GST Department initiated prosecution proceedings against Mr. Sahil, a taxable person under GST. Mr. Sahil collected 8 crore as GST but failed to pay…
CA Final · Indirect Tax Laws · PYQS · May 2024
GST Department initiated prosecution proceedings against Mr. Sahil, a taxable person under GST. Mr. Sahil collected 8 crore as GST but failed to pay the same to the Government beyond the period of three months from the date on which such payment became due. He approached the Commissioner on 15.10.2023 with a request for compounding of offence. Mr. Sahil made full and true disclosure of facts relating to the case. After considering the request, the Commissioner directed him to pay an amount of 5.2 crore as compounding amount on 20.10.2023. As per the provisions of section 138 of the CGST Act, 2017 read with relevant rule of the CGST Rules, 2017, examine the issue and provide the answers with supporting explanatory note to the following: (1) Determine the minimum and maximum compounding amount which can be determined by the Commissioner. (2) Is the amount determined by the Commissioner in this case within the limits prescribed under the GST law? (3) In what time period will Mr. Sahil have to pay the compounding amount ordered by the Commissioner?
Suggested Answer and Working Notes:
(1) Since Mr. Sahil has collected amount exceeding 5crores as tax but failed to pay the same to the Government beyond a period of 3 months from the date on which such payment became due: (i) minimum amount for compounding is 50% of the tax evaded, i.e.,4 crore (50% of 8crore). (ii) maximum amount for compounding is 75% of the tax evaded i.e.,6 crore (75% of 8crore). (2) Yes, the amount for compounding determined by the Commissioner i.e.5.2 crore is within the above limits prescribed under the GST law. (3) Mr. Sahil has to pay the compounding amount ordered by the Commissioner within 30 days from the date of the receipt of the order.
Topics: Offences and Penalties and Ethical Aspects under GST
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