Compounding of an offence [ Section 138 ] - GST Ready Reckoner - GST

Compounding of an offence and Procedure for compounding of offence Compounding offences [ Section 138 read with section 132 of CGST Act read with Rule 162 of CGST Rules ] As per section 138(1) Any offence under this Act may, be compounded by the Commissioner on payment, by the person accused of the offence, to the Central Government or the State Government, as the case be, of such compounding amount in such manner as may be prescribed, either before or after the institution of prosecution. Exception of Section 138(1) a person who has been allowed to compound once in respect of any of the offences specified in clauses (a) to (f), (h), (i) and (l) of section 132(1) ; a person who has been accused of committing an offence under clause (b) of section 132(1) ; a person who has been convicted for an offence under this Act by a court; any other class of persons or offences as may be prescribed. Either before or after the institution of prosecution, applicant can may, make an application under section 138(1) in FORM GST CPD-01 to the Commissioner for compounding of an offence. [ Rule 162(1) of CGST Rules ] On receipt of the application, the Commissioner shall call for a report from the concerned officer with reference to the particulars furnished in the application, or any other information, which may be considered relevant for the examination of such application. [ Rule 162(2) of CGST Rules ] Accept or rejection of Application [ Rule 162(3) of CGST Rules ] The Commissioner, after taking into account the contents of the said application, may, by order in FORM GST CPD-02 , on being satisfied that the applicant has made full and true disclosure of facts relating to the case, allow the application indicating the compounding amount and grant him immunity from prosecution or reject such application within 90 days of the receipt of the application. Opportunity of being heard [ Rule 162(4) of CGST Rules ] The application shall not be decided under rule 162(3) without affording an opportunity of being heard to the applicant and recording the grounds of such rejection. No compounding unless Amount of tax , interest penalty is paid [ Rule 162(5) of CGST Rules ] The application shall not be allowed unless the tax, interest and penalty liable to be paid have been paid in the case for which the application has been made. Determination of Compounding amount [ Section 138(3) CGST Act read with Rule 162(3A) of CGST Rules ] As per Section 138(2 ) The amount of compounding of offences under this section shall be such as may be prescribed, subject to Upto 30.09.2023 The minimum amount Rs. 10,000/- or 50% of the tax involved, whichever is higher of the tax involved and The maximum amount Rs. 30,000/- or 150% of the tax, whichever is higher of the tax involved. From 01.10.2023 The minimum amount not being less than 25% of the tax involved and The maximum amount not being more than 100% of the tax involved As per Section 138(3) On payment , the proceedings indicated will abate and no criminal proceedings can be launched. Payment of Compounding Amount [ Rule 162(6) (7) ] The applicant shall, within a period of 30 days from the date of the receipt of the order under rule 162(3) , pay the compounding amount as ordered by the Commissioner and shall furnish the proof of such payment to him. [ Rule 162(6) ] In case the applicant fails to pay the compounding amount within 30 days from the date of receipt of order under rule 162(3), the order made under rule 162(3) shall be vitiated and be void. [ Rule 162(7) ] Determination of Compounding amount [ Rule 162(3) ] (w.e.f. 01.10.2023) The Commissioner shall determine the compounding amount under rule 162(3) as per the Table below:- S. No. Offence Compounding amount if offence is punishable under clause (i) of section 132(1) Compounding amount if offence is punishable under clause (ii) of section 132(1) 1 Offence specified in clause (a) of section 132(1) of the CGST Act Subject to Maximum amount Up to 75% of the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken, subject to minimum amount of 50% of such amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken. Subject to Maximum amount Up to 60% of the amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken, Subject to minimum amount of 40% of such amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken. 2 Offence specified in clause (c) of section 132(1) of the CGST Act 3 Offence specified in clause (d) of section 132(1) of the CGST Act 4 Offence specified in clause (e) of section 132(1) of the CGST Act 5 Offence specified in clause (f) of section 132(1) of the CGST Act Amount equivalent to 25% of tax evaded. Amount equivalent to 25% of tax evaded. 6 Offence specified in clause (h) of section 132(1) of the CGST Act 7 Offence specified in clause (i) of section 132(1) of the CGST Act 8 Attempt to commit the offences or abets the commission of offences mentioned in clause (a), (c) to (f) and clauses (h) and (i) of section 132(1) of the CGST Act Amount equivalent to 25% of such amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken. Amount equivalent to 25% of such amount of tax evaded or the amount of input tax credit wrongly availed or utilised or the amount of refund wrongly taken. Provided that where the offence committed by the person falls under more than one category specified in the Table above, the compounding amount, in such case, shall be the amount determined for the offence for which higher compounding amount has been prescribed. In case of concealment of material facts Immunity granted can be withdrawn [ Rule 162(8) ] Immunity granted to a person under rule 162(3) may, at any time, be withdrawn by the Commissioner , if he is satisfied that such person had, in the course of the compounding proceedings, concealed any material particulars or had given false evidence. Thereupon such person may be tried for the offence with respect to which immunity was granted or for any other offence that appears to have been committed by him in connection with the compounding proceedings and the provisions the Act shall apply as if no such immunity had been granted.