GST

Offences without GST Penalties

In case of certain offences, there are no GST penalties applicable but these GST offences can incur interest at a specified rate (18% annually) on the amount of tax under consideration. The following are some key instances where no penalty under GST is applicable:

• No GST penalty is applicable for charging incorrect GST such as charging CGST/SGST instead of IGST. The registered business/entity has to pay the correct GST and get a refund for the wrong GST paid.
• No penalty under GST Act for incorrect filing of GST returns but interest at the rate of 18% p.a. is chargeable on the tax amount shortfall.
• No penalty is applicable for delayed invoice payments. But any input tax credit claimed in lieu of such invoices is liable to be reversed if invoice payment is delayed beyond 6 months.
• No penalty under GST Act for charging a wrong GST rate (lower than the actual rate) but the registered business/person is required to pay interest at 18% annually on the shortfall in tax amount.

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MP HC Deletes GST Notice Against Raymond Limited, There is No Valid Prospect Granted to Respond

Madhya Pradesh high court holds thirty days as a reasonable time period for show cause notice in Raymond limited case.

The court emphasized that since Section 73(8) of the CGST Act outlines 30 days to make tax payments including penalty and interest mentioned in the show cause notice, the “reasonable period” for responding can also be considered as 30 days. Section 73 of the Central Goods and Services Tax Act deals with the determination of unpaid, underpaid, erroneously refunded taxes, or wrongly availed input tax credit, excluding cases of fraud or intentional misstatement. In this particular case, the show cause notice was issued on 03.09.2022, and the demand order followed only eight days later on 12.09.2022. The court deemed this time frame insufficient to provide a “reasonable opportunity” for the recipient to be heard.

Consequently, the show cause notice dated 03.09.2022 (Annexure P/2) and the demand order dated 12.09.2022 (Annexure P/3), both issued under Section 73 of the CGST Act, are overruled. The Revenue is granted the liberty to issue a fresh, legally valid show cause notice and proceed accordingly, after providing a reasonable and sufficient opportunity for the petitioner to be heard. This ruling was made by the Jabalpur bench, allowing the petition filed by Raymond under Article 226 of the Constitution.

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Sec 73-Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any wilful- misstatement or suppression of facts.