CONVICTION AND PUNISHMENT UNDER GST

[Dr. Sanjiv Agarwal]

Meaning of Conviction

The words ‘convict’ or ‘conviction’ are not defined in GST law. Following interpretations are relevant:

Convict (as a noun) is one that is found guilty of an offence by verdict of a jury (Tomlin). A convict is one who has been condemned by a competent court; one who has been convicted of a crime or misdemeanour. And a person committed to prison upon a summary conviction or in default of payment of a penalty or fine adjudged to be paid upon such conviction is to be regarded as a criminal prisoner.

To convict, detect: A person is convicted by means of evidence; he is detected by means of ocular demonstration. One is convicted of having been the perpetration of a crime; one is detected in the very act of committing the deed.

The word ‘conviction’ means that the person has been convicted finally. [DHANJI RAM SHARMA VERSUS UNION OF INDIA AND ANR. - 1964 (2) TMI 108 - PUNJAB HIGH COURT].

Convicted: Found guilty of the crime whereof one stands indicated. The word convicted is sometimes used to mean that a judgment of final condemnation has been pronounced against the accused. [1932 ALJ 624:139 IC 141:33 CrLJ 731: 1932 All 680].

Conviction: The act of a legal tribunal adjudging a person guilty of an offence; finding of guilt; strong belief.

 Punishment for certain offences

For the purposes of arrest under section 69 of the CGST Act, 2017, the person shall be punishable with arrest in respect of following offences :

1. Whoever commits or causes to commit and retain the benefits arising out of following offences :

1. supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made thereunder, with the intention to evade tax;
2. issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax;
3. avails input tax credit using the invoice or bill referred to in clause (b) or fraudulently avails input tax credit without any invoice or bill;
4. collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;

punishable with :

(i) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds five hundred lakh rupees, with imprisonment for a term which may extend to five years and with fine;

(ii) in cases where the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken exceeds two hundred lakh rupees but does not exceed five hundred lakh rupees, with imprisonment for a term which may extend to three years and with fine.

(2)   Where any person convicted of an offence under this section is again convicted of an offence under this section, then, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to five years and with fine.

According to section 132(1) of the CGST Act, 2017, the punishment includes both, imprisonment as well as fine and such person shall be punishable with the following types of punishments:

Offence involving	Punishment (Imprisonment extending to)
Tax evaded exceeding INR 5 crore or repeat offender INR 250 lakh	5 years and fine
Tax evaded between INR 2 crore and INR 5 crore	3 years and fine
Tax evaded between INR 1 crore and INR 2 crore	1 years and fine
False records Obstructing officer Tamper records	6 months

Repeated offences (Sub-section 2)

In terms of section 132(2) of the CGST Act, 2017, if any person is convicted of an offence under this section again, then, he shall be punishable for the second and for every subsequent offence with imprisonment for a term which may extend to five years and with fine. However, in the absence of special and adequate reasons to the contrary to be recorded in the judgment of the court, the imprisonment shall not be for a term of less than six months.

Scope of tax for calculating limit

As per explanation to section 132, the term ‘tax’ shall include the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or refund wrongly taken under the provisions of this Act, the State Goods and Services Tax Act, the Integrated Goods and Services Tax Act or the Union Territory Goods and Services Tax Act and cess levied under the Goods and Services Tax (Compensation to States) Act.

Minimum punishment

In terms of sub-section (1) and (2) of section 132 of the GST law, the imprisonment shall not be for a term which is less than six months.