Which Offences will be Decriminalised under GST Act?

About the need for criminalising certain acts under GST

• Tax evasion has significantly increased, with many instances of taxpayers utilising diverse tactics to evade indirect tax.
• Technology and information from e-way bills and GST filings are being actively used by tax authorities to detect evasion.
• To ensure seamless intrastate or interstate trade of products, to fight corruption, and to maintain an efficient tax collection system, the GST law provides harsh penalties.

Offences under GST Act 2017

The GST Law Provides for two Different Types of Penalties

• Financial penalties: The departmental authorities have the power to impose financial penalties and the confiscation of property as punishments for breaking the law.
• The GST Law also includes prison time and fines as criminal punishments, however, they can only be given out in a criminal court after an accusation.

Sections 122 to 131 of the CGST Act of 2017 

• While Sections 132 to 138 contain provisions relating to prosecution and compounding, this section only contains laws relating to penalties.
• The length of the prison sentence is based on the amount of tax avoided, the amount of Input Tax Credit (ITC) wrongly claimed or utilised, or the amount of refund improperly claimed.

Cognisable and non-cognisable offences

• The section further categorises offences into categories that include those that are cognizable and bailable and those that are not.
• Many non-compliances are found to fall under both the prosecution and compounding categories of penalties.

Recommendations of GST Council

• Increasing from one to two crore the minimum tax amount required to launch a GST prosecution.
• Lowering the rate of compounding from 50% to 150% of the tax to 25% to 100% of the tax.
• Decriminalizing specific offences under Section 132 of the CGST Act of 2017, such as interfering with an officer's performance of their responsibilities, purposeful tampering with tangible evidence, and failing to provide information
• Refunding those who didn't register and assisting small firms with e-commerce are some other ideas.

Impact of Decriminalization

The law is still in its early stages of development, making it challenging and unpredictable to implement.

• Streamlining the laws: There are situations where judgments and conclusions made by courts contradict. Laws are still being streamlined by the government.
• Impact on business: It's crucial to understand that enforcing penal provisions in a murky environment fundamentally changes how companies view risk and uncertainty, which has a direct bearing on their capacity to operate.
• Investor demotivation: The legislation already includes enough sanctions to act as a deterrent to tax avoidance. Even before engaging in any business activity or investment, investors may be deterred by the threat of criminal penalties in little, pointless, and inconsequential concerns.

News Source: The Hindu

https://www.thehindu.com/business/Economy/explained-decriminalisation-of-offences-under-gst/article66279310.ece

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