What Happens When You Don't Pay GST for your Business?

The Goods and Services Tax, or GST, is a location-based, transaction-based tax that imposes stringent compliance requirements on all taxpayers and anyone who comes under its scope. Because every transaction is documented and traced between the origin and destination, taxpayers must keep and declare data with the utmost precision

Any business with a revenue of more than Rs 40 lakh in a financial year, however, must register for GST. For service providers, the maximum is Rs 20 lakh. Many small firms, especially start-ups in India, have benefited from the increased GST threshold.

What is the GST (Goods and Services Tax)?

It is a consumption tax on products and services that are based on location. It is recommended that it be levied at any and all stages, from production to final consumer, with a set off accessible for taxes paid at prior stages. In a nutshell, only value-added will be taxed, and the eventual consumer will bear the tax liability.

Violations Under GST

The GST regime has recognised 21 specific violations. Another infraction that can be punished is making use of a composition system even though the individual is not responsible for it.

1. A supplier provides products or services without issuing a proper invoice or a fraudulent invoice.
2. He obstructs the issue of an invoice by obstructing the supply of goods or services in accordance with GST requirements.
3. Instead of using his own GSTIN, he uses the GSTIN of another person.
4. During registration, he provides bogus information.
5. When filing returns, he provides incorrect information or files fake returns.
6. During the assessment process, he provides incorrect or fraudulent data.
7. He fails to remit GST that he has deducted to the government within three months of the date of the deductions.
8. If TDS is deducted in violation of GST requirements, he is still obligated to pay the amount within 3 months of the date of the deduction. It is a crime if such fraudulently computed TDS is not deposited within the statutory time frame.
9. He fraudulently claims and receives a CGST or SGST refund.
10. He seeks Input Tax Credit despite not having received any services or goods.
11. To avoid paying taxes, he understates his sales over the period.
12. He transports or moves items without the required documents.
13. He provides products that will be seized by the authorities.
14. He either destroys or interferes with the seized goods.
15. He does not enrol himself, despite the fact that he is required to do so.
16. He either does not deduct TDS or subtracts less than the necessary amount.
17. He either does not receive TCS or takes less than the required amount.
18. As an Input Services Producer, he does not appropriately distribute credit or distributes in violation of the law.
19. He interferes with the officer's ability to fulfil his duties.
20. He does not keep proper accounting records, which is required by law.
21. He removes every piece of evidence on purpose.

As can be seen from the foregoing, the government has stated clearly which offences are covered by GST. When a firm performs one of the aforementioned offences, both the officer-in-charge and the firm will be held accountable. When a HUF, LLP, or Trust commits a crime, the Karta, members, and controlling trustees will be held liable. In the event of GST fraud, there are penalties.

Those who have purposefully engaged in fraudulent actions under the GST rules would be subjected to a 100 percent penalty, i.e., an amount equal to the amount of tax avoided or short remitted, subject to a minimum of Rs. 10,000/-. When there is no fraudulent purpose, i.e., when tax evasion is accidental, the penalty is 10% of the amount owed, with a minimum of Rs 10,000.

Provisions under GST

If a person who is not a taxable person:
• Reduces the likelihood of committing fraud.
• Acquires services or goods knowing they are in violation of GST laws.
• Fails to send a legitimate invoice.
• Fails to keep the accounting records up to date or vouch for them.
• Ignores a summons issued in his name and fails to present well before the appropriate authority.
He will also be subject to a penalty of Rs. 25,000/-.
If fraud is discovered, in addition to the foregoing amounts, the following will apply:

1. If the tax amount is less than 50 lakhs, the individual must serve a year in prison in addition to paying the penalty. There is also interest on late payment of GST.
2. If the amount is between 50 and 100 lakhs, the sentence will be three years in prison and a fine.
3. If the amount surpasses 100 lakhs, the maximum sentence is five years in prison and a fine.
   The taxable person will be served with a Show Cause Notice and given a reasonable opportunity to be heard by the appropriate authority. The implementation of such a punishment, as well as the nature of the offense committed, must be justified by the authorities.

GST-related prosecutions

If a person commits one of the following actions with the purpose to defraud, criminal charges will be brought against them.
• Fraudulently claiming a CGST/SGST refund.
• Fake documents or refunds are submitted.
• Issuing a bill without providing goods or services.
• Aiding and abetting GST fraud.

GST Examination, Search, and Seizure

When the Joint Commissioner CGST/SGST has reason to think that a taxable person is purposefully concealing transactions to dodge taxes and has assumed increased Input Tax Credit, he might direct a GST officer to inspect the taxed person's premises.

Similarly, the Joint Commissioners can authorise a seizure of property of a taxed person's property if he has reasonable grounds to think that things must be impounded or that essential records are hidden elsewhere.

GST Appeals

A taxpayer who is dissatisfied with an adjudicatory officer's decision may file an appeal with the very first Appellate Authority. The "adjudicator" is a competent authority to make that decision or issue an order underneath the Act.
With a four-tiered appeal process, the GST allows any disgruntled taxpayers to contact the administration. Taxpayers can go to the High Court after the Appellate Tribunal. The taxpayer's last option is to go to the Supreme Court.
All appeals will be considered only if they are filed on the appropriate forms, and the required costs are paid. The following is the fee for filing an appeal:

1. 100% of the taxes paid, interest, charge, and GST penalty resulting from the contested order so Always be aware of paying GST late fee. There is also interest on late payment of GST.
   AND
2. 10 percent of the disputed amount
   When the challenged tax amount exceeds INR 25 crores, the aforesaid amount of 10% might be increased to 25% of the contested amount.
   When the Commissioners of GST or an officer is the one appealing, however, no fees must be paid in advance.

Be Safeguarded: The Way Forward To A Happier GST

The GST regime has imposed a more stringent compliance obligation, which everyone must adhere to religiously. Any non-compliance can have a significant impact on the taxpayer's day-to-day operations and can result in significant interest and fines. If the offenses are serious enough, criminal charges may be brought against the perpetrators.

There is no exemption for first-time offenders under the GST Act. As a result, you will be sent a notification from the relevant government even if you are accidentally avoiding paying taxes or under subtracting expenses where appropriate.

As a result, it is usually preferable to have a comprehensive accounting system that allows you to reconcile as well as file returns on time, as well as make taxable income where required. Always be aware of paying GST late fees.

Also read:

1) What Happens to Indian's Tax Money after Payment?
2) Top-10 Highest Tax Paying States in India
3) Why Do We Pay Income Tax in India? Importance, Applicability & more
4) Types of Direct & Indirect Taxes in India
5) OkCredit: Simple, Paperless & Secure solution for businesses

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FAQs

Q. Can a taxable person's authorised representative attend in court on his or her behalf?

Ans: Of course. Unless required by law, a person who is obligated to appear before the Council can select an authorised person A worker, lawyer working in India, Chartered Analyst, Company Secretary, or Financial Planner with just an active Certification of Operating can all be approved representatives.

Q. What are the types of instances that cannot be appealed to?

Ans: Certain decisions made by a GST officer are not subject to appeal. The following are the details:
• When a case is passed from one officer to the next.
• An injunction to prosecute.
• Order for tax payments or other payments.
• Order for seizure or custody of accounting records.

Q. Can a CGST Commissioner alter an order that he has issued?

Ans: No, it isn't. A GST officer who reports to him has the authority to file an appeal with the First Appellate Authority. The appeal must state the issues that pertain to his decisions, and the Appellate Authority must treat it as such.

Q. How long do you have to file an appeal with the Very first Appellate Authority?

Ans: It takes three months from the time you place your purchase. Administrative appeals have the same time limit.

Q. What authority does the First Appellate Authority have?

Ans: The FAA can excuse a delay in filing a case for up to one month of the date of the period's expiration, or three months. He can also enable the appeal and include some further grounds.