Swastik Tours and Travel is registered taxable person under GST in the State of Punjab. Its gross receipts from the overseas package tours for the…
CA Final · Indirect Tax Laws · PYQS · November 2024
Swastik Tours and Travel is registered taxable person under GST in the State of Punjab. Its gross receipts from the overseas package tours for the month of February 2024 amounted to 50 crore. Out of this 50 crore, 10 crore were received from registered persons. While filing GSTR-1 for the month of February 2024, it tampered the amount of invoices issued to unregistered persons and reported only 20 crore on account of B to C transactions (i.e., transaction with unregistered persons), thus, understating the tax liability by - 3.60 crore (i.e. 18% of 20 crore). Moreover, while filing GSTR-3B for the same month, it availed ITC of 0.40 crore on account of fake invoices received without receipt of goods/services. GST Department initiated prosecution proceedings against Swastik Tours and Travel for the above offence. Swastik Tours and Travel deposited the amount of tax due along with the interest and penalty and 1 crore as compounding amount being amount equivalent to 25% of tax evaded and requested the commissioner for compounding of offence. Other conditions required for compounding the amount were duly complied with. Even then commissioner rejected the request of Swastik Tours and Travel on the plea that compounding amount deposited by Swastik Tours and Travel is less than the minimum amount to be deposited for compounding of offence. You are required to examine the case and comment upon the rejection of request of Swastik Tours and Travel as per the provisions of section 138 of the CGST Act, 2017 read with relevant rule of the CGST Rules, 2017. Also discuss the relevant legal provision in brief.
Suggested Answer and Working Notes:
In the given case, Swastik Tours and Travel has committed the following offences: Availing of ITC using the fake invoices received without receipt of goods/servicesFalsification or substitution of financial records with an intention to evade payment of tax due or evasion of tax Here, the amount of tax evaded/ITC wrongly availed is 4crore (₹ 3.60 crore + 0.4 crore), i.e. it exceeds 2crore but does not exceed 5crore. Further, where the offence committed by the person falls under more than one category, the compounding amount shall be the amount determined for the offence for which higher compounding amount has been prescribed. Thus, the compounding amount will be as follows: For the offence of availing of ITC using the fake invoices received without receipt of goods/services, compounding amount is 40% of the amount of ITC wrongly availed.For the offence of falsification or substitution of financial records with an intention to evade payment of tax due or evasion of tax, compounding amount is 40% [higher of 25% or 40%] of the amount of tax evaded]. Thus, Swastik Tours and Travel should have deposited the following amount of tax evaded/ITC wrongly availed as the compounding amount: = 40% of 4crore = 1.60 crore Since Swastik Tours and Travel has deposited lesser compounding amount than required, the rejection of its request for compounding by the Commissioner is justified.
Topics: Offences and Penalties and Ethical Aspects under GST
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