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Monday, June 25, 2018

GST evasion raids: 12 provisions under the GSTR Act that could land you in jail

The raids for GST evasion have begun in certain states. Here are some of the provisions of the GSTN law that could land you behind bars. Is it the beginning of inspector raj in the digital age?

Written by Sandip Sen | Published: October 4, 2017 11:23:15 am
GST, e-ways bill, courier companies, logistics industry, business news, economy news, india news, latest news, indian express In Andhra Pradesh, 25 decoy teams from the State Tax Department conducted 360 raids and slapped penalties of Rs. 36.5 crore on traders evading GST. (File)

Officers of the Legal Metrology Department LMD under the Ministry of Department of Consumer Affairs raided two malls in Bhubaneshwar and found that two departmental stores had not updated the latest GST prices in their old stock. “We have issued notice to the retail stores of two companies for not pasting new GST prices on the commodities, whose prices have decreased after the GST came into effect on July 1. According to the law, they will have to pay a fine of Rs 25,000,” controller LMD Anant Kumar Bhuyan said.

In Andhra Pradesh, 25 decoy teams from the State Tax Department conducted 360 raids and slapped penalties of Rs. 36.5 crore on traders evading GST. “Many traders are not issuing invoices to customers and are evading GST. We request the customers to insist on bills, which is their right and can check quality”, said AP Chief Commissioner of State Tax J. Shyamala Rao. Meanwhile the chief commissioner of GST (Delhi zone) has clarified that the tax department only wants to facilitate the process for shopkeepers and traders during this period and no inspector can raid any shop premises without prior permission.

Also read | If Flipkart can manage big billion days why can’t GSTN portal?

Even before the GSTN regime has been stabilised, the raids for GST evasion have begun. Senior IAS and IRS officers have reportedly been authorised to carry on the raids under the provisions of the law. As per Indiafilings these are the provisions of law that could lead to penalty or arrest under the GSTR Act:

* Supply of goods or services or both without the cover of GST Tax Invoice with an intent to evade tax
* If any person issues any invoice or bill without actual supply of goods or services or both leading to wrongful input tax credit or refund of tax
* Any person who avails input tax credit using invoice referred in point 2 above
* Collection of taxes without payment to the government for a period beyond 3 months of due date.
* Evasion of tax, availment of credit or obtaining refund with an intent of fraud where such offence is not covered in point 1 to 4 above.
* Falsifying records or production of false records/ accounts/ documents/ information with an intent to evade tax.
* Obstructs or prevents any officer from doing his duties under the act.
* Acquires or transports or in any manner or deals with any goods which he knows are liable for confiscation under this Act.
* Receives or in any way, deals with any services or has reason to believe are in contravention of any provisions of this law.
* Tampers with or destroys any material evidence or documents.
* Fails to supply any information which he is required to supply under this law or supply false information/.
* Attempts or abets the commission of any of the offences mention above.

For all of the above types of offences, the taxpayer can be imprisoned for a period of upto 5 years. All offences mentioned in this section are non-cognizable and bailable except the following cases:

* Where the amount exceeds 5 Crores
* Instances covered by Points 1 to 4 above

All the time there is a needless cat and mouse game of compliance that hurts ‘Make in India’. This can be avoided with some innovation, but a business friendly GSTN that yields right taxes would need a simulated modeling to show that it works. We will talk about how to incorporate a new business friendly methodology in the coming weeks.

The problem is that the bureaucrats won’t let it happen. If technology creates all the simple solutions what will the IAS and IRS officers do? So, the system has been made needlessly complex and inefficient. It has been primarily modeled on the old and outdated laws of the Central Excise Act which is itself complex, open to interpretation and bureaucratic. Add to it an audit trail and you have compounded the complexity.

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