules made

thereunder, with the intention to evade tax ;

(b) 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 leading to wrongful availment or utilisation of input tax credit

or refund of tax ;

(c) avails input tax credit using such invoice or bill referred to in

clause (b) ;

(d) 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 ;

(e) evades tax, fraudulently avails input tax credit or fraudulently

obtains refund and where such offence is not covered under clauses (a)

to (d) ;

(f) falsifies or substitutes financial records or produces fake accounts

or documents or furnishes any false information with an intention to

evade payment of tax due under this Act ;

(g) obstructs or prevents any officer in the discharge of his duties

under this Act ;

(h) acquires possession of, or in any way concerns himself in

transporting, removing, depositing, keeping, concealing, supplying,

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 ;

(i) 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 ;

(j) tampers with or destroys any material evidence or documents ;

(k) fails to supply any information which he is required to supply

under this Act or the rules made thereunder or (unless with a reasonable

belief, the burden of proving which shall be upon him, that the information

supplied by him is true) supplies false information ; or

(l) attempts to commit, or abets the commission of any of the offences

mentioned in clauses (a) to (k) of this section,

shall be punishable––

(i) in cases where the amount of tax evaded or the amount of input

tax credit wrongly availed or utilised or the amount of refund wrongly

taken exceeds five hundred lakh rupees, with imprisonment for a term

which may extend to five years and with fine ;

(ii) in cases where the amount of tax evaded or the amount of input

tax credit wrongly availed or utilised or the amount of refund wrongly

taken exceeds two hundred lakh rupees but does not exceed five hundred

lakh rupees, with imprisonment for a term which may extend to three

years and with fine ;

(iii) in the case of any other offence where the amount of tax evaded

or the amount of input tax credit wrongly availed or utilised or the

amount of refund wrongly taken exceeds one hundred lakh rupees but

does not exceed two hundred lakh rupees, with imprisonment for a term

which may extend to one year and with fine ;

(iv) in cases where he commits or abets the commission of an offence

specified in clause (f) or clause (g) or clause (j), he shall be punishable

with imprisonment for a term which may extend to six months or with

fine or with both.

(2) Where any person convicted of an offence under this section is again

convicted of an offence under this section, then, he shall be punishable for

the second and for every subsequent offence with imprisonment for a term

which may extend to five years and with fine.

(3) The imprisonment referred to in clauses (i), (ii) and (iii) of sub-section

(1) and sub-section (2) shall, in the absence of special and adequate reasons

to the contrary to be recorded in the judgment of the Court, be for a term not

less than six months.

(4) Notwithstanding anything contained in the Code of Criminal

Procedure, 1973(2 of 1974), all offences under this Act, except the offences referred to

in sub-section (5) shall be non-cognizable and bailable.

(5) The offences specified in clause (a) or clause (b) or clause (c) or clause

(d) of sub-section (1) and punishable under clause (i) of that sub-section shall

be cognizable and non-bailable.

(6) A person shall not be prosecuted for any offence under this section

except with the previous sanction of the Commissioner.

Explanation. – For the purposes of this section, the term “tax” shall

include the amount of tax evaded or the amount of input tax credit wrongly

availed or utilised or refund wrongly taken under the provisions of this Act,

the Central Goods and Services Tax Act, the Integrated Goods and Services

Tax Act, and cess levied under the Goods and Services Tax (Compensation to

States) Act.

133. Liability of officers and certain other persons

(1) Where any person engaged in connection with the collection of

statistics under section 151 or compilation or computerisation thereof or if

any officer of State tax having access to information specified under subsection

(1) of section 150, or if any person engaged in connection with the

provision of service on the common portal or the agent of common portal,

wilfully discloses any information or the contents of any return furnished

under this Act or rules made thereunder otherwise than in execution of his

duties under the said sections or for the purposes of prosecution for an offence

under this Act or under any other Act for the time being in force, he shall be

punishable with imprisonment for a term which may extend to six months or

with fine which may extend to twenty five thousand rupees, or with both.

(2) Any person—

(a) who is a Government servant shall not be prosecuted for any

offence under this section except with the previous sanction of the

Government ;

(b) who is not a Government servant shall not be prosecuted for any

offence under this section except with the previous sanction of the

Commissioner.

134. Cognizance of offences

          No court shall take cognizance of any offence punishable under

this Act or the rules made thereunder except with the previous sanction of

the Commissioner, and no court inferior to that of a Magistrate of the First

Class, shall try any such offence.

135. Presumption of Culpable mental state.

 In any prosecution for an offence under this Act which requires a

culpable mental state on the part of the accused, the court shall presume the

existence of such mental state but it shall be a defence for the accused to

prove the fact that he had no such mental state with respect to the act charged

as an offence in that prosecution.

Explanation.—For the purposes of this section,—

(i) the expression “culpable mental state” includes intention, motive,

knowledge of a fact, and belief in, or reason to believe, a fact ;

(ii) a fact is said to be proved only when the court believes it to exist

beyond reasonable doubt and not merely when its existence is established

by a preponderance of probability.

136. Relevancy of statements under certain circumstances.

          A statement made and signed by a person on appearance in

response to any summons issued under section 70 during the course of any

inquiry or proceedings under this Act shall be relevant, for the purpose of

proving, in any prosecution for an offence under this Act, the truth of the

facts which it contains,–

(a) when the person who made the statement is dead or cannot be

found, or is incapable of giving evidence, or is kept out of the way by the

adverse party, or whose presence cannot be obtained without an amount

of delay or expense which, under the circumstances of the case, the court

considers unreasonable ; or

(b) when the person who made the statement is examined as a

witness in the case before the court and the court is of the opinion that,

having regard to the circumstances of the case, the statement should be

admitted in evidence in the interest of justice.

137. Offences by Companies.

(1) Where an offence committed by a person under this Act is a

company, every person who, at the time the offence was committed was in

charge of, and was responsible to, the company for the conduct of business of

the company, as well as the company, shall be deemed to be guilty of the

offence and shall be liable to be proceeded against and punished accordingly.

(2) Notwithstanding anything contained in sub-section (1), where an

offence under this Act has been committed by a company and it is proved

that the offence has been committed with the consent or connivance of, or is

attributable to any negligence on the part of, any director, manager, secretary

or other officer of the company, such director, manager, secretary or other

officer shall also be deemed to be guilty of that offence and shall be liable to

be proceeded against and punished accordingly.

(3) Where an offence under this Act has been committed by a taxable

person being a partnership firm or a Limited Liability Partnership or a Hindu

Undivided Family or a trust, the partner or karta or managing trustee shall

be deemed to be guilty of that offence and shall be liable to be proceeded

against and punished accordingly and the provisions of sub-section (2) shall

mutatis mutandis apply to such persons.

(4) Nothing contained in this section shall render any such person liable

to any punishment provided in this Act, if he proves that the offence was

committed without his knowledge or that he had exercised all due diligence

to prevent the commission of such offence.

Explanation.––For the purposes of this section,—

(i) “company” means a body corporate and includes a firm or other

association of individuals ; and

(ii) “director”, in relation to a firm, means a partner in the firm.

138. Compounding of offences.

(1) Any offence under this Act may, either before or after the

institution of prosecution, be compounded by the Commissioner on payment,

by the person accused of the offence, to the Central Government or the State

Government, as the case may be, of such compounding amount in such manner

as may be prescribed :

Provided that nothing contained in this section shall apply to—

(a) a person who has been allowed to compound once in respect of

any of the offences specified in clauses (a) to (f) of sub-section (1) of section

132 and the offences specified in clause (l) which are relatable to offences

specified in clauses (a) to (f) of the said sub-section ;

(b) a person who has been allowed to compound once in respect of

any offence, other than those in clause (a), under this Act or under the

provisions of any State Goods and Services Tax Act or the Central Goods

and Services Tax Act or the Union Territory Goods and Services Tax

Act or the Integrated Goods and Services Tax Act in respect of supplies

of value exceeding one crore rupees ;

(c) a person who has been accused of committing an offence under

this Act which is also an offence under any other law for the time being

in force ;

(d) a person who has been convicted for an offence under this Act

by a court ;

(e) a person who has been accused of committing an offence specified

in clause (g) or clause (j) or clause(k) of sub-section (1) of section 132 ;

and

(f) any other class of persons or offences as may be prescribed :

Provided further that any compounding allowed under the

provisions of this section shall not affect the proceedings, if any, instituted

under any other law :

Provided also that compounding shall be allowed only after making

payment of tax, interest and penalty involved in such offences.

(2) The amount for compounding of offences under this section shall be

such as may be prescribed, subject to the minimum amount not being less

than ten thousand rupees or fifty per cent. of the tax involved, whichever is

higher, and the maximum amount not being less than thirty thousand rupees

or one hundred and fifty per cent. of the tax, whichever is higher.

(3) On payment of such compounding amount as may be determined by

the Commissioner, no further proceedings shall be initiated under this Act

against the accused person in respect of the same offence and any criminal

proceedings, if already initiated in respect of the said offence, shall stand

abated.