COMPOUNDING OF OFFENCES - Handbook of GST Law & Procedures (CBIC) [October 2024] - GST

14. COMPOUNDING OF OFFENCES 14.1 Section 138 of the CGST Act, 2017 deals with compounding of offences. Compounding of offences can be made before or after the institution of prosecution. It can be compounded by the Commissioner. 14.2 Offences can be compounded only after payment tax, interest and penalty involved in such offences by the person accused of the offence, to the Central or State Government, as the case may be. Compounding allowed under the provisions of this section shall not affect the proceedings, if any, instituted under any other Law. 14.3 In respect of the following cases, compounding cannot be made Section 138 of the CGST Act, 2017 (a) 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 sub-section (1) of section 132 of the CGST Act, 2017; (b) a person who has been accused of committing an offence under clause (b) of sub-section (1) of section 132 of the CGST Act, 2017; (c) a person who has been convicted for an offence under this Act by a court; (d) any other class of persons or offences as may be prescribed: 14.4 Section 138(2) of the CGST Act, 2017 stipulates the minimum and maximum amount for compounding the offences. 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. 14.5 As per Section 138(3) of the CGST Act, on payment of such compounding amount, as determined by the Commissioner, no further proceedings shall be initiated under this Act against the accused person in respect of the same offence and any criminal proceedings, if already initiated in respect of the said offence, shall stand abated. 14.6 Rule 162 of CGST Rules, 2017 prescribes the procedure for compounding of offences. The applicant desiring to compound his offences has to make application in FORM GST CPD-01 to the Commissioner. 14.7 The Commissioner shall call for a report from the concerned officer with reference to the particulars furnished in the application and after taking into account the contents of the said application, pass an order in FORM GST CPD-02 , on being satisfied about the disclosure of facts relating to the case, indicating the compounding amount and grant him immunity from prosecution or reject such application, within ninety days of the receipt of the application.